Autumn 2016

Assessing Risk

Systematic steps to support system-wide changeThis newsletter series is sponsored as a service for the value analysis, contracting, and materials management professionals by C. R. Bard, Inc.

Newsletter ArchiveDecision Making CoachingManaging ConflictJudging DataEffective Emails

If you would like a copy of a previous issue of our newsletter, please send an email to wendy.lemke@crbard.com. Provide your email address and the newsletter topic.

Dear Reader:

We live in an uncertain world. Every day we are faced with making decisions burdened by the unknown

and the unknowable. Together they constitute what’s known as Risk. One we can conquer; the other we

must manage. The tool we use for doing this is called risk management.

As a Value Analysis Professional, you employ some form of risk management, either formally or

informally with every decision you make. The goal of this issue is to provide you and your team with

some helpful tools to achieve better outcomes for your patients and your organization. Adding their

perspectives are members of our Editorial Board Dylan Lawlor, Terri Nelson, and Gina Thomas.

Given the world we live in, we think you’ll find this issue particularly useful. As always, if you know

of others who might enjoy this issue -- and subsequent newsletters on a regular basis -- please email me

at carol.stone@crbard.com and we’ll add them to our mailing list.

Carol StoneVice President Corporate MarketingC. R. Bard, Inc.

See You There! The Association of Healthcare Value Analysis

Professionals (AHVAP) is holding its 13th Annual Conference and Supplier Showcase

October 19-21 in Scottsdale, AZ, and Bard will once again be there as a longtime supporter and Gold Level

Conference Sponsor.

“A Team Effort” is this year’s theme, underscored by an active agenda that includes such topics as

applying evidence, accountable care, and physician engagement. Also featured: the member-generated

“Wall of Experience” for additional sharing.

Always on your team, Bard will be present, of course, both at the Networking Reception and the

Vendor Showcase. Be sure to stop by and say hello.

UDI UpdateWhat’s Up with the Rollout

The Bard initiative to realign product labelingwith FDA standards is now about 3/4 done

and we want to hear from you! To find out more, see Page 4

on her induction into theBellwether League’s Hall of Fame

for Healthcare Supply Chain.

Please join us in Congratulating

Carol Stone

The Bellwether League Inc. identifies and honors individuals who have demonstrated significant

leadership in, influence on and contributions to the healthcare supply chain. Honorees

inducted into Bellwether League’s Hall of Fame for Healthcare Supply Chain Leadership hail

from provider organizations, product manufacturers and distributors, group

purchasing organizations, consulting firms, educational institutions and media outlets.

.http://www.bellwetherleague.org/awards.html

PAge 2

Assessing Risk Practical PersPective

“T..he goal of good risk management is not to minimize risk but to achieve the best balance of risk and opportunity.”

Dan Borge, The Book of Risk

“Risk management is not a process but a mindset.” Gary Heerkens, Project Management

The first ‘hard and fast’ rule of risk management: there is no ‘hard and fast’ rule of risk management. Like the practice of medicine, effective risk management is part art and part science, requiring both risk analysis and risk judgment. [Borge] When stakes are low and time is short, go with your gut. When stakes are higher, add in analysis, along with a healthy dose of instinct gained from past experience.

For this, you need risk-based decision making: a stepped process to organize information about the possibility of one or more unwanted outcomes into a broad orderly structure to help decision makers make more informed choices. [Geigle] Its purpose: to identify the threats, estimate the risk, and then decide how to manage the risk and its potential outcomes.

Step 1: IdentificationBefore you even begin to think about threats, your first step is to clearly define the decision to be made; for example, accepting or rejecting

a new medical product, or whether and how to improve an existing process. Then gather the team and solicit input from members, experts, and key stakeholders – anyone likely to be affected by the decision.

Next, identify your options. Go with the new? Stay with the old? Seek an alternative? This will help focus your efforts on the specific issues you need to consider, issues which you will use to identify the factors that will most influence your decision. Cost? Time? Availability? The need for outside resources? Which are most critical for you and your stakeholders? Here you might want to use a SWOT or Scenario analysis to help identify the potential threats they pose.

Step 2: QuantificationNow you need to assess the magnitude of the threats against your chosen options. Put simply: what bad things can happen, how likely are they to happen, and what could be the nature or the extent of their effects. For this, you will need a combination of survey/historical data, product spec sheets, simulation results, and/or subject matter experts, whatever is necessary to answer the risk-related questions you have.

