Designing an ERM InfrastructureA Model from Healthcare

Michelle Hoppes, RN, MS, AHRMQR, DFASHRM-SVP Sedgwick HRM&PSGrace Crickette, Chief Risk Officer, UCLinda Epstein Esq. , Acting General Counsel, Health Management Associates, Inc.

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Discussion Items

• ERM Program Design – Internal and external review– Identify key risk indicators– Key Components of Successful Programs

• Healthcare Case Studies– Focus area—acquisitions and critical event investigation – Tools at the front line-embedding ERM– Overcoming Barriers

• Outcomes – Demonstrating Value Protection and Creation

ERM Components

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UncertaintyManagement

HolisticApproach

ValueProtection

ValueCreation

Value ProtectionAnd Value Creation

HolisticApproach

ERM Model and Domains

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OperationsClinical / Patient Safety

Strategic Technology Legal / Regulatory

Hazard Environment

Human Capital Financials

ERM

Checklist for Successful ERM Process

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Infrastructure/accountability Robust risk identification Accurate identification of key risk

indicators Metrics are actionable Mitigate, manage, monitor Defining risk appetite and risk

tolerance/capacity Risk domain owners-accountable Evaluation of internal and emerging

risks Early warning systems—no surprises Modeling to forecast risk Measuring TCOR and benefits

A process not a program Assess risk culture regularly Support by board and senior

management Part of operational culture with

process owners and drivers Long term strategic view of risk Customized to your organization ERM at the front level: understanding

role in managing risk Risk is considered in all facets of

decision making Continually optimize risk strategy Focus on most significant

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First Steps in ERM Infrastructure

Risk Potential Internal External

• Current• Emerging• Unknown

• Assess• Culture• Profile

• Market change• Regulatory• Legal

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External Market Forces

Risk Manager as Decision Facilitator--Leader

first do no harm

volume based

reform

patient safety – national

imperative

PAST -PRESENT

value based never events

business intelligence

ERM model

FUTURE

Economic Futurist

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Volume based

first

cur

ve

seco

nd c

urve

Value based• Aligning hospitals,

physicians, and other providers

• Utilizing evidence-based practices to improve quality and patient safety

• Improving efficiency through productivity and financial management

• Developing integrated information systems

Reform Implications

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Healthcare

Demand for services will increase astronomically

Most sweeping change to health care since Medicare was enacted

Fundamentally alters the healthcare

landscape

Transformative awakening

The Demand – The Risk

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PatientProtection Act

Council Grad MedEducation

Health ResourceAnd Service Admin

• Boomers aging

• 33-40 million more to be insured

• Shortage of 85,000 to 96,000 doctors by 2020

• Nursing shortage will exceed 800,000 by 2020

Economic Futurist

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PatientProtection Act

Core Organization Competencies

Patient centered-

integration and

collaboration

Accountable-leadership

Electronic data for PI

Strategy in unstable

environment

Engage employees

full potential

Financial stewardship –

Enterprise Risk

Management

IOM – New Frontiers in Patient Safety

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“Only serious when on no pay list “ Cost of

Medicare91% increase

trend next decade

Partnership for Patients

2001-2009Central line

infections drop 63%

Two choices:Spend less or improve care

CMS Innovation Center

Reduce preventable

harm 40%

Save $50 billion in

10 years

CMS Innovation Center

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• 40% reduction preventable harm• Hospital engagement contractors

•$5

00 m

illio

n

• Adverse drug reactions• CAUTI, CLABSI, VAP, VTE, SSI• Falls• OB adverse events• ReadmissionsTa

rget

Healthcare Top Risks

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Value based reimbursement - PI

Patient safety and quality HAC prevention

TerrorismMedicare fraud and abuse

Healthcare reform Professional staff shortages

Economy - revenue stress IT-EMR

Pandemic Environmental

Internal Assessment – Broad Categories of Review

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ERM AssessmentOperations

Reputational Risks

Strategy

Acquisitions and Mergers

Clinical and Patient Safety

Financial Loss Prevention

Legal – Regulatory

Compliance

Hazard – Environment

Technology

Human Capital

Acquisition-Sample Due Diligence Areas

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Mergers, Acquisitions, Divestitures, Joint Ventures

