MHA FPX 5014 Assessment 2 Internal Memo – Risk Financing

Student Name

Capella University

MHA-FPX 5014 Health Care Quality, Risk, and Regulatory Compliance

Prof. Name:

Date

INTERNAL MEMO

TO: Rochester General Hospital’s Risk Management Team

FROM: John Smith

CC: Professor Mary Braker

DATE: July 21, 2021

RE: Assessment 2 – Risk Financing

Patient Safety Issue

Rochester General Hospital (RGH), part of Rochester Regional Health, has earned recognition for its quality healthcare services, achieving Magnet status for excellence. However, to maintain this progress and meet organizational objectives, it is essential to address the high rate of medication errors through effective risk financing. These errors not only jeopardize patient safety but also pose significant financial risks to RGH.

An evaluation of RGH’s hospital grade for spring 2021 underscores the seriousness of this issue. The performance in the medication administration domain is particularly alarming, as illustrated below (Hospital Safety Grade, 2021):

Metric	Score
Best Hospital Score	100
RGH’s Score	45
Worst Hospital Score	5

Patient Safety Risk and Key Performance Indicators

Medication errors are a leading cause of patient harm and financial loss in healthcare facilities globally (Haytham, 2016). These errors are defined as any preventable event that may lead to inappropriate medication use or patient harm under the control of healthcare professionals (AMCP, 2019). They can occur during various stages, including ordering, transcribing, dispensing, administering, or monitoring (Durham, 2016). Given the dynamic nature of the healthcare industry, characterized by evolving regulations, policies, technologies, and guidelines, medication errors present both clinical and financial risks to RGH.

Risk financing is crucial for identifying the potential costs associated with these risks and evaluating the organization’s capacity to manage them (Rhinehart, 2021). Research indicates that medication errors cost the U.S. healthcare system approximately $3 billion annually (AMCP, 2019).

To tackle this issue, RGH’s risk management team will implement key performance indicators (KPIs) and performance dashboards to monitor, assess, and mitigate risks related to medication administration. The KPIs include:

KPI	Description
Number of medications prescribed using CPOE	Tracking electronic prescription usage
Percentage of patients identified by two identifiers	Ensuring patient verification accuracy
Number of adverse/sentinel events due to medication errors	Monitoring serious medication-related incidents
Incident reporting	Collecting data on all medication errors

Strategies to Identify Risk Financing Issues

Risk financing involves evaluating RGH’s financial capacity and willingness to manage risks while aligning with the organization’s strategic values (Harvard University, n.d.). Key strategies include identifying, accepting, and managing risks (Indeed Editorial Team, 2020).

Identifying risks entails examining processes or events that could harm patients and lead to financial loss. For instance, medication errors can result in extended hospital stays, increased resource utilization, decreased reimbursement, and financial losses (Chen, 2017). Managing risks involves gathering data, reviewing information, and developing strategies to reduce the occurrence of these risks (NEJM Catalyst, 2018). Benchmarking can then be employed to measure progress in risk mitigation and financial performance (Institute for Safe Medication Practices, 2005).

Recommendations for Risk Financing

To mitigate medication errors at RGH, the following strategies are recommended:

Computerized Physician Order Entry (CPOE) with Clinical Decision Support (CDS)
Bar Code Medication Administration (BCMA) System
Confidential Incident Reporting

Implementing technologies such as CPOE and CDS has been shown to reduce medication error rates by 55% (Durham, 2016). These systems assist healthcare professionals with drug dosages, routes, and frequencies, while also providing alerts for allergies or interactions (Shah, 2016). The BCMA system ensures adherence to the five rights of medication administration (right patient, dose, drug, time, and route) and generates real-time alerts (Shah, 2016).

Confidential incident reporting will facilitate the collection of data on medication errors, enabling the development of strategies to enhance patient safety. A culture of safety will be promoted, encouraging error reporting without fear of repercussions, thereby providing valuable insights for risk managers (Rodziewicz, 2021).

