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Joint Commission

Journal on Quality and Safety

Forum

Making the Business Case for Patient Safety

William B. Weeks, MD, MBA, CHE James P. Bagian, MD, PE

atient safety continues to be a driving force in health care. Federal funding of patient safety initiatives and research, through the Agency for Healthcare Research and Quality, the Department of Defense, and the Department of Veterans Affairs, has supported research on patient safety topics. This funding has resulted in an explosion of published papers on patient safety. These research findings are likely to find their way into clinical practice; the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) added patient safety standards in 2000 and has identified six patient safety activities that are required for accreditation in 2003.1 There is also a growing interest in demonstrating the business case for patient safety. A recent symposium on this topic was sponsored by the Department of Defense, the Agency for Healthcare Research and Quality, the Centers for Medicare & Medicaid Services, and JCAHO. The Institute for Healthcare Improvement included several sessions with a “business of patient safety” theme at its 2002 annual forum. Perhaps most importantly, a health care buying coalition—the Leapfrog Group—has defined patient safety standards for health care providers to meet. Despite such activity, we do not believe that there is widespread understanding of what constitutes the business case for patient safety. This commentary will help define those terms.

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The Business Case Developing a business case for any activity rests on the assumption that resources are limited and that an investment (the allocation of those scarce resources) will result in economic benefits that will accrue to the original investors over time. Because there are many demands for scarce resources, businesses prioritize

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their investments by the magnitude of the anticipated return. The anticipated return is influenced by absolute amounts of the initial investment and the timing of the returns (earlier returns have more value than later returns).2 To apply a business case to patient safety, it is therefore critical to understand the anticipated investment in the patient safety intervention, the magnitude and timing of the return on that investment, and whether there is alignment between those who make the investment and those who reap its benefits. Applying the business case to patient safety is hampered by several realities. First, little is known about the costs of investment and timing of returns. Although the effectiveness of information technology,3–9 improving reporting systems,10–14 personnel realignment,15,16 and quality improvement techniques17–21 has been demonstrated in a variety of settings, information on the organizational costs of implementing these patient safety interventions, their in vivo effectiveness, and their personnel maintenance costs is not readily available to decision makers. Second, a way to prioritize patient safety interventions is not widely available. Too often, organizations invest substantial resources to address the most recent preventable medical error without understanding future risk. The Department of Veterans Affairs’ use of reporting systems,22 root cause analysis,23 and failure mode and effects analysis24 helps identify organizational patient safety priorities. To make a business case for patient safety interventions will require that these tools be used to project the magnitude of anticipated future risk exposure and costs, so that the magnitude of investment return can be anticipated. Finally, the magnitude and recipients of the economic benefits of improvements in patient safety are not known.

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Indirect Organizational Costs of Patient Safety Violations

Figure 1. In addition to legal costs, preventable adverse events are likely to result in substantial personnel, regulatory, and marketing costs that may impair profitability and compromise organizational performance.

At first glance, an investment in patient safety may not appear to accrue to the original investors. For instance, adverse drug events in hospitalized patients have been associated with increased costs of care.25–27 The authors of these studies have recommended technology investments to reduce the frequency and severity of adverse drug events, and, thereby, associated costs of care. Such an investment would be substantial, would likely require training of personnel, might require ongoing maintenance and personnel costs, and might appear to be minimally cost-effective28 or even cost-ineffective in an examination of costs of implementation and direct cost savings. Although costs of care are higher for patients who experience adverse drug events during hospitalization, so are charges. So the outlay of initial and maintenance funds ironically may result in reduced revenues over the long run. On the surface, it’s a poor investment. Clearly, not all patient safety improvement activities are technological, nor do they necessarily require an increase in capital expenditure or any appreciable increase in operating cost. But the fallacy of basing the

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value of a patient safety investment on direct cost savings is that unless the hospital obtains the majority of its revenues through a capitated arrangement, economic benefits are not likely to accrue to the hospital that made the investment. An exclusive focus on the direct costs of care associated with patient safety violations does not capture the organizational costs associated with adverse events. Although litigation rates associated with errors are relatively low,29,30 risk managers consume additional resources in investigating errors, pursuing litigation defense, and paying settlements and awards.31 In addition to legal costs, preventable adverse events are likely to result in substantial personnel, regulatory, and marketing costs (Figure 1, above) that may impair profitability and compromise organizational performance.32 Marketing costs of adverse events—in lost public confidence and tarnished reputation—due to vulnerable systems are likely to be incalculable and threaten organizational survival33 (witness Arthur Andersen, Martha Stewart, Barings Bank, and Value Jet, for example). In retrospect, investments that preserve brand

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identity will appear miniscule compared to the loss of value when that brand identity has become impaired.