Clinical Financial Human Resources

Legal & Regulatory Technology Strategic Hazard/Operations

• Transitions of care

• Patient safety and quality outcomes

• Hospital acquired conditions-never events

• Value based purchasing

• On-call specialists

• Stability

• Bond covenants

• Debt

• Payer Mix

• Access to capital

• Contracts

• Supply mgmt

• Turnover

• Talent retention & recruitment

• Physician contracts

• Comparable benefit program

• Unionization

• Drug diversion

• Disruptive behavior

• Workers comp

• TJC

• CMS

• HIPAA

• Health Reform

• EPL

• Mandatory Reporting

• PSO

• Liabilities

• Insurance

• DEA license

• Broker of record

• Managed care ownership

• EMR-hybrid

• Social media

• Vendor alignment

• CPOE

• Security-information breach

• Back up

• Data integrity

• Vision

• Goal alignment

• Competition

• Conflict of Interest

• Market potential

• Culture fit

• OSHA

• Fire

• Crisis prevention/management

• EOC

• Access

• Storage tanks

Key Documents

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Material-Documents Target Areas

Marketing Advertising Warranties, guarantees Service lines

Insurance

Coverage by line of exposure Policy type and limits Exclusions Actuarial reports Financial viability

Liabilities

PCE’s---all reported Claims –loss runs by:

o Specialtyo Providero Indemnity / expenseo Trends

Satisfaction Areas of excellence Areas of exposure Patients and staff

Regulatory Survey, licensure, accreditation and consultants reports Citations Sanctions

Property -Locations

Inventory Contracts Access / signage Assets Vendors

Drill Down-Example Risk List

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Technology Risks• EMR process/stage• IT alignment•Connectivity• Breach- access•Information access

Financial Risks• Payor / reimbursement cuts•Expense ratio•Rating agency •Revenue cycle•Bonds•Tail coverages•Claims—all lines•Benefit plans

Legal / Regulatory Risks•MMSEA compliance•Fraud & abuse•Anti-trust•Privacy & security / HIPAA•EMTALA violations•Compliance program•Legal environment-tort

Clinical/Operational Risk•Readmissions•Pressure ulcers•Wrong-site surgery•RFB•SSI•Adverse medication outcomes•Adverse OB outcomes•Falls•Patient centered approach•Pandemic outbreak•Structured communication/handoff•Specialty and service access•Standardized procedures/guidelines•OR availability•Clinical quality scores•Aviation/helipad

Human Capital Risks• Union contracts/strikes• Low morale/culture• Fatigue / long shifts• Turnover• Aging • Stability of leadership• Behavior• TalentQuest-retention of key staff

Strategic Risks• Negatively publicized event• Partner dependencies• Market share retention/growth• Strategic plan• Ambulatory reach• Profit capture• Internal controls

Tour-Assessment and Clinical Safety Profiling

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High Risk Areas

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OB ED OR Behavioral Health0%

10%

20%

30%

40%

50%

60%

70%

10%

24%

36%

65%

High Risk Area Review and Reduction of Preventable Harm

Element Compliance Overall Category Compliance Linear (Overall Category Compliance)

High Risk Clinical Areas-Drill Down

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ED• Chest pain bundles lacking, wait times excessive• AMA high• Failure to diagnose abdominal pain

OR• OR fires• Wrong site surgery-spines• RFB

OB• Resuscitation of newborn intubation• EFM certification• Midwife scope• Emergency c/s timeliness and nurse deliveries

OB Bundles

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• Gestational age greater than or equal to 39 weeks

• Normal fetal status (per NICHD tiers

• Pelvic exam prior to the start of Oxytocin

• Recognition and management of tachysystole

ELECTIVE INDUCTION

• Documentation of estimated fetal weight

• Normal fetal status (per NICHD tiers)

