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Crash_RecorderTechnology in the auto industry is amazing. From electronic navigation systems that talk to you in a soothing voice to collision avoidance technology, a growing number of cars are equipped with many of the latest bells and whistles the industry has to offer. It’s the stuff of science fiction (or at least an episode of the Jetsons). And it’s exciting.

This brave new world of automobile accident avoidance mobile/broadband telecommunications technology is often categorized under the broad general term of “telematics.”

There is considerable existing and emerging tech that falls under that category. One of the key components – and something of real interest to adjusters – is Event Data Recorders (EDR). Think of the EDR as a kind of black box, but one that only records the few seconds before and after impact.

While promising in terms of driver and passenger safety, there’s an important question we must ask:  will this great data consistently get into the hands of adjusters?

It should. Think of what we could do to better resolve claims if we had definitive information about accidents such as were the brakes applied, for how long, the exact speed upon impact, how long the driver decelerated or accelerated before impact, if the driver was trying to brake just prior to impact and more.

We know this technology works because it is already being used by many companies with large commercial truck fleets. When investigating accidents involving trucks, adjusters now have an additional tool to use to determine the factors.

The National Highway Traffic Safety Administration (NHTSA) estimates that some 91% of cars on the road today have EDR. Despite its widespread use, availability to the claims industry is still very limited. Why is that? There are some key factors influencing adoption:

  • Who owns all that data? Is it the owner of the car, the automobile manufacturer, the insurer, law enforcement, attorneys, or some government entity like the NHTSA? It’s kind of a tricky issue, as each automobile manufacturer has its own proprietary approach to EDR.
  • There is currently a hodgepodge of legislation governing EDR. Some states allow it, some don’t. In fact, out of privacy and other concerns, some states even have mandates that nullify use of EDR data. As a result, many insurers haven’t determined what to do with EDR data, let alone how to work appropriate language into their policies.

Clearly, there is still much we need to do to increase adoption of EDR technology for claims settlements. Let’s not wait. The time to start preparing for this new tech is now.

As an industry, we need to encourage standardization of EDR technology and adoption of uniform state laws governing its use. We need to start more pilot programs and work to train our adjusters on how to maximize the data contained in EDRs. Insurers should include language in their policies granting them immediate access to the technology in the event of an accident. And, we need to encourage car manufacturers to do more to expand utilization of not just EDR technology, but other collision and accident avoidance tech. Let’s not just record data – let’s do more to prevent accidents.

We have a lot more to do to lay the groundwork for use of EDR. But it is coming. As of this year, all new cars sold in the U.S. must include EDR tech. EDR tech has been used in more than 100 court cases, so legal precedents have been set. We can make this tech work – like the commercial says, we need to “just do it.”

What do you think of this tech for adjusters? Have you used it? What concerns you and what do you think is promising? Stay tuned for more detailed insights into this important topic for our industry.

Mario Rodriguez, Director National Technical Compliance

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Telemedicine_Consult-(Intel-Free-Press-Wikimedia-Commons)_webTechnological advancements in medical care are happening with lightning speed these days and changing the delivery of healthcare. We’ve included “Advancements in Medical Care” among Sedgwick’s Foresight for ’14 topics and believe it will significantly affect employers this year.

I am often asked about technology and healthcare and how it could impact workers’ comp. There are rich opportunities available to us, especially with the changes from the implementation of the Affordable Care Act.

The healthcare reform goals of greater efficiencies in the delivery of healthcare, better outcomes and more affordable pricing have raised discussions about newer technologies and workers’ comp, especially telehealth. While it is not a new concept, it can have valuable new applications for our industry.

The American Telemedicine Association defines telehealth as remote healthcare technology to deliver clinical services. That can include anything from medical providers consulting by phone, to robotic surgery from a remote location.

More than 60% of health plans now include telehealth and the ATA estimates around 10 million Americans had a medical service provided remotely last year, although most were likely unaware of it. I see it as being especially effective in workers’ comp situations for nurse triaging and clinical consultations.