Final Comments The gaps that must be filled to apply business case concepts to patient safety offer rich research opportunities. It is appropriate that federal funds and business interests support these efforts: The longer-term costs of adverse events are likely to be borne by society and business interests. Patients who have been injured as a result of errors may experience direct costs, through higher copayments for the services rendered, and indirect costs, such as lost income, increased disability rates, and increased burden on caregivers.34,35 These indirect costs are borne by society through higher taxes and by business interests through higher insurance premiums and lost productivity. Because risks and rewards are aligned at the societal level, only the government appears to have a vested interest to seek solutions for patient safety–related issues. But business interests, like the Leapfrog Group, understand that they also bear these costs. In the future, marketing and direct care costs associated with system vulnerabilities may become much more apparent to health care organizations; if they do not address the safety concerns articulated by employers, they will not be allowed to provide the service. In their own right, these fiscal pressures should stimulate health care organization leaders to invest in patient safety initiatives. But we see a darker cloud on the horizon if patient safety does not become a top organizational priority. As systems—related problems are increasingly recognized as the causes of harm to patients, those responsible for the oversight and control of these systems—chief executive officers and boards of directors-will be increasingly held responsible. Accordingly, health care organizations may be subjected to the same arguments as tobacco companies and, more recently, fast food companies, which have exposed customers to risk without disclosing that risk. Although we hope that health care executives are motivated by more than the spectre of Arthur

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Andersen debacles, we are certain that only open, active, prospective identification and remedy of vulnerabilities in the health care delivery system can mitigate this risk. Health care organizations have a moral imperative to deliver safe care. The practice of medicine is rooted in the concept of nonmalfeasance, and the concept of health care begs safety considerations independent of benefits that an organization might obtain as a result of providing safe care. This imperative mandates that health care leaders wisely invest funds to address systems vulnerabilities in health care delivery—they must prioritize these investments and be cautious that their chosen solutions do not inadvertently detract from the safe, ethical delivery of health care services. But beyond this imperative, there appears to be a business case for additional investment that will enhance patient safety. Many inexpensively implemented practices can improve patient safety from the societal perspective. In the long run, high prioritization of patient safety may be critical to organizational survival. Health care purchasers demand safe care. If health care leaders do not voluntarily take action to mitigate the risk to which patients are exposed, they will eventually face regulatory mandates, with attendant pain and inefficiency. The question for health care leaders is not whether to address patient safety but whether to proceed as master or victim in the safe, ethical delivery of heath care services. For the sake of patients, providers, health care organizations, and society in general, we should let them proceed as masters. J

William Brinson Weeks, MD, MBA, CHE, is Director, White River Junction Field Office, VA National Center for Patient Safety, and a member of The Joint Commission Journal on Quality and Safety's Editorial Advisory Board. James P. Bagian, MD, PE, is Director, VA National Center for Patient Safety, Ann Arbor, Michigan. The views expressed in this article do not necessarily represent the views of the Department of Veterans Affairs or of the U.S. government. Please direct reprint requests to William B. Weeks, MD, MBA, CHE, [email protected].

