Alvin Safran, senior director of risk and claims management at New York Hospital Queens, tells HRMR why his hospital opted to not only self-insure, but also to self-administer.
New York Hospital Queens stands apart from the vast majority of hospitals in the US in its approach to risk. Not only is it self-insured, it is also self-administered, so its risk management program encompasses both loss prevention and claims management.
“When you make an apology in New York State you’re always aware that if they decide to sue you they can use your words and your apology against you."
At the heart of these operations is Alvin Safran, the hospital’s senior director of risk and claims management. Having worked there for 25 years his expertise and experience are second to none, but his job still throws up regular surprises.
“Our insurance setup means we tend to sit on the cutting edge of everything,” he says. “We generally find out about many changes in advance of other hospitals because we can’t wait for an insurance company to tell us about it: we are, in a sense, the insurance company.”
The insurance program is funded through the hospital’s revenues, which are placed into a separate self-insurance retention fund.
This approach to insurance means that besides being the hospital’s risk manager, Safran is also the administrator of the company’s insurance company. He is involved in every aspect of the claims process, from receiving process servers to developing and paying the claims.
He is also responsible for establishing the reserves and recommending changes to the reserves, which are approved by the board of trustees, who play an active role in the hospital’s claims process.
Total control
Other aspects of Safran’s role include attending mediations and pre-trial settlement conferences and trying to settle cases out of court where reasonably possible. It all adds up to a large amount of time spent doing what many hospitals pay a third-party administrator to do—but it affords the hospital several distinct advantages, including total control over the defense process.
“You don’t have an insurance company telling you to settle or not to settle,” he says. “On the economic side you don’t have to pay premiums, and it’s easier to add people to your program; we don’t have to get permission from an insurance company to add three or four new doctors to the program.
“We have our process for credentialing, for vetting their claims history, and for deciding whether new doctors should come into our self-insurance retention process or whether they should go out and obtain commercial insurance.”
For the physicians who do come under the hospital’s self-insurance retention fund, moves are now underway to offer the same risk management and online educational courses that the commercial insurers do.
The decision to self-insure makes particular sense in the state of New York, where insurance premiums now are so high that commercial insurers can demand that you pay nearly dollar-for-dollar for your coverage.
It’s not the only thing that sets New York apart from the majority states: a key issue for Safran is the fact that, like only a handful of other states, it has limited protection from discovery laws.
A consequence of this is that while there is ready recognition from Safran and his staff that disclosure and apology are the right route to take, it’s a path that is fraught with the awareness that anything you say might be used against you in litigation.
“When you make an apology in New York State you’re always aware that if they decide to sue you they can use your words and your apology against you,” says Safran.
Similarly, whereas the quality and peer review processes in most hospitals are protected from discovery, in New York State any statement a defendant makes is discoverable, including a statement at a peer review meeting.
“At peer review meetings held in NY State you are walking a tightrope,” says Safran. “You have to decide whether you want people who were involved in an incident—and who presumably know the most about it and could be the most helpful and informative—to speak at this meeting, knowing that there’s a good chance that this is a compensable event and they are going to be named as a defendant.
“This is a tremendous challenge—you are in effect walking on ice. On the one hand you want to be able to improve, and learn the most that we can from our mistakes. On the other hand, you don’t want everything that this person states to become discoverable.”
For Safran, only one thing can resolve this problem: he would like to see legislation in New York State protecting any apology and disclosure from discovery and protecting the entire quality and peer review process from discovery, including statements made by defendants. However, he is aware that his wish may never be granted.
“That has been proposed for the last 20 years and turned down because the plaintiff bar is so strong in New York State,” he says.
Electronic progress
The current state of play has implications for a new initiative. The Medical Center is working on the introduction of a new self-reporting electronic risk management incident reporting system. Until now, occurrence reports have been written on paper and then transmitted on to the electronic system.
The change is indicative of what Safran sees as the greatest revolution currently faced by healthcare: the steady influx of new technology. In particular, he believes, this is effecting a shift from an inpatient-based system to a largely outpatient procedural system.
“This is the biggest challenge to hospitals now—and in my view it’s more significant than the Affordable Care Act, regulatory changes or Medicare cuts,” he says. “Hospitals are used to having patients and counting the number of days they were there and that is all changing now.
“Heavy-hitting surgeries—things like hernia repairs—used to be the type of things that patients would stay two to four days for, but now they are being done as outpatient procedures.”
It’s the same story in several departments of the hospital: for instance, cardio coronary bypass graft surgery is now being handled mostly with stents—an outpatient procedure—and younger patients are being prescribed statins. Similarly, chemotherapy is now largely administered on an outpatient basis.
Safran notes that, in line with these changes, many hospitals are now reducing their bed numbers and finding other ways to take care of patients.
“That type of transition is going to force risk management professionals to look at things differently,” he says. “We are going to have to ask what new kinds of risks are associated with outpatient settings—things that really were not such big risks from the inpatient settings.”
An example of a new challenge relating to risks faced in the outpatient setting is electronic medical records: “If you had everything going on in one central area as an inpatient, that was fine, but when you have outpatient areas scattered throughout the borough, what’s to say that every single electronic system in every outpatient setting is the same, and that they communicate with each other?”
Keeping up with the changes in technology which are moving medical care to the outpatient setting—and doing so in a way that means that hospitals remain financially viable and stable—is a challenge that looks set to affect every risk manager.
Luckily for Safran, he enjoys the ever-evolving nature of risk. After 25 years at New York Hospital Queens—during which time he has helped bring about a 75 percent reduction in patient falls, completed a term as president of the New York State chapter of ASHRM, and seen his role shift from clinical risk management to incorporate claims management as well—he is accustomed to change.
“I can honestly say that no two days are ever the same—it is never boring. Just when you think you’ve seen it all, something even more outrageous comes along,” he says.
However, he has no doubt that the current technologically-fuelled changes stand to be the most significant yet. “My guess is it will continue to change even more rapidly,” he adds.
Alvin Safran, US, New York Hospital Queens