Legal and Ethical Financial Risk Obligations

As an accountable care organization (ACO), RGH must effectively manage legal and financial risks to remain profitable and successful (NAACOS, n.d.; LaPointe, 2016). ACOs aim to deliver coordinated, high-quality care while reducing costs and preventing medical errors (CMS, 2021). Compliance with CMS policies, which may reduce or withhold reimbursement for preventable errors, is essential (National Conference of State Legislatures, n.d.). By adhering to safe medication practices and The Joint Commission (TJC) guidelines, RGH can enhance patient safety and maximize reimbursement from CMS.

References

AMCP. (2019, July 18). Medication Errors. Retrieved from Academy of Managed Care Pharmacy: https://www.amcp.org/about/managed-care-pharmacy-101/concepts-managed-care-pharmacy/medication-errors

Chen, C. H.-Y.-C. (2017, August). The cost-saving effect and prevention of medication errors by clinical pharmacist intervention in a nephrology unit. Retrieved from Medicine; LWW Journals: https://journals.lww.com/md-journal/Fulltext/2017/08250/The_cost_saving_effect_and_prevention_of.40.aspx

CMS. (2021, March 4). Accountable Care Organizations (ACOs). Retrieved from Centers for Medicare and Medicaid Services: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ACO#:~:text=What%20is%20an%20ACO%3F%20ACOs%20are%20groups%20of,give%20coordinated%20high-quality%20care%20to%20their%20Medicare%20patients.

MHA FPX 5014 Assessment 2 Internal Memo – Risk Financing

Durham, M. S. (2016, February). Reducing Medication Administration Errors in Acute and Critical Care: Multifaceted Pilot Program Targeting RN Awareness and Behaviors. The Journal of Nursing Administration, 46, 75-81. Retrieved from https://oce-ovid-com.library.capella.edu/article/00005110-201602000-00006/HTML

Harvard University. (n.d.). What is Risk Financing? Retrieved from Harvard University: https://rmas.fad.harvard.edu/faq/what-risk-financing

Haytham, T. A. (2016, June 6). Improving admission medication reconciliation compliance using the electronic tool in admitted medical patients. Retrieved from U.S. National Library of Medicine: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5067707/#:~:text=Medication reconciliation is a key safety measure and, receive medication reconciliation within 24 hours of admission.

Hospital Safety Grade. (2021). Rochester General Hospital. Retrieved from Leapfrog Hospital Safety Grade: https://www.hospitalsafetygrade.org/h/rochester-general-hospital?findBy=hospital&hospital=Rochester+General+Hospital&rPos=96&rSort=grade

Indeed Editorial Team. (2020, December 10). Five Key Risk Mitigation Strategies (With Examples). Retrieved from Indeed: https://www.indeed.com/career-advice/career-development/risk-mitigation-strategies

MHA FPX 5014 Assessment 2 Internal Memo – Risk Financing

Institute for Safe Medication Practices. (2005, March 10). Measuring Up to Medication Safety. Retrieved from ISMP: https://www.ismp.org/resources/measuring-medication-safety

LaPointe, J. (2016, April 5). Understanding the Fundamentals of Accountable Care Organizations. Retrieved from Revcycle Intelligence: https://revcycleintelligence.com/features/understanding-the-fundamentals-of-accountable-care-organizations#:~:text=ACOs%20take%20value-based reimbursement to a new level,in%20ACO%20contracts%20can%20be%E2%80%9Cupside%E2%80%9D%20or%E2%80%9C

NAACOS. (n.d.). Membership Types and Dues. Retrieved from National Association of ACOs: https://www.naacos.com/member-types—dues#:~:text=An%20ACO%20legal%20entity%20that%20holds%20one%20or,single%20ACO%20Board%20seats%20in%20each%20year%27s%20election.

National Conference of State Legislatures. (n.d.). Medicare Nonpayment for Hospital Acquired Conditions. Retrieved from NCSL: https://www.ncsl.org/research/health/medicare-nonpayment-for-hospital-acquired.aspx

NEJM Catalyst. (2018, April 25). What Is Risk Management in Healthcare? Retrieved from Catalyst: https://catalyst.nejm.org/doi/full/10.1056/CAT.18.0197

Rhinehart, C. K. (2021, June 30). Risk Financing. Retrieved from Investopedia: https://www.investopedia.com/terms/r/risk-financing.asp