I. Traditional Risk Management

Traditional risk management has involved primarily the management of claims and litigation support. In general, it has been reactive to handling adverse events which have already occurred in an effort to minimize their consequences, both in terms of financial loss and harm to reputation. Goals involved the handling of reported incidents to try to avoid litigation, efforts to minimize adverse consequences and potential damages and support to improve the defense of litigation.

In traditional risk management, there could be some attempts to analyze past claims as a way of determining how to prevent potentially compensable events (PCEs) and litigation in the future. However, these initiatives were often regarded merely as “studies” and often were the first to be eliminated in times of budgetary austerity.

II. The Patient Safety Movement

Although the patient safety movement in the U.S. dates at least back to the early 20th century (Dr. E. A. Codman if not Clara Barton in the 19th Century), its most recent renaissance may be traced to November, 1999.  Then, the Institute of Medicine (IOM) published its breakthrough report (the most quoted in its 36 year existence), “To Err is Human: Building a Safer Health System; National Academy Press; Washington, D.C. (1999), concluding that preventable errors in American hospitals were responsible for between 44,000 to 98,000 deaths annually. 

Various reports since that time have put this preventable annual death figure as high as 225,000 (Starfield, B, Is U.S. Health Care Really the Best in the World; JAMA; 284(4):483-5 (July 26, 2000)).  The fact that the Institute for Healthcare Improvement (IHI) reported on June 14, 2006 that approximately half of the nation’s hospitals (3100 out of 6000) saved over 122,000 lives as a result of implementing between just three to six safety measures over an 18 month period would indicate that the baseline figure for all hospitals is probably even greater than 225,000. The initial IOM report (and its later companions, Crossing the Quality Chasm:  A New Health System for the 21st Century; National Academy Press; Washington, D.C., 2001; Leadership by Example:  Coordinating Government Roles in Improving Health Care Quality; National Academy Press; Washington, D.C., 2002 and Patient Safety: Achieving a New Standard of Care; National Academy Press; Washington, D.C., 2003) have catapulted patient safety to the top of priorities in health and public policy.

President Bush signed into law on July 29, 2005, the Patient Safety and Quality Improvement Act of 2005 (Public Law 109-41). This law was directly spawned by these Institute of Medicine reports and their recommendations to provide legal protections to those reporting and analyzing medical errors and near misses.  Most state legislatures have also proposed (and some have enacted) patient safety legislation with similar protections and incentives (see the article on New Jersey’s Patient Safety Act in this edition of Risk Review Online). In addition, there are currently about a dozen bills concerning health IT in the U.S. Congress (and dozens more in the individual state legislatures) which were spawned by these Institute of Medicine reports to improve the safety and quality of health care. 

In addition to the public sector, in early 2000, the Business Roundtable representing Fortune 500 CEOs, founded through several of its most prominent members (e.g. General Motors. General Electric, Verizon, et. al.) the Leapfrog Group. This Washington, D.C.-based organization now boasts nearly 200 large private sector health care purchasers representing around 40 million employees, dependents and retirees and over $75 billion in annual health care benefits expenditures. Leapfrog Group members have banded together to adopt common health care purchasing principles to financially reward and otherwise recognize those health plans and their contracted hospitals and clinical practitioners who can demonstrate the superior quality, safety and value of their care.  Also, both the Medicare Program and the Office of Personnel Management (managing the health benefits of over nine million federal employees, dependents and retirees) have embraced these common health care value purchasing principles and practices.  In addition, there are well over 100 separate health care value purchasing (now known as “Pay for Performance”) projects in existence throughout the country.  Some of these have their roots in the “Buy Right” strategy begun almost 20 years ago in the Twin Cities and Pennsylvania—Couch, JB, Medical Care Value Purchasing:  Why Now and How to Prepare for it; DRG Monitor; (May, 1987).

Finally, there are many additional funded safety initiatives through (among others) the Agency for Healthcare Research and Quality (AHRQ--$50 to $60 million per year), the Robert Wood Johnson Foundation, the California Healthcare Foundation, the Commonwealth Fund, et. al. Some of these, most notably, the three year (2002-2005) “Rewarding Results” program funded by the Robert Wood Johnson and California Healthcare Foundations have produced some early very encouraging results concerning the payback of safety efforts (Rewarding Results Pay for Performance—Program Highlights; Robert Wood Johnson Foundation; Princeton, NJ; November 15, 2005)). A reinsurance company funded prospective, randomized, controlled clinical trial at a major academic medical center demonstrated a 707% return on investment (ROI) by improving by a statistically significant 42% the adherence of university physicians with best evidence based medical practices associated with improved quality of care (Javitt, JC, Steinberg, G, Locke, T, Couch, JB, Jacques, J, Juster, I, Reisman, L, Using a Claims Data-Based Sentinel System to Improve Compliance with Clinical Guidelines:  Results of a Randomized Prospective Study; The Am. Jour. of Managed Care; 11(2): 93-102(2005)

III. Patient Safety Driven Risk Management: 
The Way Forward

Princeton Insurance Company has recognized the need for the burgeoning patient safety movement to transform its risk management operations.  As the science of patient safety develops and matures, it may improve the whole process by which patients are shielded from adverse events and medical injuries and institutional and individual policyholders are protected from preventable litigation

A patient safety driven approach to risk management differs chiefly from the traditional most notably by being proactive rather than reactive. The major goal is to prevent the adverse event and medical injury which might otherwise turn into the basis for litigation. For purposes of this brief article, it will be more than just the most common methods of preventing harm already employed (e.g. taking precautions against falls, pressure ulcers, faulty equipment, medication mix-ups, hospital-acquired infections and the like). Rather, it will encompass improving the adherence of institutions and practitioners with best evidence based medical, safety, and preventive practices endorsed by leading national authorities (e.g. the National Quality Forum, the AHRQ, the Institute for Safe Medication Practices, the IOM and a host of other impeccable sources) and the peer reviewed literature.

Institutions, as well as practitioner group practices of sufficient size to possess organizational characteristics, need to create a safety culture for sustainable improvements. In addition to the non-punitive reporting, analysis and minimization of medical errors and near misses, safety cultures go further to reward and recognize those involved in these safety initiatives. The achievement of safety improvements contributing to the goals in institutional safety plans is written into everybody’s job descriptions and performance appraisals.   Individuals and teams are rewarded (through promotions, bonuses and salary increases) and otherwise recognized (through awards and other means) based on their demonstrable contributions to meeting institutional and organizational safety improvement goals. Otherwise, all behavior changes responsible for these safety improvements,    however laudable, will quickly decay and revert to baseline (Cf. generally: Eisenberg, JM, Doctors’ Decisions and the Cost of Medical Care; Health Administration Press; Ann Arbor (1986)).

Princeton has been extremely fortunate to have developed such a strong relationship with our policyholders and other partners in improving the quality and safety of patient care. This is the first in a series on how Princeton Insurance will work with you, our partners, to become the leading patient safety risk management company in the industry.  We look forward to your comments on this article and to others appearing in this series.