Healthcare Reform Drives Demand for Risk Management and Patient Safety Innovation
At the same time, changing demographics are beginning to cause seismic shifts within healthcare delivery. Namely, the Baby Boomer generation is starting to move into the Medicare coverage ranks en masse. By the end of 2011, a record 2.8 million Boomers will qualify for Medicare with a projected 4.2 million more Boomers moving into Medicare annually beyond this date. That means that by the year 2030 an estimated 80 million Baby Boomers are likely to swell the Medicare ranks, thereby driving up demand for services.
According to a recent article in the New England Journal of Medicine titled "The Economics of Financing Medicare," Medicare currently accounts for 15% of federal spending and 3.6% of the country's gross domestic product (GDP).Moreover, it grew 2.5% faster than the GDP from 1975-2008. With this Boomer Medicare growth, those financial statistics are certain to rise, unless something is done to curtail costs.
Plus, when you factor in an estimated shortage of between 85,000-96,000 physicians, as well as a nursing shortage exceeding 800,000, the demand for services challenges for the U.S. healthcare industry overall are obvious.
Healthcare reform, shifting demographics and labor shortages are all game changing trends that will impact hospitals, physician groups, insurance companies, and captives.Many of these players are already looking for ways to streamline efficiencies and improve the overall delivery of care.Looking into the future, risk management and patient safety activities can be expected to assume even more of the spotlight and be viewed as an integral part of this movement toward value-based care.
Simply speaking, there are three main objectives when it comes to healthcare in the U.S. today.These are: delivering better healthcare for individuals, providing improved health for populations overall, and lowering healthcare's per-capita costs. These three goals demand that healthcare professionals change how they think about uncertainty and risk in healthcare.The focus of risk management has expanded to include identifying and assessing risks proactively and using business intelligence to predict success and potential areas of failure.
Michelle Hoppes, senior vice president and national director of Sedgwick CMS' new Healthcare Risk Management and Patient Safety program, explained, "healthcare risk management is moving from a primary focus on clinical risks to a more expansive enterprise perspective.Efforts must focus on risks that affect the entire organization and not just one aspect of operations."She noted that the new Sedgwick CMS practice was created specifically to help healthcare providers improve their risk management and patient safety strategies and ultimately, their outcomes.
Practically speaking, healthcare risks often get categorized into two broad categories:(1) Clinical Risks and (2) All Other Risks. Examples of risks that might fall into the "All Other Risks" category include:
-- Strategic risks including mergers, acquisitions, affiliations, partnerships and community relations;
-- Human capital risks such as physician/nurse recruiting, competency, skills and capabilities, succession planning, and the impact of fatigue, staffing, and education on quality care;
-- Operational issues such as electronic health record interoperability, including appropriate documentation;
-- Financial issues such as reimbursement rates and payor mix;
-- Legal/regulatory issues such as billing accuracy to minimize fraud and abuse allegations, conflicts of interest and cyber-liability for breeches in confidentiality/privacy.
Hoppes said, "While boards and executive leadership are aware of these other types of risks, the processes, systems and practices to manage them are typically less robust than those for clinical risks.Many healthcare organizations have more advanced methods for addressing clinical risks than they do for addressing other enterprise level risks. As a result, there is an opportunity to expand the risk management approach to encompass a more integrated method to managing risk at the enterprise level."
Even with a primary focus on clinical risks, things can and do go wrong. For example, surgery performed on the wrong side or site of the body is estimated at 2,000 occurrences annually. Further, some studies report that 1 in 7 hospitalized patients are harmed from adverse events, costing billions of dollars per year.These trends can be lowered with a solid enterprise wide risk management strategy.
While loss control is one aspect of risk management, many industry experts believe risk management is much more encompassing.Hoppes said, "Risk management is a method to create value through appropriate decision analysis and execution. For example, using an enterprise risk management approach means utilizing data and business intelligence to drive success, while at the same time delivering a measurable return on investment."