Consider restaurants, for example, where burns are a fairly frequent occurrence. Using telehealth, a nurse at a remote location can evaluate the symptoms and determine whether the worker needs to be seen directly or can be discharged with instructions for homecare. The technology is sophisticated enough to allow the provider to see deep into the hair follicles – much more advanced than, say, Skype or FaceTime, and it is HIPAA compliant.

Telehealth could also be used to reduce or even eliminate waiting times, and thus costs, for injured workers to see medical specialists. A patient visiting his occupational healthcare provider who needs an evaluation from an orthopedist could have the consultation right on the spot, via a conference call during which results of diagnostic tests are projected onto a screen visible to the specialist.

Looking ahead, there is no reason the technology could not be used for roundtable discussions with medical providers, claims specialists, nurse case manager and the injured worker. In addition to cutting travel expenses and time, that would also address issues of transparency, since the patient would be a part of the conversation.

However there is one possible issue looming for telehealth that will need resolution. As reported in Modern Healthcare last month, “State boards’ policy for telemedicine may present roadblocks“ on physicians treating across state lines. This month, state boards will vote on various policies. It will be interesting to see how this plays out in the months to come.

What are your thoughts on the uses of telehealth in workers’ comp? Are there other areas that should be explored?

Kimberly-George-Senior-Healthcare-Advisor-Sedgwick

 

 

 

 


Kimberly George, SVP, Senior Healthcare Advisor

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outcomes-based-networkWith the buzz around outcomes-based networks in healthcare and now in workers’ compensation, many are trying to understand what these are all about and if they are all created the same.

In workers’ compensation, one of the main goals for risk managers is of course to control costs, but of more importance is to provide programs and resources to help injured workers regain their health in order to get back to work as quickly as possible.

For years, our industry has been providing employers with access to preferred provider network solutions that reduce bill costs and help manage expenses, but how do employers know if the fee reductions also mean good outcomes?

What has been needed is a more holistic approach where risk managers and human resource directors have access to information that provides an understanding of the impact a medical provider has on the claims management process – not just the medical bill review data. Fee reduction is a very important objective, but the primary goal for every employer should be to eliminate unnecessary care and related bills first and then address fee reduction on the bills for necessary care.

With these goals in mind Sedgwick embarked on a mission to create a truly outcomes-based network solution with two main components:

  1. Deploy the network solution throughout the daily claims and medical management process
  2. Measure how medical providers are doing across a broad spectrum of data points by creating scorecards

As many in the industry understand, a key component for successful claims management is locating primary care physicians and specialists associated with the best outcomes and utilizing them, as allowed by law, to treat workplace injuries.

Sedgwick’s benchmarking program is doing just that. While the industry continues to debate what comprises a smart medical network, our benchmarking program and claims management services are consistently helping employers provide quality care for their injured employees and reduce workers’ compensation costs.

Our program scores medical providers on a scale of one to five, and those earning four and five stars are the top-performing providers. This is a continuous process and takes into consideration more than medical bill review data such as litigation, return to work, recidivism, care utilization and cost. Sedgwick developed a total workers’ compensation provider benchmarking solution that focuses on all of the components that impact employers’ cost of risk.

As the first in the industry to create a quantitative methodology to measure the quality of care provided to injured employees and to use that knowledge to build superior networks, we are seeing great results. When injured employees visit top-performing providers identified in our benchmarking program at the onset of their injury, claim duration is shorter, incurred costs are less and employees return to work faster.

In a recent evaluation of 107,000 claims, using high-scoring providers resulted in:

  • 40% faster claim resolution
  • 61% less incurred expense
  • 62% less incurred medical expense
  • 73% less lost time days

To learn more read our recent white paper on this topic. What is your experience with outcomes-based networks? Let us know what you have learned.

