Foresight vs. Hindsight Moving Toward a Proactive Model.

Foresight vs. Hindsight

Moving Toward a Proactive Model

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Speakers:

• Irena Kaler, Executive Director/CAO, Robert Wood Johnson Health Network & President, System & Affiliate Members Ltd.

• Mark Nix, CEO, Infirmary Health System

• Lois McChristian, AVP, Western Litigation, Inc.

Moderator:

• Oliver Heyliger, Managing Director, Willis Management (Bermuda) Limited

The Panel

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Overview

1. The Beginning/Stories from the Field

2. The Middle/Changing Culture &Setting Structure

3. The Lessons/Pulling It All Together

4. Questions

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The Beginning:Stories from the Field

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Case Study: Stories from the Field

• Once Upon a Time . . . .

– Patient adverse event occurs.

• Hold our breath; sit and wait. “Maybe we’ll get lucky.”

• 2 years later, suit filed, numerous parties named.

• Circle the wagons kicks in – Alert the insurance company.

• It’s a nursing issue; it’s a doc issue. Anyone ever hear of system issues?

• Discovery lasts forever; delays and more delays.

• Oldest case on docket – expenses mount, staff stressed; judge frustrated with the parties.

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Stories from the Field

• No happy ending

– Almost 9 years later – suit settles on the court house steps.

• No one is satisfied with outcome.

• Family still angry; negative press.

• Expenses out of control.

– There has to be a better way!

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• Trying a new approach

– Volunteer collides with another in a doorway on our premises – alleges hazardous area to work.

– Late night visitor steps into a sink hole that developed after hours.

• Neither directly a result of hospital liability; both looking for “compensation” for the issues immediately at hand.

• Relationship and compassion drive attempted proactive responses.

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– Patient adverse event occurs.

• Issues of liability recognized upfront.

• Hospital wants to do the right thing.

• Contacted insurer – let’s resolve quickly.

• No can do. “Let’s see what the doctor does first. Why do you think you have liability?”

– Family files suit out of frustration to compel response.

• RM staff conflicted.

• Defense attorney needs to follow directives of the insurance company.

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• In each case, trying to do the right thing– Responded with requested assistance.

• Again and again and again.

• Situations out of control; hospital feeling used.

• Ultimately, have to say, “No more.”

• Suits filed – claimants feel entitled and still feel wronged, especially when the $$ go away.

– Unable to provide fair resolution in a “recognized” bad situation – hands are tied with no where to go.

– Why did good intentions fail?

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• Third time is a charm

– Patient alleges loss / damage to personal articles.

• Assess the situation – what are the facts?

• Determine liability – what is a “reasonable” resolution for both parties?

• Sincere apology, offer of compensation at set value, execution of release.

– Evolving our process; managing proactively; limiting scope; closing the door with a release.

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• Taking it to the next level

– Serious patient adverse event occurs.

• Assess the situation – what are the facts?

• Hospital is in the driver’s seat this time.

• Engage different counsel – understands trying to do the right thing.

– Offer of settlement; negotiation; executed settlement.

– 6 months after event, matter concludes.

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The Middle:

Changing Culture and Setting Structure

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INFIRMARY HEALTH SYSTEM

Our Mission is LIFEOur Mission is LIFE

One Organization’s Experience

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INFIRMARY HEALTH SYSTEMMOBILE, ALABAMA

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Overview of Organization

• Mobile Infirmary Medical Center—704 Licensed Beds

• Thomas Hospital—150 Licensed Beds

• Infirmary West—124 Licensed Beds

• Infirmary Long Term Acute Care Hospital—191 Licensed Beds

• North Baldwin Infirmary—55 Licensed Beds

• Infirmary Medical Clinics—26 Clinics

• Over 700 Physicians on Medical Staff

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Overview of Organization

• Non-hospital entities

Infirmary I-65

Infirmary Eastern Shore

Thomas Medical Center

ProHealth

Thomas Hospital Wellness

North Baldwin Wellness

Oakwood

Hospice

Gulf Health Properties

Gulf Health Mgmt Service

American Oak Hill Assurance

Infirmary Foundation

Thomas Foundation

North Baldwin Foundation

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2007 B.C. (Before Captive)

• Direct purchaser of liability insurance

• Full policy premiums expensed

• Insurer controlled:– Claims strategy– Defense team– Trial strategy/denied and defended– Large number of cases/large verdicts– Higher deductibles– Ultimately denial of coverage

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What We Did Not Know

• Domicile options

• Captive types

• Third Party Administrator (TPA) options

• Selecting a captive manager

• Lawyers/Accountants/Bankers

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How We Started

• Education—Captive 101

• Vendor fair– Captive managers– Accountants/Lawyers/Bankers– Brokers

• Researched TPAs

• Underwriter meetings—Speed tables

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Building a Risk Mgmt Program

• Independent risk assessment (On Site)

• Form executive oversight team (Claims Committee)

• Secure claims tracking software

• Develop claims management process

• Develop risk management program– Identify incidents– Provide notifications– Engage legal defense

• Develop open communication– Leadership, Risk Management, Legal, TPA

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Three Years Later…

• Settlement of outstanding claims

• No cases to trial

• Retained premium reserves

• Increased Self Insurance Retention (SIR)

• Improved patient safety via Risk Management

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The Lessons:

Pulling It All Together

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• Deeper claims investigations

• Interest in efficient, effective resolutions

• Strategic focus on claims handling

• Direct learning opportunities

• More control overall

• Stabilize reserves/payments

Case Study: All the Others....Goals?

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• What is the current state of the program?

• Are the philosophies working?

• Is information accessible?

• Is reporting timely?

• Are reserves adequate?

Case Study: All the Others....Now?

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Case Study: All the Others....Now?

• Is the authority structure working?

• Are counsel aggressively managed?

• Are operational changes being identified?

• Are defenses united with key co-defendants?

• Are there standardized (and effective) vendor relationships?

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• What would we like to see?

• What are the changed philosophies?

• What information would we like to have?

• How committed will we be to doing what it takes to get there?

• How much time can we dedicate to this process?

Case Study: All the Others....Future!

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• Do we have the reinsurer’s backing on this process?

– Experienced staff/management

– Strong claims system

– Well executed transition


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• Changed handling = Changed cash flow

• More control = More staff

• More detail = More resources

• Changes = Insecurity

• More control = More reporting

• More presence = More accountability

• Changed reserving = Changed actuarial picture


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Before process:

Almost 300 pending w/TPA (>100 litigated)

Almost 200 pending in-house

Three tracking systems

Inconsistent historical data

After process:

Under 150 pending (<20 litigated)

Early investigations/early disclosures & resolutions

One tracking system

Clear, aggressive data

Case Study: It Can Happen!

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Suggested Resources

• Bermuda Captive Owners Association www.bcoa.bm

• International Center for Captive Insurance Education www.iccie.org

• Captive.comwww.Captive.com

• Network with other captive owners

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Contact Information

• Oliver: [email protected]

• Mark:

[email protected]

• Irena: [email protected]

• Lois: [email protected]

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Question & Answer Session

Thank you!

Foresight vs. Hindsight Moving Toward a Proactive Model.

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