MHA FPX 5014 Assessment 2 Internal Memo – Risk Financing
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MHA FPX 5014 Assessment 2 Internal Memo – Risk Financing

MHA FPX 5014 Assessment 2 Internal Memo – Risk Financing

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), a part of Rochester Regional Health, has been recognized for its quality healthcare services, earning Magnet status for excellence. However, to sustain its progress and achieve organizational goals, addressing the high rate of medication errors through risk financing is crucial. These errors not only compromise patient safety but also present significant financial risks to RGH.

An evaluation of RGH’s spring 2021 hospital grade highlights the severity of this issue. The performance in the medication administration domain is particularly concerning, as detailed 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 worldwide (Haytham, 2016). Defined as any preventable event that may cause inappropriate medication use or patient harm under healthcare professional control (AMCP, 2019), these errors can occur during ordering, transcribing, dispensing, administering, or monitoring stages (Durham, 2016). Given the dynamic nature of the healthcare industry, with its evolving regulations, policies, technologies, and guidelines, medication errors pose both clinical and financial risks to RGH.

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

To address this, RGH’s risk management team will employ key performance indicators (KPIs) and performance dashboards to monitor, assess, and mitigate risks associated with 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 assessing 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 involves examining processes or events that can harm patients and cause financial loss. For example, medication errors can result in extended hospital stays, increased resource use, decreased reimbursement, and financial losses (Chen, 2017). Managing risks entails gathering data, reviewing information, and developing strategies to reduce the occurrence of these risks (NEJM Catalyst, 2018). Benchmarking can then be used to measure progress in risk mitigation and financial performance (Institute for Safe Medication Practices, 2005).

Recommendations for Risk Financing

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

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

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

Confidential incident reporting will help gather data on medication errors, enabling the development of strategies to improve patient safety. A safety culture will be fostered, 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 manage legal and financial risks effectively to remain profitable and successful (NAACOS, n.d.; LaPointe, 2016). ACOs aim to provide coordinated, high-quality care while reducing costs and preventing medical errors (CMS, 2021). Compliance with CMS policies, which 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 improve 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

MHA FPX 5014 Assessment 2 Internal Memo – Risk Financing

Rodziewicz, T. L. (2021, January 4). Medical Error Reduction and Prevention. Retrieved from U.S. National Library of Medicine: https://www.ncbi.nlm.nih.gov/books/NBK499956/

Shah, K. L. (2016, September). Bar Code Medication Administration Technology: A Systematic Review of Impact on Patient Safety When Used with Computerized Prescriber Order Entry and Automated Dispensing Devices. The Canadian Journal of Hospital Pharmacy, 394-402. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5085324/