James Harvey, SVP Managed Care Products & Products Development

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2014_BI_InnovationAwards_webA few weeks ago at the Business Insurance Risk Management Summit in New York City, our President and CEO, Dave North, and I had the honor of accepting one of the 2014 Innovation Awards for our viaOne® express mobile app and push technology.

As you can imagine, the summit was abuzz with technology and tech-related topics. In addition to the awards ceremony, I was asked to facilitate a roundtable discussion on risk management tools and technology. Discussions were lively and centered on four areas:

Big data

How can we best manage growing data and utilize it to better identify the needs of target audiences? The benefits of “big data” were of significant interest. Data provides the opportunity to better understand your customers and draw conclusions from seemingly unrelated data sources. The ability to better target the needs of individuals based on this information is of tremendous benefit and value.

Another topic of interest centered on the challenges created by “big data” as it relates to privacy. The more data and information we create, the greater potential there is that it could be used against us in ways we cannot fathom today. Privacy and understanding how this data will ultimately be used was of paramount concern.

Social media

What does the spectrum of use and success look like for organizations that attempt a social media footprint? What guidelines or standards should a company look to when determining how to leverage and manage social media? Our roundtable discussed specific examples of how companies are prospering and falling in their social media endeavors.

Most felt that, currently, social media is more of a tool for marketing than something that could be leveraged along with core business data. However, in this day and age, support can often be much more rapidly achieved by tweeting your question or issue to a company’s twitter account. Although not every company follows the same guidelines for responding, those that do it well are able to respond within minutes and address the exact question or need.

Cloud, mobile and analytics

Many companies now have a mobile-first (possibly even only) policy in terms of the products their consumers access. Smart companies utilize cloud-based platforms and develop in such a way that the mobile presence is not separate from their desktop equivalent. In our roundtable, consensus was that getting a solution out to users is more important than waiting to release the “perfect solution” – with one key caveat – that customer feedback is taken into consideration and ultimately built into the product.

When determining what to offer in a mobile product, at least some cues should be taken from the capabilities found in personal apps. Clearly, younger workers are adopting these capabilities more readily; however, it has been Sedgwick’s experience that companies actively promoting the availability and benefits of a mobile offering see greater adoption across all demographics.

Data privacy

As more sources of data become accessible online – from sensors installed by cities, to increased social media utilization, to the emerging “internet of things” explosion – understanding how this data is and will be used will take on significant importance. Building the framework today is important and it is clear the federal government will ultimately need to play a role in making key decisions. Companies should develop solutions with a “privacy by design” approach and not wait to address issues once a product has been deployed.

It’s hard to imagine another topic garnering as much discussion, debate and passion as current trends in technology. While the benefits are seemingly endless, potential challenges must also be considered. Smart companies are already ahead of the curve by providing solutions designed with privacy in mind and giving customers access to information in ways that are most convenient to them using mobile and push technology.

Sedgwick will continue to push the technology envelope as we move forward. In what ways are you staying ahead of the risk management technology curve?

Jarrod Magan, VP Client Technology Services

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sshemanski-180hblogBy the end of this decade, 76 million baby boomers – who currently make up one-third of the U.S. workforce – will retire. At the same time, we are experiencing a shrinking youth labor force. This shift in workforce has the potential to negatively impact organizations if a gap plan is not instituted. Three key areas organizations need to consider in their succession planning are:

1)  Culture
2)  Knowledge gap
3)  Labor shortages

Culture: Organizations need to consider whether a shift in their culture would hurt or help the organization. Older workers have a reputation of bringing more stability to an organization. At the same time, though, they can be a barrier to new thinking and creativity. An exodus of older workers can bring a strategic opportunity to reshape the organizational culture. Organizations need to consider how their values align with their future vision. If a planned change in culture would benefit the company, then they need to base their future hiring on cultural attributes that will be needed in new employees. At the same time, they need to work with the older workforce to maintain key client relationships built over the years and to maintain the fundamental leadership skills that formed the company. A concerted effort is needed to successfully make a cultural shift.