Once done, you are set to calculate the likelihood of these threats being realized

and their potential effect; in other words, their probability (expressed as percent) and impact (estimated dollar amount). The rest is arithmetic: Risk Value = Probability of the event occurring x Cost of the event when/if it occurs. Uncomfortable with assigning values to your threats? Use one of the many risk analysis tools now available. Consult your local expert for guidance.

Step 3: MitigationNow that you know their risk values, you are ready to consider the best way to manage your favored choice(s) in order to mitigate any potential adverse effects. There are basically four: avoid the risk (just say no), share the risk (take on partners), accept the risk (with a contingency plan), or reduce the risk (by preventive or detective action).

The goal is to lower the risk as much as possible. This is the final step in the decision making process and must be made with significant communication with the appropriate stakeholders. Monitor your results; and provide guidance on key issues. Be alert. Threats are constantly changing. Update accordingly with your key people. Remember, risk communication is a two-way process, especially important in a healthcare environment where ethics and safety are always a consideration.

Assessing Risk theoretical PersPective

“U .ncertainty is ubiquitous due to human and technical errors, limited knowledge, unpredictability,

deception, and a plethora of other causes.” Gerd Gigerenzer, Risk Savvy

“In this world, nothing is certain except death and taxes.” Benjamin Franklin

Risk is a subjective word. On the surface, the connotations are all bad: Risky. Risk-taker. Risky business. “Risked my neck!” There’s an aura of danger, a hint of fool-hardiness. And whether you’re talking about a craps table or an actuarial table, the odds are always with the house.

But risk is really a neutral word, neither good nor bad: according to the International Organization for Standardization (ISO), risk is merely the “effect of uncertainty on objectives”. And what is uncertainty? Simply “an absence of information, knowledge, or understanding regarding the outcome of an action, decision,

or event.” [Heerkens] Something that you, the Value Analysis Professional, must seek to rectify on a daily basis.

“Certainty is an illusion” the experts tell us [Gigerenzer], yet we strive for it in everything we do; it’s a basic human need. However, what we sometimes mistake for certainty is actually the result of a reasoned and/or intuitive calculation of risk. Cross now, or wait for the light? Buy now, or see if the price drops? You can’t make a decision without making that calculation. The illusion? There is no “right” answer, only the best one.

As a Value Analysis Professional, you deal with risk decision factors every day. Who to include on the team? What data do we need? Will this lead to the best patient outcome? In addition, you are responsible for guiding teams, colleagues, and co-workers through the decision making process. Not an easy task, as our brains are programmed to worry more about the possibility of loss and not enough

about the size of the loss relative to the gain; always an issue for healthcare professionals.

You are also dealing with human nature and its by-products: bias, overconfidence, optimism, short-sightedness, pattern-seeking, overcompensation, inertia, complacency, or zealotry. Not only does this affect your team’s dynamics, but also their attitude toward risk. People who believe themselves to be competent decision-makers see more opportunities in a risky choice. We are hard-wired for survival.

One recourse for the Value Analysis Professional is a process of assessment and analysis sometimes referred to as ‘risk management’. An essential tool, it can help you identify and understand the risks you face and, in turn, manage and minimize their impact on the outcomes. Certainly, that is your goal; certainty, you must remember, is not.

PAge 2

BArd Autumn 2016

PAge 3PAge 3

VA PeoPle

Viewpoint

BArd Autumn 2016

A RoundtAble on Risk

For the Value Analysis Professional, managing risk is part of the job. Below, Dylan Lawlor, Terri Nelson, and Gina Thomas discuss what it means to them – and how they address it.

Q: How do you define risk?Terri: First and foremost: product risk. It’s part of our business requirements. What are our needs? What’s the impact on the patient?Dylan: That’s where my mind goes. Product risk. Liability. Where is it and how do I categorize?

Q: What constitutes risk for you in your position?Terri: Supply failure. Especially of a critical product.Dylan: You feel it personally, even if you didn’t make the actual decision - that’s for the team. All we can do is lay it out, paint the picture. Terri: That’s why it’s important to have a process. Established steps.

Q: What process do you use in managing risk, especially in decision-making?Gina: Researching the issue/problem from different perspectives, sharing the information early in the process, asking others for feedback and determining if information is missing or critical.Terri: What we look at are the business requirements. Wants and needs and the risks associated: availability, recalls, quality, etc. Criticality and the impact of a shortage. There’s a formula.Dylan: Also helpful: Six Sigma and an “after action” tool from our Risk Management team designed to deconstruct an incident to determine where the breakdown occurred; it’s a similar process, only in reverse.

