Leading the way

Lisa Ramthun’s proactive approach has made St Joseph Health System an industry leader in preventing, rather than managing, risk. She tells HRMR how she has achieved this.

Developing and administering a system-wide risk management program is no small task, but that is exactly what Lisa Ramthun undertook in 2005 when she became assistant vice president, risk management for St Joseph Health System (SJHS), based in Orange, California.

“The initial challenge I faced was building trust with all the different hospitals that I oversee in order to build a program, because up to this point, we did not have a proactive risk management program in place,” she says.

Ramthun set about reshaping the risk management program by trimming costs and redefining the culture, from damage control in the aftermath of adverse events to one that fosters proactive risk management, collaboration in loss prevention and best-practice sharing among the 15 hospitals in the system. Her proactive approach has catapulted the organization to one of the industry’s best at focusing on preventing risk instead of managing it.

“After that initial trust was established I would say one of the biggest challenges has been helping the organization to see risk in the everyday operations and different structures before something bad happens,” she says.

“In healthcare in general we are very good at recognizing risk after there’s been a harm event. Often leaders are very surprised and ask ‘how this could have happened?’, but when you start looking at your system design and your systems processes and structures you see that the risk is actually built into your system and you were simply lucky for a long time, as opposed to safe.”

When Ramthun took on the role she and her colleagues conducted an assessment to establish the strength of their risk management program. They examined everything from risk management processes to loss prevention activities; from high risk area review programs to root cause analyses. The aim was to change the system’s approach to risk from reactive to proactive.

“That initial assessment showed that we were at 48 percent compliance across the health system. Each hospital came up with its own action plan with some very specific objectives and today, six years later, we are at 93 percent compliance,” she says.

she says.

Ongoing improvement

Further improvement efforts include examining how leaders view risk within the organization and the creation of a risk management scorecard which, as well as looking at compliance, looks at leading indicators of risk with the aim of spotting areas where risk is built into the system.

“We have been able to identify these and go into our highest risk areas and say, ‘we really have an opportunity here’. For example, we looked at the discharging of patients of 35 years and older who come in with chest pains and asked whether we were doing all the follow-ups.

“Were we scheduling a treadmill test, making sure they had a follow-up with a cardiologist? Were we doing all the things we should be doing to reduce the possibility of something happening to those patients after we discharge them?”

In addition, they used the Agency for Healthcare Research and Quality (AHRQ) Safety Culture Survey to assess their staff’s perceptions of risk.

“We’re making risk in our system more visible, and we’re asking whether we are recognising potential claims or whether our first notice is some type of litigation or legal notice,” Ramthun says.

Working as a system-wide risk manager brings with it the need to acknowledge the differences between the various hospitals within the system, and to communicate effectively with all of them.

“One of the challenges is making sure that we are able to keep all of the different organizations on track and on the same page,” she says. “Every member of staff—not just in my system but in the whole country—sees their hospital as different and unique. I’ve tried to say, ‘yes we’re different but let’s try to focus on those things that are similar and the same because we are more alike than we think’. 

“Despite the differences between hospitals, good practices of risk management are standard across the board and we can impact our organization if we accept that we need to standardize what we can.”

A characteristic feature of SJHS’s approach to risk is its use of a captive insurance program to manage claims. Established 30 years ago, the Bermuda-based captive is one of the oldest in healthcare. It was originally started in response to a hard insurance market, and has proved to be a highly effective way of insuring all SJHS’s hospitals.

“It’s provided us with the opportunity to maintain control over our claims, and to smooth everything out so that whether we have a hard or soft market we can better manage our insurance costs and premiums,” Ramthun says.

“With regard to maintaining control over our claims management, it allows us to turn on a dime when we need to—so we can do early evaluation of a liability exposure and decide on our exit strategy. It affords us the opportunity to maintain that responsiveness—plus it allows us, as a Catholic healthcare organization, to manage our claims within the values of our organization.”

She adds that SJHS’s success in running its captive and its claims program has given it the almost unique ability to purchase occurrence-based reinsurance coverage in the marketplace.

This means that SJHS has coverage that allows it to settle claims against the policy from the year in which the incident occurred, rather than having a claim from a previous policy year affect the current year’s policy. 

In the more usual ‘claims made’ policy model, if a claim arises this year that relates to an incident that occurred last year, that claim goes on to the current policy year. This can mean that claims from previous policy years fall into your current policy year, eroding your total aggregate policy.

On the other hand, with occurrence coverage, if a claim arises this year that relates to an incident that occurred last year, it goes on to the last year’s policy.

“Insurers—and in my case reinsurers—really like the ‘claims made’ form because it allows them to close out their policy years,” says Ramthun. “With occurrence coverage I could find out something five years after it occurred and it still goes back to that policy year.

“Insurers will write occurrence-based coverage only for those insureds that make them feel very comfortable with their claims programs and their risk management programs, so that they feel as though they don’t have a lot of exposure there.

“Our captive enables us to do things our own way. We can take a certain amount of risk into the captive and then reinsure on top of that. Because of how effective we are at managing our captive and our claims program we have this additional benefit of continuing to be able to purchase occurrence-based coverage in the marketplace.”

New tools

Meanwhile, Ramthun continues to sharpen up her system’s approach to risk. Over the last year she has developed and implemented a new root cause analysis tool because the tools that were available to the system through outside organizations and through some regulatory and accreditation bodies were not helping SJHS achieve the results that they wanted.

“We wanted to identify some of the key system issues and to put in place appropriate corrective action to stop those events from happening again,” she says.

The new tool has now been rolled out and is currently helping Ramthun and her colleagues to establish the efficacy of the corrective actions that come out of their root cause analyses. As part of this process Ramthun asked one of her hospitals to examine 49 root cause analyses to establish whether the corrective actions put in place were weak, middle or strong.

‘Weak’ corrective actions include steps such as requiring more documentation, requiring more training, or requiring education of staff. ‘Middle’ corrective actions include simplification, standardization, minimizing choices, increasing detectability and optimizing redundancy.

At the strongest level for preventing adverse events from recurring are changes to the hospital’s system design that build in fail-safe mechanisms for enforcing functions.

“When we looked at the strengths of our solutions we found that 70 percent of our solutions fell into the weak category, 27 percent into the middle category and 3 percent into the strong category,” says Ramthun.   

The next step is to ask why a corrective action falls into the ‘weak’ category. Ramthun recognizes that if somebody fails to follow a policy, even though they understand it, re-educating them will not work; it is better to examine why they failed to follow the policy, and to design a safer system based around how humans behave.

“We need to test the strength of our corrective actions so that we don’t think we’ve done a good job when we spend most of our time in these weak solutions. That’s what we’re working on at the moment.”

Luckily, this is one of Ramthun’s favourite activities. “What I enjoy most about the job is being able to design systems and processes and programs that respond to our changing healthcare environment,” she says.