Knowledge gap: A sudden gap in skills, abilities, talent, and industry knowledge can make it impossible for an organization to maintain their competitive advantage. We will notice the gap most when it comes to company leadership. With more employees over the age of 55 than any other industry, the healthcare industry has already started to experience this loss of talent. High-tech and data-driven companies are also expected to see a severe negative impact to their industry as they lose aging talent. Studies have shown that older workers are better at interpreting data and younger workers tend to just gather and repeat the data. Could this be driven by their limited knowledge of the industry they have just joined? Organizations should consider bringing back retirees as consultants to continue mentoring younger employees and to help with transitioning client relationships – a process that can take years.

Labor shortages: Failure to have a plan for gaps when older workers start to retire could hinder a company’s growth and client retention. Labor shortages will require creative ways to hire, retain, and provide flexible work schedules to keep the current generation engaged. Human Resource departments need to be trained to interview for skills and knowledge that are needed without age as a barrier. AARP reports that 79% of workers that have reached age 65 will be looking for a “working retirement.” Keeping those workers engaged and healthy will be key.

Susan Shemanski, VP, Client Services

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sedentary-work-heart-riskOffice employees and other sedentary workers typically have lower frequency and severity of workers’ compensation claims than their more active or labor-intensive coworkers. However, new medical evidence suggests a link between sedentary employment and significant health issues which could potentially raise both the frequency and severity of workers’ compensation claims for these workers in the future.

Recent medical studies have shown a link between sitting and other sedentary behavior and an increased risk of events associated with cardiovascular disease such as chest pain or heart attack, as well as other diseases such as cancer, diabetes or metabolic syndrome. Consider:

  • An Australian study of more than 200,000 individuals revealed that people who sat for 11 hours per day or more were 40% more likely to die from any cause, and those who sat between 8 and 11 hours per day had a 15% greater risk of death compared to individuals who sat less than four hours per day
  • A Women’s Health Initiative Observational Study found that women who sat more than 10 hours per day had significantly greater risk for heart disease, heart attack and stroke compared to women sitting five hours per day or less

Although these studies did not specifically deal with employment, the results can easily be applied to sedentary work activities. It is important to note these studies looked at adults age 45 or older. Also, studies differed on the relationship of other factors to the findings.

The American Medical Association (AMA), at its 2013 annual meeting, adopted policy recognizing potential risks of prolonged sitting. “Prolonged sitting, particularly in work settings, can cause health problems and encouraging workplaces to offer employees alternatives to sitting all day will help to create a healthier workforce,” said AMA board member Patrice Harris, M.D.

What does all of this mean for your workers’ compensation risk of heart-related claims?

Generally, a workers’ compensation claimant would need to establish both medical and legal causation in order to prove a heart attack compensable. For medical causation, in general, the heart attack must be caused by the work environment rather than the natural progression of cardiovascular disease. A workers’ compensation claimant is required to provide medical evidence from an expert witness that connects the heart attack to the employment. The standard for that connection varies from jurisdiction to jurisdiction. In some states, the employment needs only to contribute to the heart attack. Other states require more than just contribution and the employment must be a substantial or material cause of the heart attack.

Regardless of which standard a jurisdiction uses for medical causation, an expert witness can theoretically use the above-mentioned medical studies to try to prove medical causation. In a contribution state, an expert medical witness could opine that 1/3 of a claimant’s day spent in a sitting position at work certainly contributed to the heart event. In a substantial or material cause state, an expert medical witness could draw the conclusion that eight hours of sedentary work every day was the substantial or material cause of the claimant’s heart-related problems.

In addition to medical causation, a workers’ compensation claimant must also prove legal causation of the heart attack. A majority of states have adopted the usual exertion rule for legal causation. The above studies could support legal causation in these states by showing the sedentary work activities were a substantial contributing cause of the heart attack.

