Evidence-Based Risk Management

Architects have long determined that a better building is a safer building and that there are a number of design features that enhance patient safety as well as staff satsfaction. These features include such things as single patient rooms and ceiling mounted patient lifts.

Risk management can benefit from this approach by looking at patient incident reports and medical malpractice cases to learn what factors and behaviors that may have contributed to the incident. It is also very important to evaluate current policies and procedures to determine if they are sound and up-to-date, and, most inportantly, if they are actually followed at the site of care. Often, investigations of what actually took place reveal differences from policy and alert management that they have a problem.

While little good comes from a malpractice case, it can be used as an educational tool and prevent further incidents of a similar nature.

Leadership in Difficult Times

Smart organizations see a difficult environment as an opportunity. It is a time to fine tune programs and services, sharpen policies and procedures, and to take a fresh look at the hospital’s strategic plan. A commonly used cliché says that when things get tough, the tough get going, and this applies to organizations as well. Now is the time to take a fresh look at the hospital, its environment, and the patients you serve. It is not a time to panic or retrench without thinking things through. It is particularly the right time to do the right things and to do them well, not cut corners or retrench in areas that will impact the success of your business. Let’s look at several things:


Your Strategic Plan

If you do not have a plan, this is an opportunity to develop one. A hospital without a strategic plan is truly like a ship without a rudder. There is very little ability to achieve success when you have not defined what that means for your institution. If you have a strategic plan, this is an opportunity to take a fresh look at it as the environment changes around you. Tough times are not an excuse to throw away your plan, it is a time to refine it and capitalize on the changes occurring in your area. For example, if your patients are experiencing reductions in insurance coverage, this is an opportunity to define and prepare for the added services they may need. Many hospitals are seeing reductions in elective procedures and an increase in emergency department visits. Are you adequately prepared for the potential reductions in revenue and the concomitant likely increase in costs and bad debts. Your strategic plan is the roadmap for your business. Develop it, keep it current and relevant, and implement it. In the final analysis, it is all about execution.

Manage Costs, but Grow the Business

It is a given that every business must manage its costs. There is a budget in place and a set of metrics to determine that appropriate cost levels are being achieved. Every organization must be able to define its costs so that is can determine what services make money for the organization and what services do not. Obviously, hospitals use more then a profitability analysis in determining the services that they provide to their patients, however, it is important to understand the services that may contribute to financial stability and those that detract from it.

It is my experience that true prosperity is driven by growth, rather than savings or cost reductions. It is very likely that a strategy focused only on costs will push the organization to reduce staff, skimp on services, and ultimately achieve the opposite results that were intended. I have never seen an organization implement layoffs without a long list of unintended consequences, including poor morale, service reductions, or even sabotage by unhappy staff.

A better strategy is to focus on growth, developing new business opportunities, either with new clients or new revenue producing services. It is always better in the long run to increase the size of the pie rather than to cut smaller slices for everyone.


People Matter

In service businesses like ours, nothing else matters more than the people we hire, the way we support them, and how we reward them. As I noted in the previous section, any action that harms our work force will always negatively impact our business success. Layoffs, salary reductions, and benefit changes may seem like smart actions but the impact of these decisions will harm the organization in ways that no one expects. The people left after a layoff are damaged in both visible and invisible ways, they are leery of taking risks, unable to take initiative to solve a patient’s problem, and are just looking behind them to see if they are next in line to lose their jobs.

The patient care we provide is entirely a people-driven service business. Anyone who thinks that a path to success does not go through a well trained, well-compensated, motivated work force is fooling themselves. It is all about servicing our customers, in fact, at Health Strategies & Solutions, we pride ourselves at over servicing our clients.


Focus on Your Core Business

I realize that this seems obvious, but as a former hospital administrator and current consultant, I am constantly amazed at hospitals that do not show a positive return from patient care services, but instead depend on non-operating revenues or investment income for their margin. We have lost track of the number of health care organizations that have told us they are cutting back due to reductions in their investment income. Yes – I do advocate added value services, but I view them as generating additional revenues, not as a replacement for margins that should come from core business activities. It is not surprising to me to see many hospitals that have been dependent on investment income for their profitability floundering in today’s marketplace. If you can’t make money from what you say you specialize in, you must determine the root causes and address them. Perhaps the hospital may no longer remain independent and must join up with a larger system for support. Maybe some services must be closed regardless of the community’s need for them. These are difficult decisions, but they must be addressed. Tough times only exacerbate the problems.


Technology Drives Success

Health care is obviously a technology-driven business, not only in the clinical areas, but also increasingly more important in administrative functions as well. This is evident in the installation of electronic medical records programs, scheduling systems, and billing systems. We are experiencing new product development occurring at an extraordinary pace and it can be overwhelming, especially to the small- and medium-sized organization. It is not the time to fall behind in providing the best available technological platform for your patients. Notwithstanding that the investment necessary to provide the latest technology is a challenging expense in the difficult environment we are experiencing today, this is a time to focus on providing the best services possible.


Lastly, Watch Your Competition

A good idea is a good idea. Who cares if a competitor thought of it first? A smart organization has a competitive intelligence system in place and knows what innovations are being developed in their industry. In a highly competitive business like health care, with a modest potential for differentiating your institution, you must focus on being current and even leading in your service mix. You can never stop looking for the even smallest possible improvement in your quest to be the best. Watch your competition and learn from them!


In Closing

Difficult times like today present us with a true opportunity. We can take a fresh look at our organization, our environment, and our patients and determine if there are ways to improve our service offering and reposition ourselves. It is not a time to simply retrench, rather that approach is exactly the wrong way to go and will ultimately impact the organization negatively. It is strategic growth and planning that achieves the success we all aspire to.

