Reducing Medical Errors:
how state-of-the-art information technologies will
save money ... and lives

A Thilman Filippini perspective on medical cost containment, with new TF guidelines for employers

By John Atkinson, Partner
Thilman Filippini

One night six years ago, the lead story on almost every newscast was a stunning medical expose'. The National Academy of Sciences' esteemed Institute of Medicine reported that each year between 44,000 and 98,000 women, men and children – in hospitals, while under care – die from preventable, often simple medical errors:

Diagnostic errors, misinterpreted (usually hand-written) physician instructions, improperly filled prescriptions, equipment failures.

Even at the low end of the IOM estimate, medical errors comprise the eighth-leading cause of death in America – ahead of pneumonia, for example, breast cancer and AIDs. More people die every year from mistakes in hospitals than are killed in all auto accidents.

Equally unnerving: the IOM said up to 25% of deaths are due to administration of an incorrect medication, the wrong dosage, or a wrong combination of prescribed drugs.

The 1999 study was titled "To Err is Human." But in fact the authors said human providers were not so much to blame as the system itself. It must be assumed that in a health care industry as vast and complex as ours, with annual patient admissions in the scores of millions, brilliant doctors, fine nurses and dedicated caregivers will, on occasion, err. But here, for the first time, was documentation of the extent to which lethal risk actually is built into an antiquated information system.

"The paradox is that an industry so admired for miracle technologies still depends, for the most part, on 1980s-era communications," said one cost containment expert. "These days, everything and everyone is on-line. But the primary links between many providers and pharmacists are still little slips of paper and the telephone."

To be sure, the term "health industry" is a sweeping generalization. The IOM study did not include nursing facilities, per se. Or urgent care centers. What's more, individual centers of excellence abound. Dozens of hospitals, health systems and provider companies get high marks from IT professionals and consistently rank in the upper echelons for patient safety.

Nonetheless, from an industry-wide perspective, there's much to be done.

A second study in the prestigious Journal of the American Medical Association corroborated the IOM's initial conclusions. And in 2004 a report by HealthGrades, citing a larger data base, figured the annual number of deaths from medical errors closer to 195,000, calling the situation an "epidemic."

NOTE: Early this year, new AMA research confirmed that while some significant improvements are being made - particularly in the area of computerized prescriptions - the overall pace of change is stubbornly slow, with an estimated 100,000 deaths each year.

An epidemic? It's worth remembering that, by definition, health care is a high risk undertaking. Staggering as these estimates might seem, out of context, they represent an infinitesimally small percentage of total patient volume in this country. Our imperfect system, by all accounts, is the envy of the world.

So instead of resorting to hyperbole, let's calmly examine a larger issue:

How many "close calls" go unreported? How many information-based errors and procedural snafus go uncorrected. In other words, to what extent does inefficiency perpetuate itself?

Corporate risk and benefit-plan managers were among the first to ask these tough questions: How much are medical errors costing all of us, not just in terms of suffering, but extended hospital stays, additional treatment, "heroic" interventions, malpractice awards and, ultimately, insurance premiums?

Consider this:

While waste of resources is not synonymous with outright medical errors, it's generally acknowledged that "defects" and redundancies in protocols, pharmaceutical ordering and information systems account for as much as 30% of all costs in a $1.8 trillion health care industry.

Studies also note that preventable adverse drug reactions can increase average hospitalization costs by $4,700 per admission.

Authors of the IOM report put the price tag for medical errors at $38 billion per annum.

In the state of Massachusetts alone, a recent investigation found that 2.4 million prescriptions are improperly filled each year.

Predictably, these reports have launched a thousand reform-minded committees, from Congress down to the community hospital level. Ambitious action plans have been drawn up and posted. But outside of impassioned memoranda and an unquestioned commitment to do better, how much actually has been accomplished?

Honestly, less than one would hope. Why?

"Fixing the problem ... is problematic"

"Health care is 30 times tougher than national defense," said former House speaker Newt Gingrich in a recent New York Times article. Gingrich is now spearheading a private health care reform initiative and working alongside, of all people, Hilary Rodham Clinton. The problem is that serious.

Last year the government introduced ambitious plans to move Medicare and Medicaid away from paper and ink to electronic patient record-keeping and computerized prescription systems. Critics said, what took you so long? But from a macro-economic view, here's the dilemma:

Over the years, health care providers (understandably) have heavily invested in diagnostic and healing technology, not in fixing the paperwork. The existing information bureaucracy is now so integrated into fast-paced day-to-day operations that the capital investment needed to overhaul these systems would far exceed expected savings in corrected waste and errors. At least, immediately.

Only over time will expensive new information systems begin to generate significant cost-savings while decreasing the risks of medical error at an industry-wide level. No one can say how long this will take.

Meanwhile, many individual provider companies and physician specialties have taken enormous strides toward managing their own risk by minimizing errors.

Anesthesiologists, for example, have cut errors nearly sevenfold, to 5.4 per million procedures, by aggressively standardizing their protocols and equipment. Some pioneering hospitals have reduced medication errors by as much as 70% through the use of hand-held computers for physician orders and bar-coding for prescriptions. And the 2006 AMA study noted that where computerized prescription systems are being used, they've decreased errors by 81%.

This is what to expect: not a one-shot IT panacea, but steady, incremental progress. Specialty by specialty, hospital by hospital.

"Health care is a complex and intra-dependent system, and it can't be shut down for a few weeks to do inventory and install new systems," said an industry economist. "Change is coming, but it won't be overnight."

What can you do?

As a premium-paying and benefit-plan sponsoring employer, what can you do – right now – to help reduce information and medical errors in your own program? From a TF Managed Risk standpoint, here are three general guidelines we use in developing our benefit-plan designs.

Insist on excellence. This isn't a mission statement blurb, it's our basic operating principle.

Keep in mind: you're the consumer. Demand quality ratings. Ask specifically about IT systems, record keeping, on-line links between providers. Negotiate not only on price and network capabilities, but patient-safety performance and outcomes. A number of forward-looking health care companies and hospital systems have remodeled their IT systems to . A good broker will know these providers.

Invest in state-of-the-art claims management. The potential cost-savings from utilization review and claims administration cannot be overstated. What's more, a good claims system functions as a positive "check" on provider instructions and referrals.

Claims administration should be the "hub" of your plan, ensuring that each plan participant receives the right care, from the right provider, at the right time.

Improve your employee education programs. An underlying cause of many medical errors is – let's face it – passivity on the part of patients. Your plan participants should be encouraged to ask questions, inform themselves and take a pro-active role in their own health care.