Some states require only that the usual exertion of the work activities be greater than the claimant’s exertion outside of work. But in a minority of states, an employee would need to show an unusual work exertion above and beyond their normal employment activities caused their heart attack and the above medical studies would be less relevant. However, if the results of these medical studies become accepted medical doctrine, one can foresee these states moving toward the primary usual exertion legal causation standard for heart attacks over time.

Clearly the trend in current medical studies is that sitting and sedentary activities for many hours each day can contribute to an increased risk of significant medical conditions including cardiovascular disease and heart attacks. Here are eight steps employers can take now to help minimize future risk and promote healthy lifestyles for their employees:

  1. Encourage employees to participate in a heart screening to determine heart health
  2. Make available alternatives to sitting, as encouraged by the AMA, such as standing work stations
  3. Allow the use of wireless or Bluetooth headsets so employees can stand or walk around while on the telephone
  4. Encourage employees to not eat lunch at their desks, but to visit the lunchrooms to eat, walk outside or exercise at lunch
  5. Build periodic movement into the regular work routine of employees
  6. Encourage less e-mail and more face-to-face discussion which would require employees to get up from their desks to visit co-workers (this option has the added benefit of promoting better relationships in the workplace)
  7. Provide an on-site exercise room where feasible and promote its use
  8. Build financial incentives into employee health plans to get regular physicals, join fitness centers, lose weight, stop smoking and generally have healthier lifestyles

In summary, there are significant new medical studies which show a link between sitting and sedentary activity and an increased risk of various diseases, including heart attacks and cardiovascular disease. In theory, these studies could substantially change the landscape of compensability of workers’ compensation claims from sedentary employees for heart attacks. In practice, it remains to be seen how and to what extent the landscape changes. In the interim, anything an employer can do to encourage more movement and less sitting during the work day could mitigate future heart attack claim risk.

Do you have suggestions or examples of how your organization is working to prevent this growing trend?

Joe Daly, Director Technical Performance

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CA-Voluntary-Plan-blogDid you know that California is one of only five states in the nation – along with Hawaii, New Jersey, New York and Rhode Island – with a mandatory disability insurance program? In California, the State Disability Insurance (SDI) “State Plan” is funded by employee contributions and protects California workers against wage loss due to a non-industrial injury or illness. If you have employees working in California, there is an alternative to SDI you might find very interesting.

The California Unemployment Insurance Code allows an employer to establish a substitute disability program called a “Voluntary Plan.” The coverage, rights and benefits under this Voluntary Plan must be equal to what is provided by SDI and it must also be better than SDI in at least one respect. A majority of employees eligible for coverage must approve the plan going into effect. Once a Voluntary Plan is approved, the employer is no longer required to send employee contributions to the state for those employees who selected coverage under the Voluntary Plan. Instead, the employer can withhold up to the same amount of contributions from these employees and hold the money in trust to pay Voluntary Plan claims and approved expenses.

One of the benefits of establishing a Voluntary Plan is the potential for an employer to provide better coverage to employees without any additional cost. When an employer’s work force has low claim frequency, the surplus contributions (the difference between what is withheld from employees and what is needed to pay the claims and expenses) can be used to provide a higher level of benefit or to underwrite a lower contribution rate from the covered employees. An employer who is already providing some form of salary continuation can integrate those benefits with the higher Voluntary Plan benefits to greatly enhance their employees’ total benefit package.

Obviously, your employees’ claim experience is a critical factor in determining if a Voluntary Plan can support an enhanced benefit. The number of covered employees also has an important bearing. Although there is no upper or lower limit on the number of employees who can participate in a Voluntary Plan, the greater the number of employees, the more likely it is that the plan will be financially sound. A caution to any employer considering a Voluntary Plan is that the employer is ultimately responsible for plan expenses. The state rate of contributions can be withheld from employees, but if that is not adequate, the employer must loan or contribute funds as necessary to meet plan expenses

Hundreds of California employers have implemented a successful, fully employee-funded Voluntary Plan that provides better benefits to their employees – and Sedgwick can help with a Voluntary Plan for you. If you have questions, please let me know or feel free to share your thoughts here on the blog.

