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Texas Children’s Hospital Unlocks $14M in Annual Drug Savings by Automating Pharmacy Inventory

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$0M+

in avoidable drug losses previously identified through visibility gaps

0%

reduction in tracking steps (12 steps down to 2)

0/7

real-time visibility into inventory value, location and expiry

Customer: Texas Children's Hospital
Industry: Pediatric hospital
Location: Houston
Scope: Item-level RFID tracking of drug inventory from receipt through dispensing, with every drug tagged on receipt and automated cycle counts replacing manual counts
Tecsys solutions: Hospital Point of Use (POU), built on Tecsys Elite™
Integrated with: Epic Willow

“Any hospital pharmacy can say they know where their drugs are — we can actually show you. We urge our peers to track their inventory along with us, so nobody is over-ordering and preventing others from getting the medications they need.”

Gee Mathen
Director, Pharmacy Application and Technical Services, Texas Children’s Hospital

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The margin drain in pharmacy operations

Pharmacy leaders at Texas Children’s Hospital, the largest pediatric health system in the U.S., uncovered a critical gap: Manual counts, inconsistent workflows and limited expiry tracking created an environment where high-value medications were routinely misplaced, overordered or allowed to expire. A 90-day audit of the system’s 30 highest-cost drugs revealed $40 million in inventory unaccounted for, nearly 10% of TCH’s more than $400 million in annual drug spend.

The financial exposure extended beyond waste. Re-dispenses — when staff could not confirm whether a drug had been administered — meant the hospital occasionally dispensed a second dose but captured revenue for only one. Without item-level visibility, losses were invisible until audits exposed discrepancies.


How Texas Children’s Hospital fixed it 

TCH implemented a fully integrated solution built on Tecsys’ Hospital Point of Use (POU), part of the Tecsys Elite™ platform, combined with RFID automation, Terso cabinets and Zebra hardware. The system creates real-time, item-level visibility from receipt through dispensing, supported by direct Epic Willow integration for accurate billing.

The transformation included:

Automated tracking

Every drug is RFID-tagged upon receipt, enabling continuous visibility into quantity, location, value and expiry.

Proactive expiry management

RFID-enabled workflows highlight drugs nearing expiry and prompt reallocation to high-use areas.

Closed-loop chain of custody

Tecsys connects RFID cabinets, carousels, automated dispensing cabinets and the EHR to document each movement and ensure accountability.

Automated inventory counts

Automated cycle counts replaced hours of labor; wand-based scans deliver rapid verification for drugs outside RFID cabinets.

Point of use inventory tracking

The financial impact:

TCH’s pharmacy transformation now serves as a margin-protecting engine for the health system. The initiative produced measurable financial gains across five areas:

Lower drug procurement costs

Accurate visibility prevents premature orders and ensures every high-cost item is used before expiration.

Labor efficiency

Technicians complete tagging in seconds, and automated cycle counts remove hours of manual inventory work.

Revenue protection

Charge capture improves because re-dispenses are eliminated.

Risk reduction

Visibility across all storage locations supports compliance, minimizes diversion and ensures audit-ready accountability.

Asset optimization

Item-level tracking protects millions in inventory by preventing misplacement, expiry and unmanaged movement.

Healthcare Professional Team in a Meeting

Before and after

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Before

  • Manual 12-step inventory processes;
  • Widespread variation in counts;
  • Expired drugs treated as usable stock;
  • Recurrent re-dispenses;
  • Millions lost to diversion, expiries and overordering;
  • No reliable view of on-hand value.
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After

  • Two-step automated workflow;
  • Seven-second RFID tagging;
  • Full visibility into on-hand asset value and expiry;
  • Reallocation of high-cost items before expiration;
  • Reliable charge capture;
  • Continuous, system-wide accountability

Operational impact

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$14M

Annual savings on Factor VII and VIII despite 30% higher usage
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83%

Reduction in tracking steps (12 steps down to two)

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$40M

In avoidable drug losses previously identified through visibility gaps

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7-second

RFID tagging for high-cost medications

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24/7

Real-time visibility into inventory value, location and expiry

Turn data into dollars with Tecsys’ Hospital Point of Use (POU)

Tecsys’ Hospital Point of Use (POU), built on Tecsys Elite, enables hospitals to control high-value drug inventory with precision. It connects pharmacy workflows, automation, RFID hardware and the EHR to deliver a real-time, closed-loop view of every item. Health systems gain:

  • Item-level tracking from receipt to dispensing
  • Automated cycle counts and expiry oversight
  • Accurate billing visibility through Epic Willow integration
  • Waste reduction through proactive reallocation
  • Stronger compliance and accountability across all pharmacy operations

Cutting waste through visibility

Millions in high-cost drugs were going unused or expiring at Texas Children’s Hospital until an RFID-enabled inventory system gave pharmacy teams full, real-time visibility into inventory levels and expiration dates. With that visibility, the hospital saved $14 million annually on Factor VII and VIII despite 30% higher usage.

Access this case study to see the transformative results in action.

 

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