Ebola’s Impact on the Health Care Industry
Now that a second nurse at Texas Presbyterian Hospital in Dallas has been infected with the Ebola virus, the risk to U.S. health care workers has been thrown into the limelight.
“Health care workers are at more risk than any other worker,” said Ron Leopold, M.D., health outcomes practice leader for Willis North America. “But I think there is an overwhelming tendency for all of us and the national media to overblow the risk.”
The virus is highly contagious, but only through direct contact with an infected person. “That’s a very small number of health care workers in this country,” he said. “Being alerted to what’s going on but not alarmed is critical.”
“Being alerted to what’s going on but not alarmed is critical.” — Dr. Ron Leopold, health outcomes practice leader, Willis North America
However, as more doctors, nurses and other clinical staff are exposed to the virus, the potential spread of Ebola on U.S. soil could pose a considerable workers’ comp risk for the health care industry.
“What if doctors treating patients in the U.S. are exposed? For every doctor, you have multiple staff working beneath them. That could have a quick and dramatic effect on personnel at the hospital and the financial consequence would be large,” said Pete Reilly, health care practice leader at retail broker William Gallagher Associates.
In the case of nurses Nina Pham and Amber Joy Vinson, who both cared for Liberian Ebola patient Thomas Duncan at Texas Health Presbyterian Hospital in Dallas and subsequently contracted the disease, illness clearly arose out of the course and scope of employment.
Arguments could be made that breaches in safety protocol led to their exposure, placing fault on the nurses and precluding coverage. But given the CDC’s admission of mishandling its approach to Ebola safety training and not offering enough assistance to the hospital, that rationale may not stand up.
At a hearing of the House Subcommittee on Oversight and Investigations, CDC director Thomas Frieden even said, “While we do not yet know exactly how these transmissions occurred, they demonstrate the need to strengthen the procedures for infection-control protocols which allowed for exposure to the virus.”
Several of the nurses’ co-workers also said that they followed CDC guidelines and wore full hazmat gear while caring for Duncan.
“There are details about every case that would come to bear, but it all depends on the carrier, the policy and other things we can’t address until a scenario is presented,” said Eric Justin, M.D., chief medical officer at Lockton Cos.
Workers’ comp carrier and large health systems, which are typically self-insured, simply don’t have enough information to determine coverage at this point.
It’s tough to understand what all the risks are at this point.”– Dr. Eric Justin, chief medical officer, Lockton Cos.
“It’s a small numbers problem. It’s tough to understand what all the risks are at this point,” Justin said.
Even if few health care workers become infected, the impact on workers’ comp could be significant for any individual hospital because of the high costs associated with caring for a patient in isolation.
“You may not have to close or quarantine your emergency room, but certainly you’ve had to quadruple your order for some type of vaccine or other medications,” Reilly said. Additional expenses may be incurred for hazmat suits, the proper disposal of those suits, additional steps needed for disinfection of hospital rooms and equipment, and even public relations messaging that may be necessary to reassure the public that a facility is safe.
“Normal business services may be 50 percent more expense in this type of situation because you have to go through additional steps to comply with CDC protocol,” Reilly said.
It’s up to hospital risk managers to plan for the admission of Ebola patient, however unlikely, to ensure staff is up to date on safety protocols.
The transmission of the disease on U.S. soil has sparked renewed vigor from the CDC, including clearer and more rigorous guidelines for the proper wear and removal of protective gear, and a plan to send larger, more experienced teams of experts to any hospital caring for an Ebola patient.
Initially, the CDC indicated that any hospital in the U.S. should have the essentials to treat Ebola on their own. The experiences of Emory Hospital in Atlanta and then Texas Presbyterian prove that assumption to be naïve and unsafe.
“In a very short time, mostly due to the situation in Dallas, we’re learning [about the virus] rather rapidly, and one sign of that learning is that the CDC announced that they will start to be much more assertive about providing not just teams to go wherever an Ebola case is confirmed, but larger teams that are experienced not just with working with Ebola but also training others to work with the isolation gear and decontamination procedures,” Justin said.
Most doctors and nurses are aware of the guidelines issued by the CDC and OSHA regarding protective gear, but many have likely not practiced them since early days of job training.
“Even people with experience are finding, ‘This isn’t so easy,’” Justin said. “They’re becoming aware of the need to actually practice them.”
Current CDC protocol also calls for any worker to be observed while removing protective gowns, masks and gloves to ensure that everything is done correctly.