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References 1. JCAHO approves National Patient Safety Goals for 2003. Jt Comm Perspect 22:1–3, Sep 2002. 2. Weeks W: Quality improvement as an investment. Qual Man Healthcare 10(3):55–64, 2002. 3. Wyatt J, Walton R: Computer based prescribing. BMJ 311:1181–1182, 1995. 4. McMullin ST, et al: Automated system for identifying potential dosage problems at a large university hospital. Am J Health Syst Pharm 54:545–549, 1997. 5. Raschke RA, et al: A computer alert system to prevent injury from adverse drug events: Development and evaluation in a community teaching hospital. JAMA 280:1317–1320, 1998. 6. Fraass B, et al: The impact of treatment complexity and computercontrol delivery technology on treatment delivery errors. Int J Radiation Oncol Biol Phys 42:651–659, 1998. 7. Bates D, et al: The impact of computerized physician order entry on medication error prevention. J Am Med Information Soc 6:313–321, 1999. 8. Bates DW, et al: Effect of computerized physician order entry and a team intervention on prevention of serious medication errors. JAMA 280:1311–1316, 1998. 9. Opfer KB, Wirtz DM, Farley K: A chemotherapy standard order form: Preventing errors. Oncol Nurs Forum 26:123–128, 1999. 10. Williamson J, Mackay P: Incident reporting. Med J Aust 155:340–343, 1991. 11. Welsh CH, Pedot R, Anderson RJ: Use of morning report to enhance adverse event detection. J Gen Intern Med 11:454–460, 1996. 12. Beckmann U, et al: The Australian Incident Monitoring Study in Intensive Care: AIMS-ICU. An analysis of the first year of reporting. Anesthes Intensive Care 24:320–329, 1996. 13. Prevention of medication errors in the pediatric inpatient setting. American Academy of Pediatrics. Committee on Drugs and Committee on Hospital Care. Pediatrics 102(2 Pt 1):428–430, 1998. 14. Billings CE: Some hopes and concerns regarding medical eventreporting systems: Lessons from the NASA aviation safety reporting system. Arch Pathol Lab Med 122:214–215, 1998. 15. Folli H, et al: Medication error prevention by clinical pharmacists in two children's hospitals. Pediatrics 79:718–722, 1987. 16. ASHP guidelines on preventing medication errors in hospitals. Am J Hosp Pharm 50:305–314, 1993. 17. Berwick DM: Eleven worthy aims for clinical leadership of health system reform. JAMA 272:797–802, 1994. 18. Cullen DJ, et al: The incident reporting system does not detect adverse drug events: A problem for quality improvement. Jt Comm J Qual Improv 21:541–548, 1995.

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19. McNally KM, Page MA, Sunderland VB: Failure-mode and effects analysis in improving a drug distribution system. Am J Health Syst Pharmacy 54:171–177, 1997. 20. Wilson DG, et al: Medication errors in paediatric practice: Insights from a continuous quality improvement approach. Eur J Pediatr 157:769–774, 1998. 21. Weeks W, et al: Using an improvement model to reduce adverse drug events in VA facilities. Jt Comm J Qual Improv 27:243–254, 2001. 22. Bagian J, et al: Development and deployment of a patient safety program In a large health care delivery system; or You can't fix what you don’t know about. Jt Comm J Qual Improv 27:522–532, 2001. 23. Bagian J, et al: The Veterans Affairs root cause analysis system in action. Jt Comm J Qual Improv 28:531–545, 2002. 24. DeRosier J, et al: Using Health Care Failure Mode and Effect Analysis: The VA National Center for Patient Safety's prospective risk analysis system. Jt Comm J Qual Improv 28:248–267, 2002. 25. Bates DW, et al: The costs of adverse drug events in hospitalized patients. Adverse Drug Events Prevention Study Group. JAMA 277:307–311, 1997. 26. Suh DC, et al: Clinical and economic impact of adverse drug reactions in hospitalized patients. Ann Pharmacother 34:1373–1379, 2000. 27. Senst BL, et al: Practical approach to determining costs and frequency of adverse drug events in a health care network. Am Health Syst Pharm 58:1126–1132, 2001. 28 Anderson J, et al: Evaluating the capability of information technology to prevent adverse drug events: A computer simulation approach. J Am Med Inform Assoc 9:479–490, 2002. 29. Localio AR, et al: Relation between malpractice claims and adverse events due to negligence. Results of the Harvard Medical Practice Study III. N Engl J Med 25:245–251, 1991 30. Weeks W, et al: Tort claims analysis in the Veterans Health Administration for quality improvement. J Law Med Ethics 29:335–345, 2001. 31. Kavaler F, Spiegel A: Risk Management in Health Care Institutions: A Strategic Approach. Sudbury, MA: Jones and Bartlett Publishers, 1997. 32. Weeks W, et al: The organizational costs of preventable medical errors. Jt Comm J Qual Improv 27:533–539, 2001. 33. Reason J: Managing the Risks of Organizational Accidents. Brookfield, VT: Ashgate Publishing Company, 1997. 34. Thomas EJ, et al: Costs of medical injuries in Utah and Colorado. Inquiry 36:255–264, 1999. 35. Brahams D: Medical errors: A costs burden on society. Med Leg J 68(Pt 1):1–2, 2000.

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