• Pelvic exam prior to the start of Oxytocin

• Recognition and management of tachysystole

AUGMENTATION

• Alternative labor strategies considered

• Prepared patient• High probability of

success • Maximum application

time and number of pop-offs predetermined

• Cesarean and resuscitation teams available

VACUUM

ERM in a Decentralized Organization

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Everyone’s a Risk Manager ERM

Office of the President sponsors numerous risk

treatment initiatives

Identify risk treatments and leverage the Power

of Ten

Identify the key risks that will interfere in meeting our Mission

ERM Program: Focus on Tools Example

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• “No Tech” – Informational Content– Distributed via web/email

• “Low Tech” – Partial Automation of Data – Excel based, e.g. risk assessment tool

• “High Tech” – Information Systems– Cognos based business analytics and

optimization– Custom-built information systems “No Tech”

“Low

Tech

” Bu

sin

ess

Pro

cesses

“High Tech”

Enterprise Risk

Management Program

ERMIS Business Architecture

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ERM at the Event Level

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Incident reporting system captures identified event or near miss

Incident(includes near misses)

Directed to category manager

Trend reports developed by location quality or risk

Metrics & benchmarks

Trend reports provided to location quality & safety committee

Trend reports are forwarded to the location executive committee of the

medical staff

Trend reports provided to governing body

Adverse event directed to category manager/quality & risk*

Adverse Event

Serious events identified and reviewed by weekly quality of care

steering committee

Sentinel event/root cause analysis

Metrics & benchmarks

Trend reports provided to location quality & safety committee

Trend reports are forwarded to the location executive committee of the

medical staff

Trend reports provided to governing body

Directed to local risk manager, claims adjuster, OGC and OPRS

Claim / Lawsuit

Case reviewed by facility risk committee for quality of care issues

Corrective action is reported to board of regents as part of request for

settlement

Retrospective reviews/UC action

Resources for Integration

27Source: http://www.ucop.edu/riskmgt/erm/bulletins.html

UC Action Background

• Basic system functionality was originally intended to be a campus specific activity tracking tool

• Original tool was repurposed to automate the retrospective review process

• Team has made multiple presentations on the proposed functionality of the tool, and incorporated changes and suggestions from campus and medical center risk managers whenever possible

Tools for Evaluating Risk

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Overcoming Barriers

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• Not just a Risk Assessment, or a Strategic Plan, or Mitigation Plan• ERM does not replace what you are already doing but rather leverages

these activities and builds on them• ERM is about the thought process-does not replace your professional

experience or judgment!

ERM is not just about the deliverables!!

• Improved management of risks• Improved quality and sustainability of controls• Consistent approach and terminology used across the organization• Improved visibility and understanding of risk across the entire

organization (causality as well as impact)

• Makes Everyone a Risk Manager!!!

Value of ERM

DashboardsA Key Component of ERM Infrastructure

High Level and Drill Down

Monitoring: Example Key Risk Indicators

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ERMIS Dashboards Background

• Users - Risk Managers enterprise wide, enterprise leadership, general counsel’s office, external finance staff, UCSF Police Department personnel, and medical center HR and quality departments

• Web based BI solution• Designed to provide:

– Better quantitative analysis capabilities – Improved analytical and reporting

capabilities – Support for leading risk governance and

compliance processes – System wide visibility, with local flexibility– Scalability without additional burden on UC

