Texas Children’s Hospital (TCH), the largest freestanding children’s hospital in the world, purchases more than $110 million in pharmaceutical products a year. Until recently, though, the hospital had no visibility into its current stock.

It didn’t know what it had on hand at any given time, couldn’t find recalled medications without a manual search and disposed of at least $17 million in medications annually due to drugs expiring. "We didn’t know where anything was without human intervention," Gee Mathen, TCH assistant director of pharmacy applications and technical services, told Supply Chain Dive.

TCH added medication management software to provide drug tracking and visibility across its main hospital, five satellite hospital locations and affiliated Houston health centers. In addition to increasing patient safety by decreasing human touchpoints, Mathen conservatively estimated TCH will save 16% in drug costs compared to its manual system.

A phased implementation

Beyond tracking software, TCH is changing its operations with the integration of new technology into its operations. The hospital is phasing in an automation program, and in the final stage will introduce robots like those used in automotive factories. The XR2 Automated Central Pharmacy System will scan, store, pick and bag medications, while the Robotic IV Insourcing Solution will prepare intravenous (IV) drugs.

The hospital system first created a simulation module that allowed it to use the automation concepts in a playground environment. That convinced TCH that the robotic systems would provide the needed visibility and transparency. "It’s not a cheap product," Mathen said of the XR2 robot, and the concept needed to be proven across the institution to get the budget approved. The XR2 is a back-end workhorse, Mathen said, but the software for inventory management, to provide visibility and transparency has to already be in place and working before adding the robot. The software has now been implemented for more than a year.

TCH is adding five XR2 robots this fall. The main facility has one central pharmacy and will use two robots due to the volume. Each XR2 cabinet holds 90,000 specific items, and the modular design allows the pharmacy to add capacity. Satellite hospitals will use the remaining three robots.

1. Gaining inventory visibility

The hospital system is transitioning its pharmacy inventory management away from relying on manual processes. Currently, technicians walk through stocking areas, counting items on the shelves to determine future needs. "Our goal is to reduce the number of human touches through technology," said Mathen. By automating more processes to gain supply visibility, TCH can overlay analytics to improve efficiency, cost effectiveness and clinical outcomes.

The idea behind autonomous pharmacies is to create an individual drug dose as a "node" on a network, to effectively manage the inventory, Jim Stevenson PharmD, vice president of medication systems management at Omnicell told Supply Chain Dive. By tracking each dose individually, it’s easier to prevent waste from expiration dates, and to ensure the hospital isn’t buying excess medication. Omnicell provides the software and robotic systems TCH uses for its pharmacy automation.

With greater visibility, TCH can reduce its drug orders, as the current stock will be accurate. Stevenson said hospital pharmacies manage thousands of line items, and it’s difficult to continually adjust reorders to optimize inventory. By moving to this automated system, the hospital can adjust orders based on machine learning instead of human effort.

Before implementing the medication management software, TCH had virtually no inventory visibility. Mathen estimated the system now has 40-45% real time visibility of medication inventory. After the XR2 robot comes online, he predicts 95% real time visibility.

2. Reducing drug waste

With automation, TCH is better able to use its medications before they expire. On a regular basis, the system notifies staff of pending expiration dates. Whether in the central pharmacy or an automated dispensing cabinet on the patient floors, the medications can be moved to locations with higher turnover, so they can be used before expiring.

When the robotic system is implemented in the centralized pharmacy, Mathen estimates drug waste will be reduced to almost zero.

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"Our goal is to reduce the number of human touches through technology."



Gee Mathen

Assistant director of pharmacy applications and technical services, Texas Children's Hospital

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The robot will capture the lot, expiration date and storage location for each medication, allowing staff to dispense medications on a first-in, first-out basis. The current manual inventory process requires a dedicated person to move stock from the back of the shelf to the front, so older products are used first. Technicians should already be doing this, but given time constraints, they usually don’t, he said.

