Boost in efficiency gained by real-time capacity management provides significant ROI, better patient care.

If your hospital is considering a real-time locating system (RTLS), there are plenty of reasonable options available today. That is, if the goal is simply to keep track of assets.

A number of vendors have jumped into this sector because it is easy to show a quick return on an asset-tracking investment and therefore relatively easy to sell.

However, potential purchasers should be aware that some RTLS systems can offer a much larger return for their hospitals because they can be integrated with two other technologies: patient flow automation and automated business intelligence. This convergence creates an enterprise-wide platform known as a capacity-management system, which has the potential to create a tipping point in healthcare.

Equipment tagging saves tracking time and inventory costs in the range of $1 million per year.

A true enterprise capacity-management system delivers a continuously updated, moment-by-moment picture of a hospital’s physical operations as they occur, including the status and location of patients, beds, staff and assets.

Dashboards accessible to all executives and managers provide alerts when operational tasks are being executed within standard best-practice parameters and critical information on the root cause of problems. This gives hospital leaders more control over the physical environment, allowing them to produce additional capacity from existing space, reduce wait times system wide, speed patient transfers from other hospitals and reduce or eliminate diversions.

The platform also produces an extensive amount of data, collected and distributed in real time, that can project staff-to-volume planning needs, continually measure performance and identify potential process problems before they occur so that corrections can be applied.

The boost in efficiency gained by real-time capacity management provides significant ROI, better patient care and increased revenue generation.

Buyers taking a more holistic view of RTLS should research their options before investing in a system that may already be outdated. RTLS is becoming the cornerstone of a digital nervous system that will increasingly automate healthcare delivery and provide instant feedback on procedures, admissions, discharges, room availability and assignments, asset inventory and location, emerging trends in referral patterns and even new marketing opportunities.

But to get these capabilities, buyers must choose an RTLS platform that integrates all the major components of patient throughput.

Potential impact

The ROI benefits to capacity management are significant, as a pro forma analysis can show. The average annual impact, based upon a five-year projection, typically averages more than $10 million. The chart outlines key margin impact indicators.

Real-time capacity management means knowing the status of all resources all the time.

Proven results

The following examples are from hospitals that have translated better capacity management into better service and financial gains. In many cases, the hospitals centralized their capacity-management function and integrated it with an automated transfer center in order to realize the greatest gains. This allows closer monitoring of capacity to make room for transfers who might otherwise be diverted to other hospitals.

Methodist Healthcare, Ill.

•    $490,000 capital savings for infusion pump inventory
•    $187,000 rental expense reduction

Methodist Healthcare System, Texas

•    $51 million in transfer center net margin increase
•    $2 million to $10 million annual operational efficiency
•    Patient length-of-stay reduction from 5.2 to 3.81 days
•    13 percent increase in market share in 18 months

Lehigh Valley Hospital, Pa.

•     73 percent decrease in transfer center diversions

Oklahoma University Medical Center

•    Transfer denials decreased by more than 50 percent

Seton Healthcare, Texas

•    40 percent decrease in bed request to bed assigned times

Advocate Good Samaritan, Ill.

•    53 percent decrease in bed request to bed assigned times

Denver Health, Colo.

•    92 percent reduction in ED diversion hours


Better capacity management is becoming a strategic initiative for healthcare executives facing federal reform measures, based on the belief that better use of existing capacity and resources is one of the fastest ways to reduce cost, generate income and maintain the quality of care.

One of the biggest sources of waste in healthcare, the under-utilization of time and resources, can now become one of the biggest sources of savings and revenue.

By having so much operational information online at the touch of a finger, executives and managers can make the kinds of decisions that optimize all hospital assets, including people, equipment and space, in a way that can save significant costs and generate considerably more revenue than most hospitals are currently realizing.

About the author

Jon Poshywak is managing director, RTLS workflow service, at TeleTracking Technologies Inc. For more on TeleTracking Technologies, click here

Real-time capacity management key drivers for maximum margin impact

Key metric Calculation
Reduction in ED diversion 2.2 ambulance arrivals/hour averaging 1 admission x average contribution margin per inpatient admission
Reduction in ED left without being seen (LWBS) Average contribution margin per inpatient admission
Reduction in OR hold/boarders OR contribution margin per hour
Growth in transfer center admissions Net contribution margin for transfer center patient
Reduction in ED length of stay and reduction in inpatient LOS ED bed request to bed assigned placement time reduction revenue; LOS reduction impact to available inpatient days or reduction in cost basis
Improvement in mobile asset utilization Cost avoidance reduction in capital acquisition expense through inventory right sizing
Reduction in replacement capital Reduction in lost, stolen, misplaced equipment
Reduction in equipment rental expenses Rental expenses reduced or eliminated as utilization of owned assets is increased
Efficiency in equipment preventive maintenance and repair PMs and repair costs reduced as a result of both inventory right sizing and efficiency in process
Support staff productivity Support service staff productivity gained through optimal workflow process