Q: How do you lead a team through this process?Gina: Providing opportunities for each person to weigh in, and calling on them specifically to weigh in with their perspectives.Dylan: Painting the complete picture.Terri: Looking at all the potential problems.Dylan: The idea is to stay in front of the risk. Identify what’s acceptable, what is not, and how to mitigate it.

Q: Do you find some groups are more risk-averse than others?Dylan: It’s more cultural; certain companies are more open to risk.Terri: Depends on the clinical area. Research is more open to risk, physicians more than nurses.

Q: How do you address these attitudes or biases to move the process forward?Gina: Communication, communication, communication, information, information, information.Dylan: Again, it’s about process. Walking through the steps. And knowing your people, when you need to bring in the “VA support group.”Terri: For some people, risk is a four-letter word. You might have to go to a clinical leader.

Q: Do you find statistical data helpful in this process?Terri: Yes! Doctors, nurses, clinicians, they’re scientists. They like their info in black and white.Dylan: If you leave a void, people make up their own story.Terri: That’s when you go back and ask, “What are the key objectives?” Keep it factual.Gina: Many people in any situation want to avoid risk. By having the most information makes it easier to arrive at the best informed and quality decision. Physicians fall into this category as well and frequently ask for clinical evidence, i.e. outcomes from clinical studies.Challenges are great to ensure a comprehensive analysis is provided when comparative data is requested.

Download a QR Reader to your smartphone and scan in the QR code to view copies of previous newsletters.

Tools To UseIn assessing risk, it’s sometimes helpful to arrange your data in a visual format, making it easier to picture -- and communicate. Gerd Gigenrenzer suggests one of these:

Fact Box A table for transparent risk communication, which can summarize the scientific evidence for, say, a drug, treatment, or screening method, such as showing benefits and harms for people with and without treatment. With all numbers in plain frequencies,it does not use misleading statistics such as relative risks, double-tonguing, or survival rates.

Icon BoxA visual tool using picture icons for transparent risk communication, which can be used to summarize scientific evi-dence such as for a drug, treatment, or screening method. Similar to fact boxes only more visually appealing.

Q: Any examples?Dylan: 510(k)s! The “Me too!” problem.Terri: Clinicians see something but if it’s not FDA 510k cleared –Dylan: or off indication -Terri: That’s a risk. You have to take that back to the group. Communicate!Gina: Validate the presumed information with facts such as nonbiased clinical evidence with attributes and comparative safety data.

Q: Any final thoughts?Terri: Be consistent. Identify the steps and communicate. I’ve done this 14 years. Everybody knows the process.Dylan: That way they’re not surprised; it’s familiar.Terri: Get to know your Risk Management group. They’re a good resource. My question to them: “Should I be looking at other factors?”Dylan: Trust in your process. It’s your path. Use it. You can’t always eliminate risk, but you can identify ways to manage it.

Share your view as a Viewpoint Guest! If you – or someone you know – would be willing to share your

viewpoint on the topic of one of our upcoming newsletters, please contact Editor Wendy Lemke at wendy.lemke@crbard.com.

? What’s Your View ?

PAge 4

BArd Autumn 2016

*Terri Nelson, RN, BS, MA Value Analysis Manager, Supply Chain Management Mayo Clinic, Rochester, MN *Dylan Lawlor, MT (ASCP) Manager, Value Analysis Greenville [SC] Health System *Gina Thomas, RN, BSN, MBA, CMRP,

FAHRMM Chief Development Officer Procured Health

Carol Stone Editor-in-Chief Vice President, Corporate Marketing C. R. Bard, Inc., Murray Hill, NJ

Wendy Lemke Editor Manager, Corporate Marketing C. R. Bard, Inc., Murray Hill, NJ Katherine Hause

Editorial Services, Hause & Hause

Laura Bell Graphic Illustrator Corporate Marketing C. R. Bard, Inc., Murray Hill, NJ * These healthcare professionals have been compensated by C. R. Bard, Inc. for their time and effort in contributing to this publication. This newsletter series is sponsored as a service for the value analysis, contracting, and materials management professionals by C. R. Bard, Inc. Comments or suggestions on newsletter format or topics of interest may be forwarded to Wendy Lemke, wendy. lemke@crbard.com or (908)277-8491. CORP 16-78