staff

Process Overview Steps

Process Step Descriptions

1. Receive Dashboard Request 5. Dashboard Design & Development

2. KPI Development & Data Availability 6. Prototype Testing

3. Develop Solution Outline (Mock-Up) 7. Design Review and Final Approval

4. Data Acquisition

2 Medical Quality

3 Strategic Sourcing

4 Office of General Counsel

5 Travel Incidents, Calls, Claims

6 UC Travel Dashboard

7 Waste Management Workgroup

8 Ergonomics / Remedy Interactive

9 Education Abroad Program (EAP)

10 Construction

11 Contracts & Grants

12 StayWell Location Participation

13 Medical Center PL Cube

14 Rep Risk - (CDPH, OSHA)

15 University of California, Irvine

16 Safety Index + Enhancements

17 Human Capital + Enhancements

18 Budget and Risk Assessment

19 Master Scorecard

20 UC Ready Dashboard

21 Effort Reporting

22 Fine Arts

23 IVOS

1 2 3 4 5 6 7

24 UCSF Disability Management

25 NFPA

26 UCSD Scorecards (Target 3/11)

27 UCSD HR

28 UCD MC

29 UC Police Dept (Target 4/11)

30 TM1 – ERMIS / Budget and Plan

31 Health Policy and Services

32 UCB – AVC

33 Be Smart about Safety

34 OGC Package

35 UCI Safety On Site Prog Metrics

36 UCI LMS Safety Training Records

37 UCI Lab Building Safety Survey

38UCI Ergonomic -Pelletier, Remedy, Equip Purchase, Costs

39 UCI Actuarial Data

40 UC Ready Enhancements

41 ERMIS Adoption Dashboard

42 Waste Management & Recycling

Dashboard Name

Process Overview Steps

Process Step Indicators = Completed

= Started

�= Not Started

ERMIS Cognos Dashboard Development Priority Pipeline

Overcoming Barriers

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OutcomesReturn on Investment (ROI)

Key Components Driving Value

ERM process- tools include these four components:

• Create Efficiency – Benefits that result in saved time, fewer resources, or faster cycle time

• Reduce Cost of Risk – Benefits that result in a lower risk exposure, fewer claims, less expensive claims, lower insurance rates or reduced administrative costs

• Improve Cost of Borrowing – Benefits that result in improved debt ratings and reduced borrowing rates

• Reduce IT and Operational Redundancy – Benefits that allow users to leverage a single tool to support multiple activities, or support a single process system-wide to achieve consistency

Create Efficiency

Reduce IT and Operational Redundancy

Improve Cost of Borrowing

Reduce Cost of Risk

First non-financial institution to receive credit agency acknowledgement of ERM program

System-wide ERM information

system

Drive down total cost of risk to

13.43 per $1000 of operating

budget

Cost avoidance ($493 million)

Example: ERM Benefits in Healthcare

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Preventing Harm-OB Example

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OB • 16 hospitals

• Perinatal safety initiative

PRO

CESS • Bundles

• Induction

• Vacuum

• Standardize

• Measure harm O

UTC

OM

ES • Adverse outcome index

• 8% decrease in adverse outcomes

• 790 births

• Preliminary claim costs: 33% to 14%

OB Risk Management Intervention-Shoulder Dystocia

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Intervention- 2004

Outcome-decreased SD loss

Future Risk Management

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Outcomes – Data - ROR

Operational Excellence

SSE rate decreased

70%

TCOR less than $10 per

$1000 of operating

budget

ERM metric compliance

98%

Faci

litat

ors

Decision Analysis

Expe

rts

Quantify Risk

Dem

onst

rate

Outcomes in Value Creation

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Notes

Information is educational and is based on several references including but not limited to:

AON 2009 and 2010 Global Risk Management Survey Greater Expectations, Greater Opportunities-Excellence in RM VIII

–RIMS/Marsh 2011 ERM Framework-Committee of Sponsoring Organizations of the Treadway

Commission AON/ASHRM Benchmarking and Liability Report-2010

• This presentation is for informational/educational purposes only. The speakers do not warrant as to the accuracy of the data or opinions expressed.

Designing an ERM InfrastructureA Model from Healthcare

Michelle Hoppes, RN, MS, AHRMQR, DFASHRM-SVP Sedgwick HRM&PSGrace Crickette, Chief Risk Officer, UCLinda Epstein Esq. , Acting General Counsel, Health Management Associates, Inc.