Justin called this “buddy system approach” a necessary methodological step, which allows observers to both step in in a critical moment to correct a problem, and also record information to suggest process changes in the future.
The CDC has also backtracked on earlier assertions that any hospital can handle an isolation patient.
Future cases will most likely end up in one of the four larger, specialized centers that house their own biocontainment units, including Nebraska Medical Center in Omaha, the National Institutes of Health in Bethseda, Md., and St. Patrick Hospital in Missoula, Mont., along with Emory Hospital.
Health care risk managers should make sure to keep third party service providers informed about Ebola response plans and safety procedures.
The experience at Emory, the first U.S hospital to receive an Ebola patient, revealed shortcomings in the U.S.’s plan to manage the virus.
Several third-party vendors working with the hospital balked at the idea of dealing with any potentially infected materials.
Their waste removal company, for example, refused to haul away the high volume of waste generated by someone afflicted by the disease. A transport company would not take blood samples a few blocks away to be tested.
“People on the waste management side are a step or two removed from the clinical setting, so I can see why they’d be concerned,” Justin said. “The best thing to do to allay those anxieties is to have discussions between infection control and those companies, and also let them know of the procedures available.”
Having these third-party vendors on board not only help care for an infectious patient run more smoothly, but also mitigates the risk of a contracted worker making claims of negligence against a hospital.
“As part of your disaster recovery plan, you should be checking with those vendors and making sure they are going to respond,” said Deana Allen, SVP at Willis North America’s national health care practice. “These are the critical services we’ll need.”
It’s probably way too soon to start dreaming up insurance products that will respond to the risk that robots are going to rise up and annihilate humankind. And good luck finding the market capacity for it anyway.
However, robots and robotics are fast becoming a fixture of our reality, and the industry is poised for rapid expansion.
Robots, in some form or another, have been present in the manufacturing sector since 1962, when a New Jersey General Motors factory began using a robot to do spot welding and extract die castings. By the ’70s, increasingly sophisticated machines, operated by minicomputers, were being widely used for small parts assembly.
Robotics have long since moved away from the assembly line. Robots are present everywhere from warehouses to hospitals, from farms to laboratories, and from the military to mines and more.
One of the latest robotic forays into the workplace is at the Aloft hotel in Cupertino, Calif., where “The Botlr” — a service robot that looks like a distant cousin of R2-D2 — is being used to make small deliveries to guests’ rooms. Robots may soon be flipping your burgers or picking the grapes that make your favorite wine.
Video: The Botlr, a robotic bellhop built for Aloft Hotels, delivers an item to a guest in his room.
But the application of robotics is going ever deeper.
The development of robots connected to the Internet, big data, the cloud and advanced computing technology such as artificial intelligence (AI) algorithms are bringing a new class of robots into the workplace — those that can sense, think and act based on specific data and sensory input, and make routine decisions.
In June, the Associated Press began experimenting with having machines write short business stories. The news organization said that eventually, the majority of its U.S. corporate earnings stories would be produced using automation. (As of press time, Risk & Insurance® is not yet employing robotic journalists.)
There are obvious positives to the growth of robotics in the workplace. It makes sense to give robots the high-turnover jobs that are mind-numbingly rote, as well as those jobs and tasks considered extremely dangerous.
But the change that is coming may be far more profound. Garry Mathiason, co-chair of the Robotics, Artificial Intelligence and Automation practice group at Littler Mendelson in San Francisco, cited a 2013 study published by the Oxford Martin School, examining automation potential across the U.S. labor market.
According to the study, said Mathiason, “47 percent of jobs currently done by people in the United States will be done by machines and software within one to two decades. That doesn’t mean there’s going to be 50 percent unemployment; it does mean there’s going to be that much change taking place.”
(For the record, the Oxford Martin study said that insurance underwriters are in the highest risk category for being taken over by automation, just ahead of claims and policy processing personnel, claims adjusters, examiners and investigators.)
“2010 was a turning point in terms of the acceleration of the technology and its implications,” said Mathiason. “There is a change taking place that will be the equivalent of the Internet in terms of what it will do to the workplace.”
Video: At the fulfillment center of North Reading, Mass.-based Kiva Systems, 100 robots work alongside 300 fulfillment associates.
So far though, companies that employ robots see the importance of having human checks and balances on the robots’ work. Many companies are actually increasing staffing levels to support their robotic equipment.
That raises concerns about whether employees are at increased risk of harm by robotic equipment, or may inadvertently interfere with safe robotic operations. A fair number of workplace fatalities related to robotics have occurred in the last decade or two.
