Paying for Patient Safety: Solving an ROI Puzzle

It is a long-standing complaint: designing and implementing interventions to make health care safer costs money, but showing a return on investment in patient safety and quality is challenging. That, in turn, can make it more difficult for leaders in those areas to secure support for improvement initiatives that move the dial. But new methods of looking at these investments might be able to turn more heads.

At a recent gathering of patient safety experts in Boston sponsored by CRICO’s Candello division, two Harvard researchers shared how they have successfully approached this quandary. Dr. Adam Schaffer is a hospitalist and Senior Clinical Analytics Specialist for CRICO, the patient safety and malpractice insurance company for the Harvard medical community. According to Dr. Schaffer, unlike traditional thinking in other domains, a return on investment, or ROI, of zero can be considered a success for patient safety.

“An ROI of zero means that the program neither gained nor lost money. And if you’re talking about a financial context , an ROI of zero is unquestionably going to be considered a failure, because, you know, when you’re investing your money, you want to make money, but within the patient safety sphere, an ROI of zero means that a program must have been cost neutral, and in many situations that will actually be considered a success, you know, leaders are receptive to supporting things that don’t cost them money.”

Dr. Schaffer talked about how malpractice data have typically been used for ROI analysis. He called it ROI version 1.0, which shows high malpractice dollar values attached to something that you want to prevent with a safety program. He used data from the National Practitioner Data Bank to show that the dollar values for payouts are significant.

“The average was 356,000. The median was about 200,000. And then, you know, the cases that keep us up at night as you get, let’s say, to the top decile, you’re approaching $1 million. So, you know, again, if we’re talking about these cases that are going to be 500,000, 750,000, $1 million, preventing a very small number will really very substantially offset some of the investment in some of the patient safety programs.”

As an example, Dr. Schaffer described a current proposal at a hospital to implement a rapid response system in the inpatient areas. At a high level, if the data say that 60 percent of failure-to-rescue cases in the data set closed with payment and the mean payment was $900 thousand, then this gets people’s attention. Limits on this method, however, include the reality that no single program can prevent 100 percent of errors in its area of focus that lead to malpractice cases. According to Dr. Schaffer, Return on Investment Version 2.0 looks at historical, coded malpractice data and subtler characteristics and contributing factors that reviewers attach to every single case. Reviewing the prior malpractice cases allows you to determine what proportion of them the patient safety intervention would likely prevent.

“So what you’re doing is you’re going through in the relevant malpractice cases you have historically so that you can get an objectively determined probability of success term, which then allows you to give a much more sort of sophisticated analysis of, how much money, in terms of, malpractice indemnity payments, you can anticipate saving with the patient safety intervention.”

This case-by-case analysis using standardized codes already assigned to the data is a key advancement for this kind of patient safety ROI. To illustrate this ROI 2.0 method, Dr. Schaffer described an intervention called Ambulatory Safety Nets, which uses EHR registries and patient navigators to follow up with patients who don’t get the recommended repeat colonoscopies. The case example is a 60-year-old male who undergoes a colonoscopy with a recommendation to repeat it after three years, but he doesn’t go for follow-up.

“He never undergoes the repeat colonoscopy. He says he was never actually notified that this repeat colonoscopy was required… He doesn’t undergo that necessary repeat colonoscopy. And then six years later, he’s diagnosed with metastatic colon cancer, a malpractice case is filed and an indemnity payment of $650,000 is made.”

That $650,000 can be considered cost savings from implementing an Ambulatory Safety Net intervention, because of the high probability the follow-up would have prevented the cancer. It adds up to a powerful argument when applied across many cases. Dr. Schaffer says this ROI analysis can also help fine-tune and improve the intervention itself.

“The aspect of this which was really a revelation for me as we were reviewing each of our cases to say, would this patient safety intervention with the colon cancer ASN have potentially prevented this case?, is it really allows you to think about what can we do to augment, what can we do to enhance this patient safety intervention, so we can prevent a larger number of the cases.

It can be important for ROI arguments to show that an intervention program actually works. Expanded adoption of a patient safety intervention provides another kind of ROI validation by evaluating the program after it has been implemented. Dr. Christopher Landrigan illustrated this aspect for the audience, using his I-PASS program as an illustration. Dr. Landrigan is Chief of the Division of General Pediatrics at Boston Children’s Hospital. I-PASS is a structured method of handing off patients at shift changes or other transitions, and it stands for Illness severity, Patient summary, Action list, and Situational awareness and contingency. Dr. Landrigan says that research has consistently shown hand-offs as a significant vulnerability for patient safety and medical malpractice.