Barbara Jones, VP Client Services, Disability Administration

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blog-US-CapitolJust when you thought you knew all the acronyms, TRIA (the Terrorism Risk Insurance Act) comes back to the forefront, now known as TRIPRA (Terrorism Risk Insurance Program Reauthorization Act).  First passed in 2002 in its original form, its purpose was to provide a federal (U.S. Treasury-based) reinsurance mechanism (“backstop”) in the wake of the 9/11 attacks to an industry shocked at the size of expected ultimate losses. Losses from just the World Trade Center buildings are estimated at $60 billion. The insurable property losses from 9/11 were approximately $32.5 billion [1]. Of course, nearly 3000 lives were lost, entailing an additional massive amount of workers’ compensation losses. As such numbers would imply, the insurers that stood behind those insurance contracts were spooked by the brave new world of the “black swan” – losses never seen before. As a result, the immediate future of insurable terrorism risk was fraught with insurance contract exclusions up to absolute and total exclusion of terrorism risk losses, though not excludable in workers’ comp policies by law. Thus the need for a federal mechanism that would help the industry regain comfort with the ostensibly unpredictable.

Predictability is at the heart of insurability; underwriters typically agree to “underwrite” or insure risks that they can confidently assess. Getting some level of comfort around the frequency and severity (i.e. the likelihood and impact) of causes of loss (exposures), allows for the calculation of targeted profit and needed capital to back the risks taken. The more unpredictable the exposure, the less likely it is that insurance markets will take the risk. Terrorism is, notwithstanding the media-fueled perceptions of the frequency of events, still rare and uncommon in the United States. The problem of insurability, however, lies more in the severity of potential losses, even though infrequent. This is especially true of NBCR – nuclear, biological, chemical or radioactive sources of loss.

In an early example of an exposure dilemma, a Fortune 500 company in Texas with a large concentration of its employees in one location had its consideration of non-subscription, opting out of the Texas workers’ compensation statute, stymied by one large insurer’s estimated workers’ compensation possible maximum loss (PML) of $5 billion. Because terrorism cannot be excluded in workers’ comp policies, risk concentration is of utmost concern. This PML estimate itself bears witness to even the largest commercial insurer’s ability to take this much risk from any one source. And while this insurer was not explicit about how such a large loss could be envisioned, it was obvious to me that terrorism was the scenario that spooked them most. Needless to say, this company opted not to come out from under the exclusive remedy protection of the Texas workers’ comp statute and avoided the potential destruction of the company in a worst-case scenario event.

What does TRIA’s federal reinsurance mechanism provide in the case of an insurable event? In its current form, the mechanism will respond only if the following criteria are met:

  • An individual loss must result in at least $5 million
  • The event must be a certified act of terrorism by the U.S. Treasury
  • Aggregate industry losses from an event must exceed $100 million

With these criteria met, the act provides for risk sharing once aggregate insured losses exceed $100 million, but requires an insurer absorb another 20% based on prior year premiums. Above this level of risk assumption, the U.S. Treasury pays 85% of each loss dollar and the insurer 15% up to a maximum limit of $100 billion. While a truly catastrophic risk transfer mechanism, TRIA has been effective in allowing insurers to take more terrorism risk and for risk managers to find coverage where none would have been available otherwise.

So while TRIA was renewed in 2005 for two years and again in 2007 for seven additional years, it now expires in its present form on December 31, 2014. Each renewal has brought adjustments to the law, usually in favor of more risk shifting away from the U.S. Treasury and toward insurers. Hearings are now taking place with testimony from risk managers, insurers, brokers and other interested parties offering a consistent refrain that this federal reinsurance mechanism should continue if not become a permanent source of risk financing. Its protections can continue to enable the broader industry of insurers, self-insurers and even hybrid insurers like captives to take risks that remain highly unpredictable but include exposures that are not going away and, in fact, most would say are growing in both potential frequency and severity in the United States.