As it stands, employers are covered by existing workers’ comp statutes if a robot were to cause a workplace injury or fatality, the same as they would be in the event of an injury or death caused by any other piece of equipment.
The same would not be true, however, if a robot were to injure a customer, a vendor or any other visitor to a facility. In those cases, who can expect to face a lawsuit? The answer, for now, is: It depends.
Liability issues get sketchy when you factor in the element of closed versus open robotics.
In a closed robotics system, a robot is designed and manufactured for one specific purpose. (iRobot’s Roomba, for instance, is a vacuum — period — no matter how many YouTubers use it as an amusement park ride for their cats.)
But with an open robotic system, independent developers would be able to create programs, or apps, to allow the system to accomplish different user-defined tasks, adding more potential culprits in the event of a claim.
“This is going to be a big issue,” said Stephen Wu, an attorney who is of counsel to Silicon Valley Law Group based in San Jose, Calif.
“[In the event of a robot-related accident], I’m going to be doing an investigation and using experts to determine the root cause. Was it my own environment? Was it the hardware manufacturer? Was it the firmware manufacturer? Was it the application software? Was it the operating system manufacturer? Or was it some subcomponents thereof? Or else … was it a data service provider [such as one providing mapping data]?”
These questions will grow still more complicated with the growth of adaptive technology — meaning when robots make decisions on their own based on the data and sensory input they receive.
“Increasingly, adaptive intelligence is being built in where the robot is going to be changing what it does based on external stimuli,” said Drew Haaser, U.S. technology practice leader for Marsh.
“Let’s say it’s putting welds on an auto and it’s been programmed to sense the properties of the materials it’s welding and adapt … . If it makes the wrong decision — what are going to be the legal implications to that?”
That question reaches a whole other level when the consequence is a loss of life.
“What if you have a robot that is … facing the decision to either run over your daughter or hit a school bus full of kids, what is the right thing to do in that situation?” asked David Beyer, managing member of Digital Risk Resources.
“I think that it’s a very complex issue. … They try to think through a lot of these situational risks but you can’t predict all the risks all the time.”
“I think what we’re going to see is that all parties are going to be drawn into these lawsuits. They’re all going to have their feet put to the fire and they’re all going to point at each other. Unfortunately, a jury is going to have to decide these things.” — David Beyer, managing member, Digital Risk Resources
It’s crucial, said Guy Fraker, that we remember robotics is not synonymous with infallible.
“You can say, ‘We can fix that with an algorithm.’ But can you program for that kind of variability in advance? No,” said Fraker, former director of business trends and foresight for State Farm and co-founder and CEO of consultancy Autonomous Stuff.
“We’re learning new things about the technology every day.”
“These are not dumb devices anymore,” said Haaser, “and when they make mistakes in how they interpret stimuli, is it a professional liability error in the design of the product or in the software as opposed to a straightforward bodily injury/property damage claim?”
As more businesses incorporate adaptive technology into the workplace and robotics follow cues based on what they’re learning in their environments, the more that risk management will be expected to have thought through all of the implications of how the robot or robotic systems might respond.
Eventually, there will be cases where robots make “correct” decisions that result in tragic outcomes.
Several experts cited the example of a driverless car faced with a choice of hitting a tractor trailer or hitting an occupied baby stroller. Most assume that the car would attempt to minimize damage by hitting the stroller.
In a case like that, “Was it a mistake? Well, no,” said Haaser.
“Was it what a human with a duty to care would have done? No! And how will the courts treat that? Unfortunately, there are a whole lot of questions and not a whole lot of answers yet as to how the courts will treat that.”
“I think what we’re going to see,” said Beyer, “is that all parties are going to be drawn into these lawsuits.
“They’re all going to have their feet put to the fire and they’re all going to point at each other. Unfortunately, a jury is going to have to decide these things.”
The extremely good robotics news is that a great many of the developments coming out of the industry have the potential to decrease employer exposure rather than increase it.
In particular, advances in exoskeleton technology are moving to the forefront, even gaining a global stage during the 2014 World Cup, when a young paraplegic man made the first official kick of the event, wearing a mind-controlled robotic exoskeleton.
Video: Juliano Pinto, 29-year-old paraplegic man, successfully made the first kick of the 2014 World Cup in Sao Paulo, wearing a full body robotic suit.
