could RFID tune up health care supply chain?

It may have abandoned its plans to get into the banking industry, but Wal-Mart is moving full speed ahead with an initiative that could revolutionize the health care market. The mega-retailer has joined forces with Blue Cross Blue Shield and the University of Arkansas to open a center for research into ways to incorporate RFID (and other information technology) into the health care industry's supply chain.

Researchers at the new Center for Innovation in Health Care Logistics, which will be located at the University of Arkansas, will study ways to use technology to improve the industry's procurement and distribution processes. "The goal of the center's work is to put the right materials in the hands of doctors and nurses where and when they need them," according to a Wal-Mart press release. Initial work will focus on technology-based solutions for tracking and providing visibility into the whereabouts of drugs and medical supplies as they move through the supply chain.

Researchers at the center won't limit their focus to RFID, however; they will also study emerging technologies such as RuBee (a datatransfer protocol) and near-field communications. But RFID is still expected to be one of the first technologies to be addressed. "While this venture is separate from the RFID Research Center [which is also located on the University of Arkansas's campus], RFID will certainly be [examined] with the goal of improving the health care supply chain," says Bill Hardgrave, director of the RFID Research Center.

It is unclear whether the Center for Innovation in Health Care Logistics will tackle the sticky question of which of two RFID frequencies is the better fit for the pharmaceutical sector. Pharmaceutical companies are currently split over ultra high-frequency (UHF) and high-frequency (HF) technology. Wal-Mart, however, leans toward UHF, specifying that suppliers use UHF labels when they send tagged merchandise to its DCs.

In any event, it appears that there will be other issues to address first. Several segments of the health care supply chain have yet to adopt bar-code technology, according to Hardgrave—which could affect how quickly they can be brought up to speed with RFID. "From what I've been able to see in the health care supply chain, it really lags behind the consumer goods supply chain, so there is an opportunity for a lot of learning," he says. Still, that could have an upside, Hardgrave notes. "Those parts of the industry not using bar codes can possibly make an easier transition to RFID by leapfrogging from having nothing in place to using RFID."

As a large operator of in-store pharmacies, Wal-Mart has much to gain from efforts to make the health care supply chain more efficient. As a large employer, the company also has a vested interest in trying to control health care costs.

The move isn't Wal-Mart's first foray into health care. In addition to introducing a $4 generic prescription program at its U.S. pharmacies last fall, Wal-Mart recently concluded a pilot in which it opened instore medical clinics at 75 sites in 12 states. The company plans a fast rollout nationwide, and could be operating more than 6,000 in-store clinics within five years. Wal-Mart is considering providing its in-store clinics with a common electronic medical records system so patient care can be tracked from store to store.