Inventory management grows increasingly difficult as a business or institution grows larger. Often, it is viewed as a purely economic problem – better management of inventory (location, expiry dates, etc…) results in better savings for a business. However, hospitals have a particular obligation towards excellent management of their inventories to ensure the safety and efficacy of the therapies administered to their patients. Hospitals additionally need to keep an eye out on their inventory due to their use of controlled substances, such as opioid drugs. Medgadget recently had the opportunity to chat with CEO and co-founder of Kit Check, a company working on two products that improve inventory management for hospitals in the United States.
Mohammad Saleh, Medgadget: Can you tell us about your background and how you became a co-founder of this effort?
Kevin MacDonald, Kit Check: My background is technical, but I’ve been on the business side of things. I started my career at Sun Microsystems dealing with a variety of new technologies. RFID was one of those technologies, and what I saw in the early 2000s was the FDA was trying to mandate RFID for anti-counterfeit purposes. I thought it was really the wrong way to go about it, as it was adding cost to the manufacturers, and there was no real benefit. After that, I was in consulting for a while and worked with medical device companies with a focus on track-and-trace and RFID.
In 2011, I was having dinner with a family friend, a pharmacist, who was talking about how she was on “crash-cart duty,” – a highly manual process that requires someone who’s very highly educated and very highly paid. They’re tasked with picking up vials, looking at expiration dates, and putting them back. As she was describing this, I began thinking: if we apply the right technology to it and we start looking at RFID and cloud technology, we can really make this process much more efficient and start to decrease the amount of waste. When I looked at where the market was, these drugs that were in crash carts and in the OR were completely untracked and I thought I can help pharmacists save a lot of time. It’s not uncommon that expired or incorrect drugs are given to a patient, so there’s room for improving safety and efficacy. These technologies can also start to bring modern supply chain management to medications by providing full solutions that go to the item level and can track across different systems.
My co-founder, Tim Kress-Spatz, who oversees the technical side, and I started cold calling hospitals and our first hospital client signed up in April of 2012, and now we’re working with more than 450 hospitals.
Medgadget: Give our readers an overview on what Kit Check is now, and how you’re working towards achieving your mission.
MacDonald: We’re helping hospitals be more efficient with their medications through three different approaches. How do you not waste time dealing with supply chain issues? How do you make sure that you’re safe and compliant throughout the system? And how do you ensure that you are as efficient as possible in terms of reducing the amount of medications bought and wasted?
What we’re doing, at the end of the day, is taking a look at an item-by-item level (sometimes using RFID, sometimes using data systems like the EMR) and asking where a particular vile of medication was over the course of its lifetime.
We’re putting that into the cloud and then we’re providing the hospital with really specific solutions – things like “this is how I need to restock,” “this is what I need to put there in the first place,” “these are the analytics that will tell me that an anesthesia provider is diverting medication.”
Medgadget: How is all of this typically done right now?
MacDonald: Mostly very manual. In terms of controlled substances, a hospital typically tries to take a look at their medical record, realize that Dr. X has administered 50mgs of fentanyl to a patient, but they checked out 100mgs of fentanyl. So, typically, someone is taking a look at two Excel spreadsheets and trying to make a match. It’s extremely time consuming and it’s really difficult to line up all the transactions.
As for our second product, Kit Check – what is typically happening today is that people are just manually picking up vials to check what is expired, missing, or incorrect. Processing a single kit manually takes about 30 minutes. With Kit Check it takes less than two minutes. With controlled substances, most hospitals are trying to audit five to ten percent of patient records, and that can often take a full-time pharmacist. With us, a fraction of a pharmacist’s time can audit a 100 percent of the records. This allows you to know exactly where there are issues or discrepancies in the records.
Medgadget: Is most of this facilitated by RFID technology?
MacDonald: I would say that there are three key components to our solutions: our item level tracking (some of which is by RFID), cloud-based tracking (so that we can look across hospitals/systems), and artificial intelligence/machine learning algorithms. Our Kit Check product is RFID-based and we have a tag on every single vial. The Bluesight product deals with controlled substances. It does not use RFID at all – it just uses data feeds from existing systems.
Medgadget: Tell us about how machine learning algorithms are driving your company’s success. How are you leveraging this technology?
MacDonald: There are core patterns that emerge around whether more or less of a given drug is used, how one person may be wasting a drug, or just general pattern recognition problems. We’re using more advanced concepts of AI and machine learning to take all of those trends and patterns and putting them together to risk-score and start to figure out individuals who may be problematic.