Clearly, healthcare reimbursement and demand for services is changing. The healthcare industry is complex, and healthcare professionals such as Hoppes strive to help healthcare organizations manage risk and maximize their value potential.Her goal is to help clients make the best decisions for the enterprise by achieving operational and clinical excellence, one of the most effective means to prevent failures and ultimately control losses.
As healthcare reform goes forward, there will be an increasing need to focus on high-risk areas. Under the new law, for example, so-called hospital-acquired conditions will no longer be eligible for reimbursement for care to providers. If a patient experiences a hospital acquired condition or is readmitted within a certain timeframe, the hospital will no longer be paid for that care. Excellence in patient safety is not only the right strategy for medical care, but it is also going to be a financial imperative. Resource allocation and focus on patient safety should be a top enterprise strategy.
To help clients manage this risk , Sedgwick CMS has created a progressive approach with national experts to not only reduce risk, but to create value in the high risk clinical areas such as the operating room (OR), emergency room (ER) or obstetrical/gynecology (OB GYN) unit.Additionally, Sedgwick CMS helps clients with risk profiling by using analytics to uncover potentially negative outcomes that if not improved, will increase the risk of harm and financial loss.
"We've been able to demonstrate how a high-performance strategy can result in better outcomes and lower claim losses at the same time," Hoppes said. "What can be better than harming fewer patients and saving money?"
High risk areas, such as the emergency room need to have specific protocols and strategies in place. In the ER, that means concentrating on handoffs, teamwork, and communications.Hoppes promotes keeping it simple with bundles of 3-5 listed items to make it easier for staff to remember important information.Ultimately, it's this type of approach that goes a long way in maximizing reimbursement for outcomes and reducing high claims costs and malpractice litigation.
"With ER medicine, there needs to be a real sense of urgency for innovation,"Hoppes said.Most ERs are already overcrowded, and it is estimated that the demand for ER services will continue to climb as much as 10% in the next 24 months.
"Bottom line, we're talking about assisting with saving lives as the first and foremost strategy, with the protection of financial assets as a critical consequence,"Hoppes emphasized. "The strategy to apply more focus on quality and patient safety must happen."
Hoppes said that Sedgwick CMS typically gets involved after an event or claim has occurred. But the company's deep history, use of claims data, business intelligence and broad expertise can help the healthcare industry in finding ways to reduce and prevent losses.
The idea behind Sedgwick CMS' heathcare risk management team is to reduce total loss costs across the board.Hoppes further explained, "The healthcare industry is a very unique space, and arguably it presents the most demanding set of risk management challenges of any industry. It has almost every exposure possible. Given the nature of healthcare exposures, the potential costs of risk for this industry are huge.With healthcare reform, they can only continue to grow unless risk management gets the attention it deserves."
"Given our capabilities and penetration in the claims area and now our expansion into healthcare risk management and patient safety consulting, we can help. We are unique in the industry and have the ability to leverage our experience to deliver an innovative, well-rounded, results-oriented program," Hoppes said.
"In a nutshell, the claims data we handle on an annual basis and our expertise gives us a real advantage in developing and implementing innovative solutions for our healthcare clients," she concluded.
For more information, contact Michelle Hoppes at Michelle.Hoppes@sedgwickcms.com, or visit www.SedgwickCMS.com
About Sedgwick CMS
Sedgwick Claims Management Services Inc. is the leading North American provider of innovative claims and productivity management solutions. Sedgwick CMS and its affiliated companies deliver cost-effective claims administration, medical management, risk consulting, and related services to clients through the expertise of approximately 9,400 colleagues in more than 190 offices in the U.S. and Canada. The company specializes in workers' compensation; disability, FMLA and other employee absence; general, automobile and professional liability; and warranty and credit card claims services as well as Medicare compliance solutions. Sedgwick CMS and its affiliates design and implement customized programs based on proven practices that meet client needs.
(The above piece is part of our continuing Insights series designed to highlight key products and services to our readers. This paid-for Insights was written and edited by Risk & Insurance®
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September 21, 2011
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