In South Korea last year, employees of Daewoo Shipbuilding and Marine Engineering helped test a prototype of a full-body exoskeleton that will enable them to lift large hunks of metal, pipes and other objects without excess exertion or risk of strain or injury.
“In basic safety and loss control, the first line of defense is to engineer the risk out; robotics is one of the purest forms of ‘engineering out’ a risk,” said Bill Spiers, vice president and risk consulting manager, Lockton Cos.
“You have eliminated the human interaction around a task that’s going to create soft tissue strains that are very costly.”
Industry leaders such as Ekso Bionics and Cyberdyne are actively producing exoskeletons that have a broad range of applications. Robotic suits could dramatically reduce injury risk for workers with physically intensive jobs, potentially enhancing productivity at the same time.
“Wearable technology has the potential for ameliorating some [health and safety] concerns,” said Littler Mendelson’s Mathiason. “You can see it someday becoming as common as safety shoes.”
Mathiason said this may eventually be of equal importance as applied to Americans with Disabilities Act accommodation issues.
“You have people who couldn’t perform the essential functions of the job. Then seven million paraplegics can suddenly walk and do things nobody thought they would ever do again,” he said.
For workers who’ve already suffered temporary or permanent disabling injuries, exoskeletons could eventually open the doors for new means to keep injured workers on the job. Even severely disabled employees could potentially be returned to productive and essential work, increasing quality of life for injured workers while saving employers millions in partial and total disability payments.
“You have people who couldn’t perform the essential functions of the job. Then seven million paraplegics can suddenly walk and do things nobody thought they would ever do again.” — Garry Mathiason, co-chair of the Robotics, Artificial Intelligence and Automation practice group, Littler Mendelson
Currently, 330 of Cyberdyne’s HAL-5 full-body exoskeletons have been leased to hospitals across Japan, where they assist patients with muscle weakness or disabilities due to stroke and spinal cord injuries. In some industries, this area of robotics could virtually eliminate obstacles to accommodating injured or disabled workers.
As companies make critical decisions about incorporating robotics into their operations, it’s important to bring risk management into the loop early on.
While companies increasingly transition processes to robotics for the sake of cost savings, said Haaser, “the challenge for the risk manager will be to see that some of those savings are being reinvested back into risk management.”
But the most urgent piece is getting risk management involved in decisions about capital expenditures like robotics from the get-go.
John Abbott, an account executive at Arthur J. Gallagher & Co., said there are a host of questions that risk managers need to think through in advance.
“Are you going to be using it to do something that’s never been done before? Do you want to go into an area where there’s a potential environmental issue that may impair the robot’s performance? Robots are mechanical and electrical systems — any robotic system is prone to wear and tear and failure to some degree.”
Wu of the Silicon Valley Law Group added that due diligence is of utmost importance when selecting vendors for robotic system components, including whether there are any kinds of certifications that apply to the machines.
“Is there a UL-type seal of approval that we could look for that can be had?” Wu asked. “And what kind of testing went into the robots in the first place?”
Issues such as hackers and the potential for fraud must also be given consideration, said Fraker. “For every great capability that’s ever been developed … there’s an opposing potential dark side,” he cautioned.
Six Best Practices For Effective WC Management
It’s no secret that the professionals responsible for managing workers compensation programs need to be constantly vigilant.
Rising health care costs, complex state regulation, opioid-based prescription drug use and other scary trends tend to keep workers comp managers awake at night.
“Risk managers can never be comfortable because it’s the nature of the beast,” said Debbie Michel, president of Helmsman Management Services LLC, a third-party claims administrator (and a subsidiary of Liberty Mutual Insurance). “To manage comp requires a laser-like, constant focus on following best practices across the continuum.”
Michel pointed to two notable industry trends — rises in loss severity and overall medical spending — that will combine to drive comp costs higher. For example, loss severity is predicted to increase in 2014-2015, mainly due to those rising medical costs.
Debbie discusses the top workers’ comp challenge facing buyers and brokers.
The nation’s annual medical spending, for its part, is expected to grow 6.1 percent in 2014 and 6.2 percent on average from 2015 through 2022, according to the Federal Government’s Centers for Medicare and Medicaid Services. This increase is expected to be driven partially by increased medical services demand among the nation’s aging population – many of whom are baby boomers who have remained in the workplace longer.
Other emerging trends also can have a potential negative impact on comp costs. For example, the recent classification of obesity as a disease (and the corresponding rise of obesity in the U.S.) may increase both workers comp claim frequency and severity.