The regular need for terrorism insurance to secure debt and the selective non-renewal of some workers’ compensation policies by certain insurers now fall among the real world issues affecting risk managers. With insurers becoming increasingly uncomfortable with the concentration of risk surrounding some insureds and the insecurity caused by ongoing debate about whether or not to extend or make TRIA permanent, risk managers find growing uncertainty in the insurance renewal process. Unfortunately, the acceptable risk financing alternatives available to affected companies, some of whom will no doubt be our clients, are few and far between.

CMandel2-180px

 

 

 

 

Chris Mandel, SVP, Strategic Solutions

[1] Claim Journal, 9/9/2011, “9/11′s Costly Insurance Impact”

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himss14_adI attended the annual Healthcare Information and Management Systems Society (HIMSS) 2014 conference this week along with over 35,000 attendees and 1,200 vendors participating from all over the world. It was clear that this is the true mecca of healthcare information technology. From big data to data analytics and predictive modeling, data integration/interoperability, intelligent hospital, to mobile health and telemedicine, the conference represents the best and the newest technology available in the market that is rapidly transforming the healthcare landscape. New tools are available to help patients connect with doctors virtually, manage prescriptions through mobile phones, match with the right doctor based on the patient’s specialized needs, and manage health using web portals and digital devices.

In our “Foresight for 2014,” Sedgwick forecasted that technological advancements in healthcare delivery are expected to increase rapidly throughout the year. In fact, we predicted that devices such as Google Glass will become part of delivering care and one HIMSS vendor called Pristine is already developing the next generation of telehealth communication solutions built around the device. Numerous start-ups showcased their new integrated solutions that enable multiple providers to share and exchange data, focusing on health and wellness management, and reducing hospital admissions that drive the cost of care. One of those was OneReachHealth that provides advanced integration of medical information using the phone and texting to improve patient engagement – and is HIPAA compliant.

In our industry, the practical applications of these new integrated solutions can help provide immediate and appropriate care for an injured worker while keeping the overall healthcare cost down. Integrated healthcare solutions are tied to interoperability, which is the ability of multiple data systems to communicate with each other and share data. This technology is the backbone of a new model of care where multiple providers share patient data, reduce errors, minimize hospital visits, and focus on the patient’s overall health and wellness. The accountable care model relies on coordinated care from each provider to manage the patient’s health. Accumulated healthcare savings is then shared among the group. Some of the start-up companies at the conference focusing and supporting the Accountable Care Organization (ACO) model of care include ACOMS+, a population health and disease management ACO vendor called Self Care Catalyst, Caresync, and Healthloop, a cloud follow-up visit platform available to providers.

What are your thoughts on the use and benefits of emerging technology in surveying the needs of ill or injured workers? Join my LinkedIn group, Transforming Healthcare for Tomorrow, to be part of ongoing conversations on health tech and how it is changing our industry.

Kimberly-George-Senior-Healthcare-Advisor-Sedgwick

 

 

 

 

 

Kimberly George, SVP, Senior Healthcare Advisor

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RiskResource-ERMblog022014Healthcare is undergoing dramatic change. The operating environment for hospitals is rapidly shifting from a volume-based delivery model to a value-based one. A road map for hospitals to transform from the fee-for-service first curve to the pay-for-performance second curve system was set forth by the American Hospital Association, who identified the top three high-priority strategies for successful quality improvement and increased efficiency:

  1. Alignment of hospitals, physicians, and other providers across the continuum
  2. Utilizing evidence-based practices to improve quality and patient safety
  3. Improving efficiency through productivity and financial management

Risk management professionals are uniquely positioned to support implementation of these “second curve” strategies in their organizations. As hospitals and health systems seek to acquire non-hospital-based providers such as physician practices and other services as a strategy to increase competitive advantage, stabilize bottom lines, and improve market share, risk managers are often asked to assess the risks of the practices or services either before or immediately after acquisition. Alignment of risk management and patient safety programs necessarily follows.