EDITORIAL BOARD

Sources for this issue include:1. Borge, Dan. The Book of Risk, John Wiley & Sons, Inc., NY, 2001.2. Browne, M. Neil & Keeley, Stuart M. Asking the Right Questions, Pearson Prentice Hall, Upper Saddle River, NJ, 2007.3. “Definition of Risk-Based Decision Making,” Geigle Safety Group, www.oshatrain.org, 2016.4. Eisenberg, Lee. The Number, Free Press, New York, NY, 2006.5. Gigerenzer, Gerd. Risk Savvy, Viking, New York, NY, 2014.6. Heerkens, Gary. Project Management, McGraw-Hill, New York, NY, 2002.7. Heller, Robert and Hindle, Tim. Essential Manager’s Manual, DK Publishing, New York, NY, 1998.8. Kahnenman, Daniel K. Thinking Fast and Slow, Frarr, Straus & Giroux, New York, NY, 2011.9. “Risk Analysis and Risk Management,” MindTools Ltd., www.mindtools.com, 2016.10. Zeckhauser, Bryn & Sandoski, Aaron. How the Wise Decide, Crown Business, New York, NY, 2008.

Effective EmailsUDI UpdateWhat’s Up with the Rollout?

On time and ahead of schedule, Bard is now about 3/4 through the massive program for complying with regulations by the U.S. Food and Drug Administration (FDA) for all medical devices distributed in the United States to carry a Unique Device Identifier (UDI) that is both machine readable and supported by easily readable plain text.

Its goal and ours: to drive improved patient safety, better product traceability, and make the healthcare supply chain more efficient and more cost effective. Using the GS1 international standard, Bard assigned Global Trade Identification Numbers (GTINs) to all products, and has been accepting electronic orders using GTINs since 2014. Bard has also published product data to the GDSN.

Because GTINs are to be used on all product packaging labels, invoices, packing slips, data sheets, and other documents and reports, the large and multi-layered process of transitioning all products to UDI compliance has been on a phased rollout schedule by FDA designated product class:• Class III by September 24, 2014• Class II (life sustaining, life supporting) by September

24, 2015• Class II remainder by September 24, 2016 and• Class I by September 24, 2018.As the changes are completed, Bard will publish all required product attribute data to the FDA Global UDI Database (GUDID).

WE WANT TO HEAR FROM YOU!Since Bard customers have had access to our GTINs for two years now, we’d like to hear from you, our readers, as to how your healthcare system is using these new electronic data standards. And, more to the point, how you see tapping into them to aid the Value Analysis Process.

Interested? We are! Share your insights by dropping us a line at UDI.info@crbard.com.

NEED MORE?For more on UDI, check out the handy data card provided in this issue. Or go to the UDI section of the Bard website at http://www.crbard.com/About-BArd/Data-Standards.html.

What’s that Mean?A Brief Glossary of Terms

Absolute risk reduction Measure of efficacy of a treatment in terms of absolute number of people saved or lost.Aspiration level When an alternative is good enough and search can stop. Degrees of belief Subjective interpretation of event’s probability of occurring.Double tonguing Trick to make benefits appear larger and harms smaller by the way the data is presented, e.g., citing survival rates vs mortality rates.Errors Mistakes which can be reduced but not completely eliminated.Error culture How an individual or institution deals with error. Frequency A number of observations in a class of events.Good errors Errors that speed learning and lead to innovation.Gut feeling. Intuition, judgment, unconscious intelligence.Heuristic Rule of thumb. See above.Illusion of certainty Belief that an event is absolutely certain when it’s not. Innumeracy Inability to think with numbers. Statistical innumeracy is inability to think with numbers that represent risks.Percentages Relative frequencies multiplied by 100.Probability Measure that qualifies the uncertainty associated with an event. Interpretation affected by degrees of belief that the event will occur, the relative frequency of its occurrence in the past, and the physical design be it a test or a slot machine.Risk Uncertainty associated with an event that can be quantified on the basis of empirical observations or casual knowledge. Expressed as relative frequencies and probabilities. Risk aversion Tendency to prefer a surer option over a less certain one.Satisficing A heuristic for choosing one object over another to meet a certain level.Uncertainty Where some risks are unknown and, by extension, all alternatives and consequences.Optimization With the best course unfeasible in an uncertain world, the goal of finding a robust course of action that has a good chance of surviving in the unknown future.Zero-risk illusion Whenever risks (or lack of) are mistaken for absolute certainty.From: Risk Savvy by Gerd Gigenrenzer