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Director of Professional Liability Claims
Prison Health Services Inc.
Brentwood, Tenn.

A Lock on Liability

You might say Stephen D. Brown, director of professional liability claims for Prison Health Services Inc. in Brentwood, Tenn., has the professional liability department of his employer all locked up.

Brown created the department from scratch three years ago. Before that, the private company that provides health services to 160 jails and prisons around the country used a third-party administrator to handle professional liability claims.

Using CS STARS' risk and claims technology, Brown created a full claims-handling process for the company's claims department and audit team.

"PHS didn't have anything other than a spreadsheet before Steve Brown entered the picture," said Ariel Siuda, management of client services at CS STARS.

"He was very creative. He had a lot of ideas and was always asking us, 'Can we do this, can we do that?'"

Prison Health has an escrow account that is funded by its insurance carrier and that draws funds from that account to pay claims. The process has enabled the company to reduce the time of payments to defense attorneys from an average of six months to 30 days. The prompt payment of bills means attorneys give claims priority handling.

Beside the administrative time and cost savings, the new process gives Prison Health data on which to base risk management strategies. Previously, it had no statistics on the causes of its claims, nor was it able to track the financial impact of claims for each site. Now, the data it has assists in designing risk management programs to reduce the frequency and severity of its claims.

To use this data, the company relies on a set of risk management reports. Through these analytical reports, it has arrived at a number of findings.

For instance, Prison Health learned it had some issues with delayed treatment, primarily delays in seeking outside medical resources. Those included delays in such operations as sending an inmate to an outside physician on a consulting basis or a delay in getting an inmate to the hospital when necessary.

It also learned that some of its larger claims were related to trauma injuries, particularly in how it responds to inmates who are in respiratory arrest stemming from trauma. The medical team now focuses on a companywide program to address that issue.

In addition, it has claim statistics in place that informs it of loss and cost drivers. With that knowledge, Brown has spoken on the topic at each of the firm's regional meetings in the past year where physicians, nurses and physicians' assistants were in attendance.

He has given them claims statistics and has discussed actual claims. Also, there is now a publication for employees, distributed throughout the company, which reports on risk management issues.

A recent audit of Prison Health's professional claims, conducted by Mendes and Mount, the law firm that conducts audits of claims departments nationwide on behalf of Lloyd's of London, showed a substantial improvement in claims handling since Brown came on board.

"He is always thinking about how to save time and makes sure to have all the information needed to get the most out of these claims as far as tracking goes," Siuda said.

"He used the system the way STARS released it instead of forcing the system to do something it wasn't built to do."

Brown's approach has been a "real money-saver for the company," Siuda said.

In fact, despite the national economic downtown, Prison Health has been able to give its employees bonuses--and has cited Brown's claims department for playing a significant role in achieving that success.

--Julie Liedman

Assistant Vice President, Risk Management
St. Joseph Health System
Orange, Calif.

Working Toward the Good, the Right and the Just

Although St. Joseph Health System in Orange, Calif., prided itself on continually modernizing its care-giving capabilities throughout its 100-year history, its approach to professional liability risk management remained steeped in the old ways.

Then Lisa Ramthun became assistant vice president of risk management and everything changed.

Ramthun reshaped the risk management program of the large and diverse organization. She trimmed costs, redefined the culture from damage control in the aftermath of adverse events to one that fosters proactive risk management, collaboration in loss prevention and best-practice sharing among the 15 hospitals in the system.

St. Joseph embraces the concept of what healthcare risk managers and others refer to as "the just culture," a structured process to guide managers through the evaluation of an event, a near miss, or the analysis of risky behavior. It is a process for conducting an investigation of the event, for identifying contributions, and for assessing accountability, either remedial or punitive, for those involved in the event.

Traditionally, healthcare organizations have held individuals accountable for all errors or mishaps that befall patients under their care. But a just culture demands that individual practitioners should not be held accountable for system failings, for which they have no control.

The concept of the just culture holds individuals accountable for the quality of the behavioral choices they make. The focus is on system design and behavior choices, rather than on punishing people when there is a bad outcome.

"Her efforts to implement a just culture model throughout the health system have been exceptional," said Gregory Wren, director of risk finance at St. Joseph. "It's a very large undertaking to get all of our ministries (hospitals) and management to go along with it.

"A lot of effort used go into managing claims," he said. "After that, we managed risk. Now, we're more focused on the prevention."

Today, the emphasis on a just culture is expressed most clearly through efforts to achieve early and equitable resolution of claims when examination of the facts demonstrates that the responsibility for the harm rests with the hospital.

As a result, total indemnity costs are down almost 40 percent since Ramthun's introduction of the proactive approach in 2008. St. Joseph now settles about half of its claims prelitigation, with minimal defense costs, compared to a prelitigation settlement rate of only 2 percent prior to the implementation of the program.

Claims reserves, standing at $35 million in June 2008, have decreased to $27.5 million in 2010. "We wouldn't have been able to lessen our reserves by more than $7 million without hard work," Wren said. "Lisa is doing the hard work."

The program assesses compliance and outcomes in seven areas: risk management; loss prevention; program review for high-risk areas; development of risk management resources; peer-based medical staff risk control and risk integration including patient safety; and performance improvement environmental safety.

Ramthun introduced other reforms as well.

Investigations of unasserted claims were transferred from outside counsel to internal risk management professionals, resulting in savings in legal fees in the past year of some $245,000.

Litigation guidelines were developed to focus on facilitating early decisions on litigated files and implementing negotiated defense fee schedules, which have reduced defense costs nearly 35 percent.

Internal claims management procedures were re-engineered to introduce the services of a third-party administrator with a specialized professional liability practice, and the capability of providing customized reports for newly introduced quarterly claims review and loss prevention meetings.

An internal incident tracking system was introduced as well. It used a variety of screens to identify incidents, them filter them up to local risk management when they are thought to be potentially compensable. The goal of the reporting system is to identify and manage compensable events before they become claims.

--Julie Liedman

Caring for the Caregivers

Overworked medical staffers have to take the blame for errors, leading to nasty professional liability disputes within the medical community. It's a sick and diseased model that needs the help and attention of people like Lisa Ramthun, a proponent of the "just culture" model.

The model finds a middle ground between a blame-free culture, which attributes all errors to system failure and a punitive culture, where individuals are blamed. Working for an organization that grounds its activities in faith-based traditions of service and justice, Ramthun has demonstrated that doing the right thing is a sound and practical strategy for risk management and may just end up saving lives.

The number of deaths caused by healthcare professionals is a cruel irony. Consider the estimated number of errors made by doctors, nurses and other medical caregivers: between 44,000 to 98,000 deaths a year, according to one source.

Hospital infections take another 100,000 lives. Mistakes involving medications injure 1.3 million patients annually, according to the U.S. Food and Drug Administration.