Reducing Medical Malpractice Exposure

Medical malpractice claims cost the healthcare industry more than $4.4 billion in 2006 – not counting the accompanying increase in malpractice insurance premiums. Can hospitals and physicians proactively prevent these damaging blows to their financial health and reputations?

The answer in many cases is yes. And in most other situations, hospitals and physicians can dramatically reduce their malpractice exposure through precautions and procedures undertaken as part of a facility or system-wide malpractice audit. The audit process, as described below, takes a serious and objective look at the risk management program of an organization and can be very effective in reducing exposures that often occur in today’s environment.

As an expert witness, I see many cases that could be avoided with some thoughtful review and analysis. Typically, the cases I review are either related to the hospital not following their required policies and procedures; or physician credentialing and privileging matters. Hospitals and physicians that do not take these matters seriously will often find themselves in situations that could be avoided. Examples of preventable problems include such things as not updating rules and regulations annually or allowing a physician to perform a new procedure without demonstrating the training required for it. It only takes one circumstance for the oversight to result in a case that is difficult to defend.

It is important to note that physicians typically depend on their hospital to effectively manage their risk management program. All too often, this is an unwarranted assumption and physicians should verify for themselves that the hospital has an effective program. The organized medical staff of a hospital has the responsibility to provide oversight of the delivery of care at their hospital and cannot delegate this responsibility. Given this responsibility, making certain that the hospital has a risk management program that involves physicians appropriately is essential in protecting physicians from unnecessary incidents and claims. This is an area that truly requires teamwork.

Reducing medical malpractice claim exposure requires leadership, a commitment to formulating an administrative system that will be adhered to and taking a long term view to the issue, not the typical ‘flavor of the month’ approach that happens when the institution has a serious loss. Most importantly, this is not the typical actuarial-driven process that looks at monetary losses and insurance costs. This is a methodology that looks at how the hospital actually manages the business of credentialing physicians, approving new procedures, empowering the nursing staff and others to report incidents and stop practices that should not be happening.

Reducing exposure starts at the top, engages all members of the hospital staff, and makes the difficult decisions needed to eliminate poor practices. It also requires a serious review of policy manuals and bylaws, as they will be used against the organization if they are not actually followed.

Conducting the audit

For a hospital, the process starts with getting the support from the top leadership that is needed for this to be successful. This means the CEO and/or the Board of Trustees. Often, these individuals are not actively engaged in the malpractice case review process or the risk management program. This is often indicative of a program that does not have the visible support needed to have a successful program. Risk management is too important to be left to the risk manager.

Physicians must not be reluctant to be involved due to the difficulties in reviewing their colleagues and friends clinical performance. There is no question that this can be uncomfortable, but administrators alone cannot perform these tasks; nor should physicians allow themselves to be co-opted from the process. A balance can be achieved so that no one is reviewing a close friend or rubber-stamping a credentialing decision that is not justified by the facts.

The audit process looks at:

Program oversight and the composition of all committees that impact the medical malpractice arena, including risk management, hospital bylaws, medical staff bylaws, physician credentialing, and nursing care, and board and medical staff committee meeting minutes

Descriptions of cases for several years of activity, the most recent accreditation and licensure surveys, a compilation of incident reports related to medical care issues, and board and medical staff committee minutes

Policy and procedure manuals for the hospital, the medical staff, and the nursing service

Rules and regulations for hospital practices

Review of physician credentialing files, including delineation of clinical privileges and surgical procedures.

Criteria for selection and history of use of locum tenens physicians and traveling or agency nurses, and review of the credentialing process for each category

Much of this information, particularly types and number of cases, should be summarized and reviewed by the leadership to determine if trends are evident. Correcting blatant problem areas is something that can be accomplished well in advance of additional incidents arising.

No organization can completely eliminate their risk of malpractice exposure, but they can seriously reduce their potential for loss. The typical program focuses too much attention on the cost of insurance and too little on the actual business of how patient care is delivered and who delivers it. Properly done, a medical malpractice audit performed in the manner described here augments the activities of the actuary and risk manager, and provides a plan for managing the delivery of care for the hospital.

Risk Management in the Office

For physicians, a properly run program gives them comfort that the hospital they utilize is managing its business appropriately and is not exposing them to unwarranted risks. Conversely, this is an area that physicians should assure themselves of the adequacy of the risk management program at their offices as well. The same principles apply at both sites and will benefit from the objective review described herein. Given how busy physicians are, and the daily demands of their practices, it is not uncommon for them to mostly ignore good risk management procedures in their offices. Add to that the requirements of HIPAA and other federal and state regulations, it is not surprising that they do not spend the time to assure themselves that their office staff is following the proper guidelines in their daily activities, nor are they making certain that the physician completes all paperwork and files on a timely and complete basis.

Good risk management principles apply to the office as well. Leadership is critical as the physicians must show that they are fully committed to doing things correctly. Compliance with regulations and licensure standards is essential. Completion of forms, timely filing, and follow-up with patients and referring physicians all play a role in this.

Taking responsibility for your files at the hospital being accurate is a needed task. Reviewing your own credentialing file at the hospital and ascertaining that there is no adverse information is something to be done on a regular basis. Making certain that you follow hospital rules regarding new procedures, use of outside equipment, and supplies is necessary. Verify that your privileges are up to date is a task to be accomplished on a regular basis.

The end result of these activities is the ability to reduce malpractice exposure, both in your office and at the hospital. It is worth your time and effort to monitor your own activities and that of your hospital. Remember: risk management is too important to be left to someone else!