Cost Reduction

Mercy Saves Millions in the OR Through Standardization and Automation

December 12, 2018 11:48 am

After data revealed no difference in outcomes between gallbladder surgeries performed with $1,600 of supplies versus $400 of supplies, surgeons agreed to use the less costly surgical supply kit.

At Mercy, a 41-hospital system based in Chesterfield, Mo., collaboration between perioperative directors, surgeons, and finance leaders has cut supply costs by $123 per surgical case and improved charge capture in surgery by 28 percent, adding more than $900 of additional revenue per case from FY17 to FY18. This collaboration is also driving efforts to reduce variability in surgical procedures and improve quality outcomes in the health system’s 259 operating rooms (ORs), says Betty Jo Rocchio, chief nursing optimization officer.

To gain physician buy-in for these standardization and cost containment efforts, leaders at Mercy have created 10 surgical specialty councils for areas such as general surgery, bariatric surgery, and neurosurgery. Surgeons across the health system meet monthly to discuss how they can improve quality and reduce variability. Perioperative directors from each hospital also meet monthly and regularly attend the surgical specialty councils.

“Our physicians get together to make decisions, and our directors put operational processes in place for the decisions that the councils make,” Rocchio says, adding that such “cross-pollination” is rare in hospitals. “Most organizations don’t do that, but it has been the sweet spot for us.”

Standardizing Physician Preference Cards

One example of this cross-pollination began in late 2016, when perioperative directors and the general surgery specialty council worked together to review variation on physician preference cards—which list all of the supplies and equipment used by a particular physician for a surgical case—for laparoscopic cholecystectomy, or gallbladder removal.

Perioperative directors and supply chain leaders compiled all of the various supplies requested by each surgeon and categorized them on a conference room table for surgical leaders to view. The surgical leaders then selected the supplies that would become the standard for the physician preference cards. This change alone has driven $1.8 million in savings in 18 months across 41 hospitals, Rocchio says.

“It’s amazing how fast products get away from you, because on a daily basis, those preference cards can be changed by any circulating nurse in an OR,” Rocchio says. “Sometimes surgeons will ask for something for one case, and it will get put on the preference cards.” Once that happens, the supply gets pulled for every future case, contributing to waste.

At first, surgeons on the general surgery specialty council resisted participating in this project because they did not want to tell other surgeons what to use. But when they saw the volume of products used by all surgeons for one procedure, they changed their minds. They also recognized that standardization would allow circulating nurses to create ready-made surgical kits with all of the necessary supplies, boosting efficiency.

What’s more, standardizing the physician preference cards would reduce cost per case without compromising quality or safety. Supplies on the highest-cost preference card totaled $1,600 per case, while the lowest cost was $400 per case. Outcomes data revealed no difference between the $1,600 cases and the $400 cases. “The change reduced our cost per case, and it was a win for our circulating nurses,” Rocchio says.

Leaders at Mercy have replicated the process with other specialties and cut the system’s supply costs by $3.6 million in 12 months.

Web Extra: Mercy’s Perioperative Dashboard

Web Extra: Mercy’s Surgeon Scorecard

Implementing an Inventory Management System

Although standardizing the physician preference cards led to significant savings, Rocchio and her team realized they needed to do more to rein in their supply costs—specifically, they needed to do a better job managing their inventory. For years, leaders at Mercy managed their extensive perioperative inventory manually—a process that wasted time and money. “We were counting products on shelves and reordering one product at a time as we used it,” Rocchio says.

Recognizing the need to move to a more efficient process, leaders at Mercy developed an inventory management system with a vendor in 2017. The automated system tracks what supplies are pulled for a surgical case, what supplies are used, and what supplies are not used. “There’s no EHR that allows you to do this,” she says.

To track supplies, OR staff use a handheld scanner to scan product barcodes that pull all of the product information into the EHR, including pricing, lot number, and expiration date. The system also alerts staff to expired or recalled products that should be sent back to the manufacturer, helping to ensure patient safety. One year after implementation, Mercy had a 99 percent reduction in expired products and recalls reaching its ORs.

The inventory management system also helped staff capture 28 percent more charges per case, compared with the previous system, which relied on nurses to enter supplies in the EHR manually. “Now, we clearly know what we used in the OR,” Rocchio says.

Getting Better Data for Decision Making

Along with the new inventory management system, leaders at Mercy rolled out a process that gives surgeons better insights on their cost per case immediately following a procedure. In fact, before surgeons leave the OR, they receive a “receipt” that lists all of their supply costs for that particular case. “It’s almost like a receipt at Wal-Mart that you receive when you check out,” Rocchio says. “The physicians leave the OR with that receipt, and they know everything that they have spent on that patient.”

This supply cost data also is compiled into an automated analytics platform, so Rocchio and her team can review the cost per case along with quality outcomes such as readmissions and surgical site infections. Data also are displayed in a perioperative dashboard that is shared with operational leaders, surgeons, and frontline staff. Each surgeon’s individual data is shared via a scorecard, including intraoperative supply cost per case, readmission rate, block utilization, patient satisfaction, and compliance with surgical pathways.

Today, Mercy’s annual surgical costs are $50 million less than peer organizations at the 75th percentile, thanks to lower supply costs and also labor costs, which dropped $29 per case from FY17 to FY18. “We know we are leading the nation on cost,” Rocchio says. Streamlining preference cards and adding the automated inventory management system also have helped Mercy reduce its OR turnover times by 12 percent.

Based on these combined efforts in the OR, leaders at Mercy expect to save between $11 million and $13 million during the next four years.

Heeding Lessons Learned

Rocchio offers the following advice for finance leaders on how they can support perioperative directors in cost containment.

Join the team. One of Mercy’s vice presidents of finance has become an integral part of the perioperative team. During the rollout of the inventory management system and analytics platform, he ensured the accuracy and integrity of the financial data so it was more actionable for operational leaders.

Help operational leaders rework processes before adding new technology. Leaders at Mercy used multidisciplinary teams and a Six Sigma approach to redesign OR processes. “A lot of people want to jump in and add technology in a highly technology-driven environment like the OR, but you need to straighten out the processes first and then find the technology that is going to sustain it,” Rocchio says. “There is no technology on the market that can help you overcome a bad process.”

Enlist IT support and get user buy-in. Implementing the inventory management system required careful coordination with Mercy’s IT team, which made sure that the new platform was integrated with Mercy’s clinical, financial, and supply chain systems. During the development phase, users from each hospital tested the new system and offered feedback.

Building Better Relationships

Rocchio stresses the need for finance and operational leaders to work together to reduce waste and improve charge capture in the OR.

“What we really need are finance leaders who can take financial data and translate that into operational data we can use with our physicians, leaders, and front-line staff,” Rocchio says. “We can’t take data straight from our financial systems and make good decisions—we have to make it operational.”

Interviewed for this article:

Betty Jo Rocchio, MS, RN, CRNA, CENP, is chief nursing optimization officer, Mercy, Chesterfield, Mo.


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