Make the 'business case' for patient safety

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Despite meaningful gains, well-intentioned efforts to improve patient safety continue to fall short of expectations. In part, that may be because there’s a missing player – financial leaders in the organizations making business investments in safety. A recent report from the Institute for Healthcare Improvement/National Patient Safety Foundation advises clinical and safety leaders to work together with colleagues in finance to make the business case for patient safety. While the cost of improvement programs is easy to calculate, financial benefits to the organization, including better workplace safety, staff retention, and reputation, are harder to quantify.

Without losing sight of the moral imperative to avoid harm from medical errors, researchers are trying to put a price tag on the cost to organizations. In a 2015 study, a team from Adventist Health System looked at 716,172 hospital inpatient discharges across 24 hospitals in the southern and central United States and found the following mean total cost of hospitalizations:

  • $6,498 for patients who didn’t experience a harm;
  • $10,224 for patients with temporary harm, and
  • $16,201 for patients with permanent harm to their health.

All told, the hospitals could have saved $201 million annually and reduced stays by 93,000 patient days in the time period studied.

“Organizations are trying to increase access, efficiency, quality and safety,” says Tejal K. Gandhi, M.D., IHI’s Chief Clinical and Safety Officer and a contributor to Optimizing a Business Case for Safe Health Care: An Integrated Approach to Safety and Finance, a toolkit for organizations looking to strengthen ties between their clinical and financial teams.

Tejal Gandhi Print Hdshot
Tejal K. Gandhi

In a 2016 survey conducted by NPSF, safety professionals and health care finance leaders agreed that patient safety expenditures must be supported with sound business plans. They also agreed that safety and finance don’t often collaborate.

Gandhi observes that safety professionals may struggle to make their case: 

It’s a reality that these types of safety initiatives need to be prioritized
against many other things. I wish we could say, ‘It’s safety, let’s just do it,’ but given the world we live in, we have to make choices. Having a robust business case helps make sure the safety items can compete effectively against some of the other things that come along. One reason why safety officers struggle with this is they tend to be people who came up in the clinical world. We speak a different language than a chief financial officer.

Graphic1 Network Collab4
The IHI/NPSF toolkit says to use a safety-finance team to ensure the success of safety initiatives and to enlist a network of collaborators for input, support and influence across the organization.

Safety and finance need to work together

Bringing those worlds together is the centerpiece of efforts by Abington Hospital-Jefferson Health, a 685-bed hospital in suburban Philadelphia, according to Doron Schneider, M.D., the Chief Patient Safety and Quality Officer.

Schneider Doron
Doron Schneider

Senior leadership decisions are hashed out in councils that include expertise from safety, patient experience, finance and operations. According to Schneider, the councils have multidisciplinary membership “to make sure that as solutions are dreamed up and brought forward, say, by the safety council, they can move laterally through the financial group, which also includes clinicians who understand the implications of decisions.”

To understand those implications, the hospital has developed a business plan that defines “the gap between current state and where we want to be” and describes needed changes in terms of return on investment, says Schneider. 

For example, the hospital recently purchased an expensive computerized surveillance system for its pharmacy that will allow staff to more easily spot potential adverse drug effects before they occur. Proponents made the “business case” that the software investment would head off costly unnecessary care and possible payer penalties, according to Schneider.

In The Economics of Patient Safety, the Organization for Economic Co-operation and Development (OECD), an international group with 35 member countries, examined “a value-based approach to reducing patient harm.” The 2017 study pegged preventable harm as the 14th leading cause of global disease burden and found 15 percent of hospital activity and expenditures are focused on treating safety failures.

“The costs of adverse events presented in this report do not estimate the true financial burden of patient harm,” the authors declare. “The true, societal cost of patient harm will include the impact on health care resources but also on lost time to injury, lost productivity and other consequences of harm on individuals, their loved ones and the communities they live in.”

Those costs have been the focus of efforts by Hallmark Health, a system of two hospitals and associated outpatient facilities north of Boston. Terry Sievers, M.S., R.N., Vice President of Quality, Risk Management and Patient Safety, notes a recent Press Ganey report found that penalties and incentives potentially put up to seven percent of Medicare revenues at risk.

Sievers Terry 2016
Terry Sievers

To address potential penalties for readmission and hospital-acquired conditions, Hallmark launched daily safety huddles that include physicians, nurses, other clinicians and staff from finance, registration, facilities, biomedical engineering and information technology to review and address potential safety issues. 

Since daily safety huddles launched in September, Sievers says there has been a five percent increase in reporting events and a 77 percent decrease in time to investigate and close them. Efforts to resolve problems often begin before the huddle ends.

“Because many hospitals across the country are making efforts to improve patient safety and the patient experience and are succeeding, if your organization isn’t getting better faster than other organizations, then essentially you’re getting worse,” she says.

The OECD report estimated indirect costs, including the loss of productivity and diminished trust in the health care system, at almost $1 trillion across all member countries in 2008. And the cost of prevention is dwarfed by the cost of failure. For example, the Agency for Healthcare Research and Quality estimates that improving patient safety saved  $28 billion in Medicare hospitalization costs between 2010 and 2015.

“As our payment models continue to evolve, our bottom line increasingly depends on high-quality, safe care,” says Schneider. “Organizations that can’t provide that are not going to thrive, let alone survive.”

“It’s really important to understand all the potential costs and benefits,” like hard and “soft” costs such as reputational risk, malpractice risk and patient engagement scores, Gandhi adds. Having a comprehensive view of everything that might be affected as part of the business case is crucial, as is bringing finance people in early “so it’s not an ‘us versus them’ but a collaborative ‘we.’” 

Are you ready to make the case?

Psb Apr2018 Up Front Business Case Safe Health Care Organizational Readiness Checklist
Organizational Readiness Checklist
Psb Apr2018 Up Front Business Case Safe Health Care Informational Readiness Checklist
Informational Readiness Checklist


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