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JOHN WASS: Enough ROI for two partners to share the cost
Sept. 23, 2008 – WaveMark CEO John Wass explains how focusing on a specialty healthcare niche provides success in a tandem supply chain.
It sounds like WaveMark has found an interesting niche, working exclusively in the medical field with both the medical device manufacturers and hospitals.
WASS: Yes. We focused on looking to solve the supply chain problem for medical devices. This is about a $300 billion industry.
We found that they had a great deal of difficulty seeing what was going on inside the hospital. The actual usage of the product, the inventory, the lab and the operating room, was not visible to the medical device manufacturers. All they ever knew was what they shipped to the hospital.
When you said seeing within the hospital, was that in terms of usage to learn how to improve or make the devices better; or was it for inventory control?
WASS: Both, actually. The usage information would be of value and of clinical interest to understand the usage patterns, which is not readily available to the manufacturers.
As well as understanding the inventory position of what is on hand, there are very real patient safety issues around expired product and recalled product that we can provide. So, we are providing essentially field inventory visibility back to the manufacturers.
That is a big deal because most all of these devices are on consignment, so in theory the manufacturers actually own this. They have regulatory issues around Sarbanes Oxley trying to figure out where all their assets are.
Are these devices on consignment mostly disposable in nature?
WASS: We are focused exclusively on disposable products. In contrast to the RTLS (real time location systems) that are out there trying to track assets that live for multiple years, WaveMark is focused on consumable devices.
Now these devices can be up to $30,000 apiece, but nonetheless, these are generally implanted and not capital inventory. We are focused on understanding the on-hand inventory position in the various different rooms, as well as accurately recording the usage.
How can this work if the hospital is not already equipped with readers? Is this passive technology we are talking about?
WASS: Yes. We are using passive high frequency, so it is 13.56. We are using the current ISO standard 15693. We will migrate to the EPC Global HF Gen II standards when they are available in the next year or so. The way the hospitals can do this, is that WaveMark provides all the equipment to make it happen and we can install a typical cath lab overnight.
So, we have devices, or appliances, that plug into the electrical outlets and into the Ethernet -- and they are good to go. There is no capital requirement for the hospital. WaveMark’s business model is an annual subscription for the hospital. With that, they get the deployed assets, the software as well as the tags that they need to use on the incoming products. We provide a full service solution.
So the products are not tagged before they get to the hospital.
WASS: As with any new industry, it is a combination. There are two manufacturers that are currently tagging all their products. We expect other manufacturers to tag over time; but since that is a process, we have created the capability for hospitals to tag everything that comes in the door that they want to track.
For a typical lab, that takes maybe 20 minutes a day to do the tagging. We have demonstrated that they are saving a minimum of three hours a day in the accounting and the ordering process.
Would hospitals tag just the consumables of your clients or all consumables walking in their door?
WASS: All consumables that they want to tag. At this point we are tagging most things at about fifty dollars and up. Our solution is focused on the high dollar value items. By the end of the year, we will be fully integrated with our barcode tracking solution for less expensive products.
But for those items that it is critical for the hospital to know whether they have one or not, our RFID solution is really the only answer in the marketplace. We provide 99.99% accuracy on their inventory
Whether it is for clinical knowledge gained or inventory, it sounds like a benefit for the hospitals as well as the manufacturers.
WASS: They are equal beneficiaries. Our business motto is the hospitals and the manufacturers each pay for the information they get; and each of them has their stand-alone value propositions.
With what we charge the hospitals, the hospitals have a strong ROI, and they see benefit. The manufacturers have a strong ROI and they see benefit. Using both the manufacturers and the hospitals, allows us to keep the cost down to both sides.
Would this preclude the device manufacturers having to go and take a physical inventory as often?
WASS: They don’t have to do that anymore. WaveMark takes inventory twenty thousand times a year.
It sounds like terabits of data somewhere or another. Do you only report when the usage of an item occurs or do you just dump the data to both parties?
WASS: We distill all the information just to the actionable events. All of our software is based on exception based management. We provide dashboards and we tell people about information only when they need to take action.
We have a point of service reader right next to the patient on the table. The system is: you wave the package in front of that reader, which updates the clinical system in the hospital. So, for 95% of all items moving to a lab, it is as simple as a wave. You literally wave it in front of the reader and you never look at a computer screen.
Why would you even have to wave it?
WASS: A level of precision is required. You have to have complete certainty that this particular product was used in this procedure. You want a proactive action associated with that.
The clinician literally put this package right next to the reader with a very short read range, and it is done that way purposely. You do have make a clinical decision that says, "Yes, I used this product."
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