“I’m going to start with the few minutes of talking through that a little bit. and, and just trying to explain why do we care about this issue of miscommunications and hand off failures in health care. So, you know, you look to the left hand side of the slide here…”

Dr. Landrigan cited an article in the British Medical Journal showing medical error was the third largest cause of death in the U.S. He shared data that show miscommunication as the most common root cause of sentinel events reported to the Joint Commission. He says half of those miscommunications are hand-off failures.

“Some failure to transmit information or some, misinformation that is passed off either a change or shift or when a patient changes locations from the within the inpatient setting, inpatient, outpatient, outpatient to inpatient, you name it.”

When Dr. Landrigan’s team set out to address the underlying issues 16 years ago, they used broad malpractice data to identify big opportunities for improved communication during hand-offs, and applied for grants to move into an intervention phase at the hospital level. At the same time, the impact of relatively recent changes in resident work hours with shorter shifts and added hand-offs of patients from one provider to another became apparent.

“The hand-offs between those physicians were just a disaster. I mean, there basically was no standardization to them whatsoever. The residents who show up on rounds in the morning and have no idea about the basic details of a patient who had been admitted the night before because there had not been a good exchange of information between the night team and the day team. And so we started thinking about, what can we do to just try to structure this process a little bit?”

Their intervention included training so transitions for each patient covered the I-PASS elements. Policies required appropriate environmental surroundings for an adequate transfer of information about each patient from provider-to-provider. Their local experiment led to a drop in medical errors. With their initial success, they received more funding to expand to more sites, and they put significant effort into measuring how their interventions affected error rates and workflows. They continued to see wider receptivity to I-PASS as they acquired more data, including findings that showed the program reduced errors at institutions by 30 percent without a major impact on clinician time. Subsequent studies showed similar effects after implementation with nursing staff.

Dr. Landrigan said that an ROI analysis provided additional support as he sought to implement I-PASS more widely. For a 2023 study in the Journal of Patient Safety, he says they went back to malpractice data and used the kind of ROI 2.0 that Dr. Schaffer described on a random sample of malpractice cases with hand-off failures. Looking closely at the contributing factors assigned to each case, Dr. Landrigan’s researchers found that the most common factors contributing to these hand-off communication failures involved patient diagnosis, contingency planning, and other elements of a structured transition communication that I-PASS was designed to enhance.

“They then began to attach some dollar figures to miscommunication and hand-off-related claims as compared with other claims. And it turns out that hand-off-related failures are almost twice as expensive as other claims. In large part, we think, because when there’s a failure of a surgeon or the pediatrician to talk to one another about something that’s wrong, largely those things are indefensible. And so what they were finding is that those things tended to go to settlement, relatively quickly. They were pretty rarely denied or dismissed. And the settlements tended to be, significantly larger than the average.”

Dr. Landrigan’s researchers found that a structured communication program at hand-off would have prevented 77 percent of those claims. If extrapolated to all malpractice claims, a hand-off tool has the potential to reduce all malpractice claims by 19 percent and costs by 27 percent. I-PASS has been expanding to health systems nationally and has garnered interest from the entire state of Kentucky.

Both Drs. Landrigan and Schaffer urge patient safety champions to think of impacts beyond financial savings. Financial calculations have their place, but other benefits should be considered, such as reputational risk, staff well-being, and health equity. Dr. Schaffer shared studies demonstrating that reducing lawsuits affects clinician burnout and retention rates. He also shared that AHRQ has a resource to assist with calculating ROI. Typical things are service operating costs like supplies and equipment and staff, medical costs avoided, productivity changes, readmissions, length of stay, etc.

According to Dr. Landrigan, ROI analysis ultimately serves as both a financial and ethical argument for change. While patient safety interventions should be pursued because they are the right thing to do, demonstrating financial feasibility makes them far more likely to gain traction with leadership. When an intervention like I-PASS can prove cost neutrality—or better yet, deliver cost savings—it clears the path for widespread, sustained adoption.

“As we move forward and again work with malpractice carriers as well as CFOs within hospitals and so forth to try to make the case for doing this, we have shared these numbers. We can often, if they’re willing to share with us their malpractice data, we can plug it in and sort of into a calculator that spits back out for them what their anticipated savings would be over a particular period of time. And at least in a few cases now, that’s been really compelling for them to put this thing up to the top of the queue where this is not just about patient safety benefit now, but there really are savings for this.”

And in a healthcare landscape where resources are tight, that can be the deciding factor in whether patient safety initiatives move forward or stall.

I’m Tom Augello for Safety Net.