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Hospitals: Never Have a Never Event
Business Journal

Hospitals: Never Have a Never Event

How engagement can reduce error rates in healthcare organizations

by Maggie Ozan-Rafferty

"Never event" is an expression in healthcare that refers to events that are never supposed to happen in a hospital -- preventable problems like falls, air embolisms, bedsores, or infections that occur after a patient's admission to the hospital. And never event sounds so reassuring. It's an event that never, ever happens, so there's no need to worry.

When something goes wrong, patients lose confidence in their provider. And that's when malpractice lawyers' phones can start ringing.

Except that never events do happen all the time. While the exact number of never events is unknown, these events result in many deaths and additional healthcare costs. The Agency for Healthcare Research and Quality reports that medical errors are responsible for injury in 1 out of every 25 hospital patients, and it estimates that 48,000 to 98,000 patients die from medical errors each year.

Not only are these events often tragic, they're expensive. In a large teaching hospital, errors in healthcare have been conservatively estimated to cost more than $5 million per year, and preventable healthcare-related errors cost the U.S. economy up to $29 billion each year. According to the 2008 Hospital Professional Liability/Physician Liability Benchmark Analysis -- a new study by insurance giant Aon Corporation in conjunction with the American Society for Healthcare Risk Management -- hospital never events accounted for one out of every six closed claims, and four categories of hospital-acquired conditions accounted for 12.2% of total medical professional liability costs.

Total awareness

Until fairly recently, patients who had suffered a never event didn't always know that they had. They would certainly be aware of, say, the pulmonary embolism following total knee replacement, but they wouldn't necessarily realize that the embolism could have been prevented. Now, patients have access to a world of information on the Internet, a world they can enter right from their hospital beds. That means they are much more aware of -- and liable to blame healthcare providers for -- never events.

That presents two major problems for healthcare organizations. The first problem is that nothing erodes trust and patient engagement like the negative publicity surrounding a never event. Healthcare organizations need their patients' loyalty -- especially in a down economy. And they need patients' trust to treat them at all. Of course, mistakes happen; doctors and nurses are human. But most patients don't reason that logically when a mistake happens to them. They expect excellent treatment, and when something goes wrong, they lose confidence in their provider. And that's when malpractice lawyers' phones can start ringing.

The second problem is that insurers are beginning to hold healthcare organizations financially responsible for never events. Until recently, hospitals and physicians were paid, albeit prorated, for the care they rendered, even if it involved errors. That's about to change. Consumer organizations and state governments are accelerating their efforts to increase hospitals' accountability. In 2008, the Centers for Medicare and Medicaid Services (CMS) announced it would end reimbursement for specific never events, stating that "nearly 20 states already have or are considering methods to eliminate payment for some never events." A growing number of insurers, including Aetna, Cigna, HealthPartners, and WellPoint, already have or are considering methods to eliminate payment for some or all of these conditions.

The CMS views the change in reimbursement as a major step forward in its shift toward value-based purchasing, a philosophy of paying hospitals based on their performance on certain measures rather than on the cost of the service provided. The cost savings to CMS will be in the tens of millions of dollars: As just one example, a secondary infection resulting from a coronary artery bypass graft can inflate charges to as much as $300,000. Medicare won't be paying those charges anymore. Guess who will be.

Motivating hospitals

If Medicare, private insurance plans, or patients aren't covering the costs of medical errors, healthcare organizations will have to. That sort of logic is hard for hospitals to refute -- why should patients pay, even indirectly via insurance, for their providers' mistakes? Expecting patients to pay for the error that hurt them only amplifies the mistrust that drove them to search the Internet for the word "embolism" in the first place. Furthermore, being held financially responsible for medical errors may well motivate hospitals to do more to prevent them.

However, a money-back guarantee on never events unquestionably eats into healthcare organizations' already thin revenues. Some worry that CMS may refuse to pay for conditions that aren't always preventable. Some providers are concerned that the new strategy could drive up medical costs, forcing hospitals to pass the expense of the safety and screening procedures on to patients and their insurers. The American Medical Association recently stated that the new CMS rules threaten to increase the practice of defensive medicine and will ultimately expose physicians to additional lawsuits. And patients who are suspicious of never events may be inclined to view all medical misfortunes as preventable errors, creating a highly defensive healthcare climate.

Both camps have a point, but the real error is in the belief that there's no middle ground. Unfortunately, never events will never go away entirely. But their number can be diminished, which is the best possible and most realistic resolution for hospitals and for patients.

Although personality and job type do affect engagement, in hospitals, it's equally possible to engage a neurosurgeon as it is to engage a housekeeper.

There are myriad suggestions for decreasing the likelihood of hospital errors: electronic record keeping, increased staff numbers, and shorter shifts to name a few. None of those suggested solutions would surprise healthcare professionals, and they all would have been put in place long ago if hospitals had unlimited budgets. But there's another possible solution -- one that's been overlooked: employee engagement.

Engaging staff

Employee engagement is an emotional attachment that workers feel to their workplace. More specifically, it's a psychological response to the fulfillment of 12 specific needs; among them, employees need to know that someone cares for them, that they have the materials and equipment to do their jobs, even that they have a best friend at work. Gallup measures employee engagement using a 12-item survey, the Q12, that measures engagement from the overall organization to the workgroup level. (See graphic "The 12 Elements of Great Managing.")

Although personality and job type do affect engagement, in hospitals, it's equally possible to engage a neurosurgeon as it is to engage a housekeeper. What determines employees' level of engagement is the degree to which they can strongly agree that those 12 items apply to them.

And there seems to be a connection between employee engagement and healthcare outcomes. One Gallup study found that hospitals with higher nurse engagement levels have statistically lower mortality and complication indices. Healthcare facilities that are in the top half of Gallup's Q12 healthcare database -- a compendium of the results of every healthcare organization Gallup has studied -- have average monthly inpatient mortality rates that are around 30% lower than those of organizations in the bottom half. Facilities that are in the top half of the same database have 20% to 25% fewer medication errors. And not incidentally, facilities in the top half yield average net revenue per adjusted patient discharge (case mix adjusted) that is 8% higher than facilities in the bottom half of the database.

There are very few hospitals that can double the number of nurses or halve the number of patients per physician. Even if they could, healthcare costs would soar to the point that never events would be irrelevant because so few people would be able to afford treatment. But engagement is well within the practical and financial scope of any healthcare organization.

Engagement doesn't come without effort. It takes an active commitment from leadership, real work from frontline employees, and diligence from everyone. That said, an engagement program takes a lot less out of workers than dealing with the consequences of even one never event -- and it's likely to be much, much less expensive. And considering that hospitals are likely to be either paying for or defending their mistakes, engagement might even be seen as healthcare's own money-back guarantee.

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Maggie Ozan-Rafferty was Global Practice Leader, Healthcare, for Gallup.

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