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By CYRIL TUOHY, managing editor of Risk & Insurance®

Healthcare risk managers have their work cut out for them as politicians and providers struggle to balance competing demands from the insurance industry, governmental controls and oversight, consumers, an aging population and rapid advances in medical technology, said Sam Terzich, president of ESIS ProClaim, the unit of third-party administrator ESIS Inc. that caters to the healthcare industry.

Fostering a culture of safety within a healthcare organization is a significant goal as well, Terzich also said, but this can only be created when management welcomes the input and every member of the team feels comfortable voicing opinions about patient care.

At the same time, risk managers must consider the reality of the claims and litigation environments in which they work. Healthcare risk managers are responsible for robust incident report tracking, early triage of potential claims, medical record reviews, claims investigations, evaluations, reserving, reporting to carriers and litigation management.

Statistical analysis can help determine patterns of outcome and even suggest areas for improvement, Terzich said, writing in a white paper titled, "Should Healthcare Risk Managers Focus on Improving Patient Safety, or on Supporting the Claims Process? They Actually Need to do Both."

On the patient quality side, "near misses" can be as important as events that cause injury and, with the aggregation of data, risk managers can learn which treatments are likely to provide favorable clinical outcomes, Terzich said.

Some states, such as Minnesota, Pennsylvania, Indiana and Missouri, require "never event" reporting, and there is now more attention paid to coding and indirect reporting through reimbursement processes with Medicare, Medicaid and private insurance, he said.

Healthcare risk management has come a long way in recent years, but there is still an educational effort required to create a culture of safety in which everyone feels comfortable with the reporting process.

One study cited by Terzich estimated that between 50 percent and 96 percent of all adverse events remain unreported to hospitals on the part of its medical staff. Because event reporting is a key element to both quality and claim issues, significant opportunities exist for further improvement, Terzich said.

Nor should risk managers underestimate the importance and the economic return of creating an environment of full disclosure. The University of Michigan, for example, was able to achieve exceptional results by creating an environment of full disclosure of medical errors to patients, according to Terzich. From1999 to 2007, the university reduced its reserves for claims from $70 million to $13 million, and the average life of claims dropped from 23 months to eight months.

In reporting its data, the university also came up with the following conclusions for healthcare risk managers:

1. Compensate quickly where unreasonable medical care causes injury.

2. Defend medically reasonable care vigorously.

3. Reduce patients' injuries (and therefore claims) by learning from each patient's experiences.

Results seem to suggest that conducting early investigations and claim interventions, implementing an aggressive reporting process and creating an environment of full disclosure for better outcomes can have a positive impact on the risk management program overall, Terzich said.

December 21, 2010

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