January 2010 | Case Studies | Casebook

Healthcare Logistics: A New Prescription for Medical Distribution

Tags: Health Care Logistics, Bar-coding Systems

Linking bar-coded pharmaceuticals and electronic patient records using Zebra Technologies solutions helps the Sisters of Mercy Health System streamline supply chain operations.

There's nothing new about hospitals using bar codes for supplies and drug formularies. But few large U.S. healthcare supply chain operations have integrated bar-coded medications with patient electronic health records (EHR) as successfully as the Sisters of Mercy Health System.

Mercy, the United States' eighth-largest Catholic healthcare system, employs more than 35,000 workers and operates 21 acute care hospitals, two heart hospitals, and a rehabilitation hospital with more than 4,300 licensed beds and 1,200 integrated physician practices in Oklahoma, Kansas, Missouri, and Arkansas. The extensive network requires complex internal supply chain management to keep operations running smoothly, and Mercy excels in this area.

"Mercy places importance on its supply chain operation," says Tim Dryer, public relations manager for Lincolnshire, Ill.-based Zebra Technologies, which provides the bar-code systems used by Mercy. "And, by improving supply chain efficiencies, Mercy has realized benefits in other areas."

Like many healthcare organizations, Mercy took a hard look at its logistics system after a groundbreaking 1999 national study by the Institute of Medicine reported that medication errors are the eighth-leading cause of death in the United States.

"In 2001, we met with our pharmacy directors and suppliers to address the national problem," says Dr. Jon Lakamp, executive director of Mercy Clinical Support Services. "We knew we were going to implement EHRs, and that we could reduce medication errors at the point of administration by using bar-coded verification."

The first step was transitioning to high-tech prescriptions. Handwritten prescriptions leave room for errors, and verifying them can be time-consuming for both pharmacists and doctors. Prescriptions entered into a computer system reduce errors by one-third and are five times less likely to require pharmacist clarification than handwritten prescriptions, according to a study by the Oregon Health and Science University.

Mercy implemented an EHR software solution called EPIC, which eliminated handwritten prescriptions for more than 4,000 physicians.

But simply computerizing the prescriptions wasn't enough. Expanding Mercy's technology to deliver prescribed medicines to hospital and clinic patients was a tremendous undertaking that triggered a complete restructuring of Mercy's supply chain.

"We needed to verify that patients in our hospitals get the right medication in the right dose at the right time via the right route," explains Lakamp. "To do that, we needed bar-coded, scanned medications in a unit-dose format ready to be administered."

Achieving that goal required significant changes because of the scope of Mercy's internal supply chain, which is handled by Resource Optimization and Innovation (ROi), an operating division of the Sisters of Mercy Health System.

"Mercy is different from most hospital systems because it does not use a third-party provider to manage its supply chain," says Cristina DeMartini, market development leader at Zebra. "By bringing all shipments into a centralized distribution and automated repackaging center, Mercy basically acts as its own supply chain."

Mercy budgeted approximately $35 million to implement the hospital's and clinic network's software, switch to automated dispensing equipment, and upgrade warehouse operations to repackage medications.

BUILDING ON NEW TECHNOLOGY

Mercy had been using Zebra coding technology for parts of its supply operations, and staff found it reliable and easy to use. For the new Mercy Meds system, Zebra Z4M and TLP344Z printers were installed at Mercy's consolidated service center in Springfield, Mo. This warehousing-repackaging hub receives shipments of medications and medical-surgical supplies from a variety of vendors, then repackages and redistributes them to hospitals, local physician practices, and clinics via Mercy's tractor-trailer fleet.

"Before we implemented the new model, each hospital and clinic received numerous deliveries arriving at different times, often crowding loading docks and causing general confusion," says John Black, vice president of supply chain for ROi. "It was inefficient and costly."

To support the new software interfaces with the hospital-clinic network, ROi's central facility in Springfield needed major upgrades. In late 2003, facility improvements began, including constructing a clean room and installing automated repackaging equipment. Because pharmaceuticals were to be repackaged, the facility had to become compliant as a Food and Drug Administration-registered location. The new bar-coding system generated labels for shelves, unit-dose medication, and totes, as well as shipment tracking labels.

TRAINING DAYS

While refitting at the warehouse proceeded, Mercy tested the new system at a few nurses' stations. It evaluated pharmacist ordering, medication disbursement, patient administration, demand planning, and replenishment processing tasks.

Because the new system changed the way Mercy prepared, delivered, and administered medication, it was critical to thoroughly educate and train all operational and clinical supply chain participants in the process.

It was equally important that everyone understood how pharmacy script interfaced with EPIC, how EPIC linked to the dispensing cabinet and the bedside verification station, and, ultimately, how the supply chain was replenished through the centralized warehouse repackaging operation and the pharmacy wholesaler.

Nursing staff had to be trained to migrate from a paper-based medication administration record to an electronic one, and pharmacists had to assume a quality-assurance role in reviewing packaged medications.

Finally, with all the improvements and training completed, Mercy Meds rolled out in June 2003. Nine months later, it was fully functional in more than 90 percent of Mercy hospitals and clinics.

With the new system, medications arrive at the ROi warehouse to be repackaged into unit-dose tablet or capsule form, individually bar-coded, and shipped to hospital pharmacies. As prescriptions are entered into the EPIC system, the pharmacy dispatches medication to the nurses' stations and records the prescription information on the patient's EHR. If pharmacy inventory runs low, a worker scans the shelf code and sends a replenishment order to ROi. Medication cabinets on the nursing floors generate replenishments based on pre-determined minimums.

When a replenishment order is received at ROi, the system generates a bar-coded tote label to pull the order and pack the tote. The label can be affixed to the tote for tracking. When delivered, the tote goes directly from the truck to the pharmacy or nursing floor.

Today, Mercy hospitals receive one shipment per day for all their medication and medical supplies, a considerable improvement over the multiple shipments from multiple vendors they used to receive daily.

"Since implementing Mercy Meds, we have improved shipping accuracy by 50 percent and increased labor productivity by 20 percent," says Black. "We can now manage inventory more strategically across the entire organization, ensuring that products are at the right location when needed.

"We also have a powerful database that helps us keep expired medications out of the pharmacies, and we can react immediately to purge the system when a product is recalled," he adds.

Continuous improvement is also part of Mercy's plan for the system. "We are never totally done," says Lakamp. "We are always tweaking it."

Thanks to Mercy Meds, the healthcare network averts an estimated 17,000 potential medication errors annually, saving $14 million a year on treatment and litigation costs. More importantly, Mercy's technology investment has provided the tools to deliver safe medications every time.