As an example, a hospital recently called us up. If you looked at one of their anesthesia providers, it looked like they were maybe dispensing slightly more of the medications than others. It also looked like they may have had slightly longer wait times between the times they dispensed and administrated the drug. A human wouldn’t have been able to pick out anything wrong. When we used our algorithms, we took a series of about 20 different data points, put it together, and it revealed this provider at the top of our risk-score list. As it turns out, this particular provider was diverting narcotics inside the hospital. We’re using this technology to both find some of the initial indications, as well as to then bring together a set of patterns.
As we get more and more hospitals in our system, our algorithms get smarter so we can identify, based on patterns that are clear across the country, where a client pharmacy has problems. We’ve got everyone on the same database and we can apply the patterns across. In the Bluesight product, it’s all about detecting and preventing diversion of controlled substances. On the Kit Check side, we have situations where two hospitals find a drug that should be recalled. We’ll then search all of our clients’ drug inventories for that same recall and can identify recalls proactively. In general, we’re finding recalls 24 to 48 hours ahead of the FDA.
Medgadget: That’s a lot of quite sensitive data! How do you ensure the safety of all of that?
MacDonald: We’ve got a very bright engineering team. We have a full-time staff just dedicated to securing the data and making sure that we have the right protections around it. For anything that has patient identifying data, we keep it in an entirely different server infrastructure with additional controls.
One advantage of a company like ours is that we have the ability to pick people that come from very high security backgrounds and put them into the engineering team. If you’re a hospital, it’s really hard to recruit people that have spent their entire career doing military-grade security.
Medgadget: What are some other success stories you’ve observed thanks to Kit Check’s solutions?
MacDonald: On the Kit Check side of the story, we’ve had hospitals reduce the amount of drug inventory in their OR by about 50 to 60%. We’ve gone into hospitals where 70% of the ORs have incorrect or expired drugs, and we’ve brought that down to zero. When the Joint Commission surveys hospitals, one of their favorite things to do is open up a crash cart and find expired or incorrect medications. If a Joint Commission inspector comes through a Kit Check hospital, they typically say “Oh, you have Kit Check. You’re fine.”
On the Controlled Substances side, we’ve helped hospitals find dozens of folks that had been diverting medications. It’s an under-reported phenomenon. Everyone talks about the opioid crisis in the patient population, but you have a one in twelve chance that your anesthesia provider, nurse, or pharmacist are diverting medications. So, it’s about making sure that patients are getting the best possible care because they’re receiving the treatment that they need and that their provider is not inebriated or diverting that treatment from them.
Medgadget: I assume doctors checking out the medication have to report who and what it’s for, as well as how much the patient needs. How is it that some of these drugs are funnelled out of the system?
MacDonald: There’s probably a hundred different ways – let me give you some examples. Let’s say you dispense 100mgs of fentanyl. Perhaps what you do is you give a patient under anesthesia a combination of medications that will mimic the same vital signs as what the fentanyl will do, but it could give you a radically different outcome. In the meantime, you have documented that the patient received these drugs or some portion of them – but you’ve actually given them to yourself. Perhaps less radically, you gave the patient half and you started collecting multiple doses over the course of the day for yourself. Perhaps what happened is that you legitimately only used half of a syringe, but rather than wasting the second half, you fill another syringe with water and show someone that you’re disposing the remaining fentanyl. You’ve probably heard some stories around patients waking up in the middle of a surgery and they feel everything – it’s highly likely, in those situations, that diversion was involved. The patient isn’t moving, but they’re not getting the pain medicine, so they feel the whole thing. A big component of the opioid crisis is within four walls of the hospital.
Medgadget: Where do you see your company in 10 years?
MacDonald: As we continue to grow, I think we’re going to end up having a larger footprint in hospitals. When we look at what we’re doing in terms of item-level cloud tracking and machine learning, we can apply these same concepts to help with other problems. How do I reduce the amount of overall waste that I produce? How do I reduce the amount of inventory I keep on hand? How do I become smarter about the drugs that I’m purchasing?
We’re already starting, for example, to help hospitals select the right drugs in the right situations. As we as we get more data on what the drugs are doing, I think we’re going to end up providing a clearer picture as to how to generate a smarter supply chain in the hospital.
As an example, a lot of hospitals will prepare a syringe of ketamine at the beginning of each case for emergency purposes, and if they don’t use it they throw it out. If you have all the data about where all the vials are going and what they’re being used for, what you’ll find is you’re better off buying a more expensive pre-filled syringe, rather than throwing out all these vials, from both controlled substances and cost perspectives. The opportunities inside the four walls of a hospital to purchase something that is more effective and easier to distribute are vast, and it means that we can reduce the price of drugs to the hospital and make the pharmacist’s life a lot easier and more efficient.