“The true goal here is to think about injured employees. Everyone needs to focus on helping them get well, back to work and functioning at their best. At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep.”
– Debbie Michel, President, Helmsman Management Services LLC (a subsidiary of Liberty Mutual)
“These are just some factors affecting the workers compensation loss dollar,” she added. “Risk managers, working with their TPAs and carriers, must focus on constant improvement. The good news is there are proven best practices to make it happen.”
Michel outlined some of those best practices risk managers can take to ensure they get the most value from their workers comp spending and help their employees receive the best possible medical outcomes:
1. Workplace Partnering
Risk managers should look to partner with workplace wellness/health programs. While typically managed by different departments, there is an obvious need for risk management and health and wellness programs to be aligned in understanding workforce demographics, health patterns and other claim red flags. These are the factors that often drive claims or impede recovery.
“A workforce might have a higher percentage of smokers or diabetics than the norm, something you can learn from health and wellness programs. Comp managers can collaborate with health and wellness programs to help mitigate the potential impact,” Michel said, adding that there needs to be a direct line between the workers compensation goals and overall employee health and wellness goals.
Debbie discusses the second biggest challenge facing buyers and brokers.
2. Financing Alternatives
Risk managers must constantly re-evaluate how they finance workers compensation insurance programs. For example, there could be an opportunity to reduce costs by moving to higher retention or deductible levels, or creating a captive. Taking on a larger financial, more direct stake in a workers comp program can drive positive changes in safety and related areas.
“We saw this trend grow in 2012-2013 during comp rate increases,” Michel said. “When you have something to lose, you naturally are more focused on safety and other pre-loss issues.”
3. TPA Training, Tenure and Resources
Businesses need to look for a tailored relationship with their TPA or carrier, where they work together to identify and build positive, strategic workers compensation programs. Also, they must exercise due diligence when choosing a TPA by taking a hard look at its training, experience and tools, which ultimately drive program performance.
For instance, Michel said, does the TPA hold regular monthly or quarterly meetings with clients and brokers to gauge progress or address issues? Or, does the TPA help create specific initiatives in a quest to take the workers compensation program to a higher level?
4. Analytics to Drive Positive Outcomes, Lower Loss Costs
Michel explained that best practices for an effective comp claims management process involve taking advantage of today’s powerful analytics tools, especially sophisticated predictive modeling. When woven into an overall claims management strategy, analytics can pinpoint where to focus resources on a high-cost claim, or they can capture the best data to be used for future safety and accident prevention efforts.
“Big data and advanced analytics drive a better understanding of the claims process to bring down the total cost of risk,” Michel added.
5. Provider Network Reach, Collaboration
Risk managers must pay close attention to provider networks and specifically work with outcome-based networks – in those states that allow employers to direct the care of injured workers. Such providers understand workers compensation and how to achieve optimal outcomes.
Risk managers should also understand if and how the TPA interacts with treating physicians. For example, Helmsman offers a peer-to-peer process with its 10 regional medical directors (one in each claims office). While the medical directors work closely with claims case professionals, they also interact directly, “peer-to-peer,” with treatment providers to create effective care paths or considerations.
“We have seen a lot of value here for our clients,” Michel said. “It’s a true differentiator.”
6. Strategic Outlook
Most of all, Michel said, it’s important for risk managers, brokers and TPAs to think strategically – from pre-loss and prevention to a claims process that delivers the best possible outcome for injured workers.
Debbie explains the value of working with Helmsman Management Services.
Helmsman, which provides claims management, managed care and risk control solutions for businesses with 50 employees or more, offers clients what it calls the Account Management Stewardship Program. The program coordinates the “right” resources within an organization and brings together all critical players – risk manager, safety and claims professionals, broker, account manager, etc. The program also frequently utilizes subject matter experts (pharma, networks, nurses, etc.) to help increase knowledge levels for risk and safety managers.
“The true goal here is to think about injured employees,” Michel said. “Everyone needs to focus on helping them get well, back to work and functioning at their best.
“At the same time, following a best practices approach can reduce overall comp costs, and help risk managers get a much better night’s sleep,” she said.
To learn more about how a third-party administrator like Helmsman Management Services LLC (a subsidiary of Liberty Mutual) can help manage your workers compensation costs, contact your broker.
Debbie discusses how Helmsman drives outcomes for risk managers.
Debbie explains how to manage medical outcomes.
Debbie discusses considerations when selecting a TPA.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Helmsman Management Services. The editorial staff of Risk & Insurance had no role in its preparation.