Enterprise risk management (ERM) provides a framework for achieving safe and reliable healthcare delivery and can provide a structure to fully integrate risk management and patient safety across care settings. This entails an interactive – versus a reactive – approach to risk identification, analysis, and treatment through an entrenchment of risk management principles into corporate operations and strategic planning.

Why ERM?
Managing risk with an enterprise-wide view allows a healthcare organization to use a cross-functional approach to assess, evaluate, and measure risks, and help guide decision-making within the organization’s tolerance for risk as it implements plans to be strategically adept under Affordable Care Act reforms.

Recent trends, including globalization of financial and business markets, continued integration of the insurance industry, increased regulation, and a greater focus on corporate governance, have stimulated a shift to ERM from the traditional “silo” approach to risk management in healthcare organizations.

An ERM program can help healthcare leaders focus on better management of patient safety risks as well as business risks and, in turn, increase the value of their organizations through gains in reputation, prevention of financial losses, and investment in expanded healthcare services to benefit both the organization and the community.

Additionally, where traditional risk management centers mainly around the risk control activities of avoidance, control, and risk transfer through insurance and other means, ERM sees risk as an asset and sees the potential for gain as well as for loss in risk-producing activities.

ERM goes beyond clinical risks
ERM provides a logical framework for identifying, measuring, and acting on the broad scope of potential risks facing healthcare organizations today. The benefits of ERM go beyond avoiding financial losses and legal entanglements and include enhancement of management effectiveness, increased value for all stakeholders (patients, staff, suppliers, and the community), better stability for the organization, protection of reputation, and increased board confidence.

Instead of dealing with risks separately or within functional departments, ERM recognizes that risks are interrelated and can be managed across various domains:

  • Operational risks arise from the healthcare organization’s core business: the delivery of healthcare services in all care settings.
  • Financial risks are associated with an organization’s ability to raise and maintain access to capital, contracting issues, cost of risk, and evaluation of supplier support. This domain includes risks eligible for risk financing techniques, such as insurance.
  • Human capital risks include the organization’s ability to recruit, manage, and retain human workforce. Workers’ compensation, occupational hazards, turnover, workplace violence, harassment, and discrimination fall under this domain.
  • Strategic risks are risks that have an impact on the growth of the organization and include mergers, acquisitions, joint ventures, and advertising liability. In addition, this domain includes reputational risk associated with community relations and performance expectations by patients and payers.
  • Legal and regulatory risks are associated with numerous complex rules, regulations, statutes, and standards. Examples include licensure, accreditation, and Medicare compliance.
  • Technological risks include those associated with biomedical devices, telemedicine, electronic medicine, and information systems that support electronic health records.

Implementing ERM
ERM in healthcare entails identifying critical risks; quantifying their financial, operational, and strategic impact; and implementing risk management strategies to maximize enterprise value.

Beginning with a risk assessment to identify the organization’s risks, generally through surveys, interviews, and observations to inventory and categorize risks by domain, identified risks are analyzed and prioritized for action according to the level of impact they would have on the organization.

Sedgwick healthcare risk management and patient safety consultants have a proven record of successful partnerships in conducting comprehensive risk assessments with prioritization and support for implementation of program improvements. Learn more and read additional detail behind this article in our latest Professional Liability Risk Resource newsletter.

Kathleen Shostek, RN, ARM, BBA, FASHRM, CPHRM, Senior Healthcare Risk Management Consultant

 

References:

  1. Second Curve Road Map for Health Care. Health Research & Educational Trust. Chicago: April 2013.
  2. ECRI Institute. Enterprise Risk Management: An Overview. Healthcare Risk Control 2006 Risk Analysis Supplement A.
  3. Heim T. Searching for risk: the search for business risk will take you on an enlightening journey throughout your organization. Healthc Financ Manage 2004 Apr;58(4):52.
  4. Carroll R (ed.). Risk Management Handbook for Health Care Organizations. San Francisco: Jossey-Bass; 2004.