3. Efficient picking

Just as manual picking is less efficient in a warehouse, it’s less efficient at a hospital pharmacy as well, except the errors carry more dire consequences.

TCH conducted a time study, finding humans could pick one or two medications from the current carousel system every minute, or 60 to 120 items per hour. During the process, the technician manually scans the bar code to ensure it’s the right one.

The Omnicell XR2 robot TCH will bring online in the fall is designed to pick, scan and bag an average of 700 medications an hour. It works 24/7 and will know what medications need replenishing in the automated dispensing cabinets in the main and satellite hospitals. Technicians arriving at work each morning will find those medications bagged and tagged for each location. "It’s recording the integrated inventory information, so they know where the drugs are and where it’s going," said Stevenson.

4. Decreasing errors while increasing shelf life

Medication errors are three times more common in the pediatric population than the adult patient population, said Stevenson, due to the calculations needed for weight-based dosages and IV dilutions. With the TCH current process, humans are about 98% accurate, he said. If the system is giving 1 million doses a year, that amounts to 20,000 preventable errors a year.

Pharmacy technicians at TCH currently prepare IV orders manually in a sterile space. The calculations and preparations are then checked by a pharmacist.



As part of the automation project, in May TCH will install Omnicell’s Robotic IV Insourcing Solution, which Mathen said does more than reduce potential human errors. The prepared formulations can be stored in the hospital floor’s drug cabinet, reducing pharmacy delays and potential communication errors. The storage issue is a big one, as robot-prepared infusions can be stored up to 30 days, while human-prepared solutions can expire in 8 hours. That’s because there’s the potential for human touch and improper practices in the sterile area, so the Food and Drug Administration (FDA) only allows short-term storage. The robotic process has been FDA approved for a longer product duration, based on studies.

5. Creating interoperability

The goal of the TCH automation project is to create a closed-loop system for medications, from ordering to procuring to dispensing to administration. TCH’s electronic medical record (EMR) connects to the automated dispensing cabinets and the medication management software to provide real time feedback. “We can see what’s being used in each cabinet and can redistribute it,” said Mathen. The XR2 robot will ingest the incoming drug information, generating a report from the EMR on which drugs need filling from the satellite facility dispensing cabinets as well.

Not all satellite clinics have electronic drug storage capabilities, so each clinic will stock two days of medication for back-up doses and unpredictable circumstances, like if a patient’s treatment changes during the office visit.

The XR2 system will also interface with the drug distributor, and the robot will order the drugs. That automated process, instead of the current manual process where a technician counts items on the shelf, will reduce inventory.

6. Cost savings

Determining cost savings using automation is simple, Mathen said. TCH uses a simulation lab to determine the amount of inventory purchasing, and what it’s losing to expiration dates and misplaced products. He estimated without the automated technology, TCH is easily losing 16% of product.

While the XR2 robots are expensive, the compounding IV robot will not require a big capital investment, as TCH will pay a monthly fee instead. "Most hospitals today spend large amounts of money on outsourcing the preparation of certain IV products," said Stevenson, to comply with manufacturing regulations. "Generally the health system can pay for the robot service we provide and still have a substantial reduction in cost compared to what they’re paying now in IV providers." That savings, he said, can be in the millions, including inventory reduction and expired products.

How pharmacy automation affects the rest of the hospital

While Mathen is focusing on pharmacy technology, other departments are closely watching, he said. The laboratory staff is interested in automation, as is hospital supply chain management. The latter currently uses some Omnicell technology to manage supplies as well.

The current pharmacy staff will be redeployed to other pharmacy initiatives which have been on hold due to time constraints. They plan to add more medications to the automated dispensing cabinets, for example, for faster clinician access, and that requires technologist efforts.

For hospitals in general, Mathen sees an automated pharmaceutical supply chain as imperative. While pharmacy is a top revenue generator for many hospitals, Mathen said, that margin will shrink eventually, and hospitals will need to look to cost containment, lowering waste, inventory reduction and reducing other expenses.