SISTERS OF MERCY HEALTH SYSTEM HONORED AS SUPPLY CHAIN INNOVATOR OF THE YEAR Mercy’s supply chain model helps improve patient safety and reduce costs

The Council of Supply Chain Management Professionals named Sisters of Mercy Health System (Mercy) and its supply chain operating division, Resource Optimization & Innovation (ROi), as the 2006 Supply Chain Innovator of the Year. Mercy, the first healthcare organization to win this international honor, stood out among seven finalists, which included Fortune 500 companies such as The Dow Chemical Company, Hewlett-Packard, IBM, Kellogg’s and Procter & Gamble. ROi was formed in 2002 as an operating division of Mercy.

The Supply Chain Innovation Award annually honors an organization’s outstanding innovations as demonstrated by customer satisfaction achievements, quantifiable and sustainable cost-savings, and revenue generation. Mercy’s selection as the 2006 award recipient recognizes ROi’s efforts in creating a new supply chain model that has contributed to patient safety, more closely links the manufacturers and users of healthcare products, and reduces costs.

PATIENT SAFETY
ROi was recognized for providing the impetus for an organization-wide medication safety initiative, “Mercy Meds.” This collaborative effort involved pharmacists, physicians, nurses, information technologists and supply chain specialists. Mercy Meds resulted in an end-to-end redesign of Mercy’s medication administration process, ensuring that the right medication is given to the right patient in the right dosage at the right time.

Mercy Meds tracks a patient’s medication from the time it is prescribed in the hospital to the time it’s administered to the patient, including the use of secure, computerized drug-dispensing cabinets within nursing units and computers at the patient’s bedside to access information regarding the patient’s medication regimen. Nurses use handheld scanners to scan their own ID badge, the patient’s bar-coded ID wrist badge and the barcode on the medication to verify accuracy. The computerized system also prompts nurses to check for potential medication issues, such as the patient’s blood pressure and diet, before giving the medication. As a result of the Mercy Meds initiative, ROi undertook purchasing, storing, repackaging, bar-coding and distributing pharmaceuticals from a centralized facility to better support medication supply needs at hospitals across the Mercy system.

The Mercy Meds program has resulted in:
• Avoidance of a significant number of potential medication errors, reducing additional treatments, lengths of stay and additional medication expense that medication errors can cause, resulting in better patient care and $13.6 million in annual cost avoidance;
• Centralized distribution of many medications, reducing overall labor and improving the timeliness of medication availability and consistency of quality;
• Significant reduction in time to complete the medication administration process, providing nurses with more time to provide direct patient care; and
• Automated management and reordering of bar-coded drugs, reducing hospital pharmacists’ distribution functions and doubling the amount of time they have available to spend on clinical functions and direct patient care.

COST SAVINGS
The healthcare supply chain constitutes 30 to 40 percent of healthcare costs, second only to personnel costs. Mercy’s ROi business model was recognized for improving patient care while also reducing costs by centralizing healthcare supply chain functions that are traditionally performed by multiple vendors such as commercial distributors, group
purchasing organizations and consultants. This more efficient supply chain model delivers $16 million in annual savings for Mercy’s 19 hospitals.

“It’s no secret that healthcare costs continue to rise and one of the key contributors has been a broken supply chain riddled with inefficiencies. Mercy was committed to creating a solution to address this issue, while also improving clinical outcomes for patients,” said Vance Moore, president of ROi.

The new supply chain model reduces costs by:
• Establishing an internal group purchasing organization to contract directly with manufacturers;
• Using a Mercy-owned central distribution center for receiving and stocking all supplies which enables bulk purchasing discounts, decreases hospital-based inventory maintenance costs, and reduces manufacturer transportation expenses associated with shipping to multiple hospital locations;
• Improving supply delivery responsiveness, resulting in 99 percent next day, first-time order fill rates by making regular deliveries to hospitals via a fleet of Mercy-owned vehicles;
• Enabling direct purchasing from manufacturers.

“It is gratifying for our staff to see the positive role that the supply chain can play in improving patient care as well as reducing costs,” said Moore. “Providing tools that ensure a safer medication environment also has helped us recruit and retain the best nurses and pharmacists in the industry.”

Editor’s Note: Photographs depicting Mercy Meds are available upon request.

About Sisters of Mercy Health System
The Sisters of Mercy Health System (Mercy) operates hospitals, physician practices, outpatient clinics, health plans and related health and human services in a seven-state area including Arkansas, Kansas, Louisiana, Mississippi, Missouri, Oklahoma and Texas. Its members include 18 acute care hospitals providing more than 4,000 licensed beds, a heart hospital, a managed care subsidiary (Mercy Health Plans), physician practices, outpatient care facilities, home health programs, skilled nursing services and long-term care facilities. Services are provided by approximately 29,500 co-workers and 4,000 physicians who are employed or practice at Mercy facilities. Mercy is the ninth largest Catholic healthcare system in the United States based on net patient service revenue and is sponsored by the Sisters of Mercy–St. Louis Regional Community. ROi was formed in 2002 as a for-profit operating division of Mercy. It is headquartered in St. Louis, with a 100,000-square-foot distribution center in Springfield, Mo. For more information, please visit www.mercy.net.

About Council of Supply Chain Management Professionals
Founded in 1963 as the preeminent association for individuals involved in supply chain management and logistics, CSCMP provides educational, career development, and networking opportunities to its over 9,000 members and to the entire profession.


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