July / August 2007
The Business Case for Patient Safety
Hospitals that worry whether making care for patients safe makes them money or costs them money will never be safe.
Since the end of 2004, the Wellmont Health System in Northeast Tennessee has been working to prove that a health system does not have to choose between safety for its patients, quality of care, and financial excellence. On the contrary, we believe sustained success requires an uncompromising commitment to learning to keep patients safe and providing them exactly the care they need to heal.
Over these 2-plus years, we have swung from a $15 million operating deficit to a $15 million annual operating margin at a time when we were investing heavily to increase the safety and quality of our healthcare delivery. Our safety investment has contributed to our financial turnaround, not detracted from it.
Looked at even in the narrowest sense, safety and quality do not add cost. At one tertiary hospital, for instance, we used important ideas and simple tools to more tightly tie how and when our pharmacy ordered drugs to what our patients actually consumed. Times when medications were stocked out or unavailable in the pharmacy fell by 84%. During the year since we made those changes, we purchased more than $1 million less in unneeded drugs — many of which would ultimately have been wasted if we hadn’t improved our approach.
At another tertiary hospital within our system, we worked with clinical staff members to develop a system that ensures they never have to hunt for a piece of nursing equipment needed by a patient. We had to invest in two new positions to staff the equipment replenishment system. Within a month, our annualized time savings exceeded that investment by a factor of 4.5 times, and our patients are safer.
These are not one-time savings. Focusing on safety and quality builds invaluable skills for every employee, for you can’t be safe without understanding a process deeply and knowing how to make it more stable and reliable. That’s a skill employees can use to eliminate inefficiencies and waste in any process. For example, the staff members who created the nursing equipment supply system went on to eliminate times when needed food is not available to patients on the floors. They did and saved more than 30% in food-supply costs. Patients have what they need, and waste is purged from the system.
But there is an even more important level at which safety, quality care, and success are linked.
Hospitals, despite all the technology we employ, are staffed and run by people. People come to organizations wanting to do meaningful work and to do it well, especially when it comes to meeting the needs of patients. What people want from their leaders is steadfast and consistent support for the principle that their values should never be compromised, including the resources and training needed to “do the job right” and to help them fix problems that do occur on the floors of the hospital every day.
When leaders live out those commitments, the people of organizations throw their hearts and minds fully into their labor every day, bristle with excitement at ways to improve it, and produce astounding gains for the institution and its mission in ways and places no leader could anticipate.
Safest Hospital Alliance
To foster that environment with our hospitals, our health system has partnered with two other leading organizations, Adventist Health System and Novant Health, to develop the healthcare industry’s first comprehensive approach to patient safety. While there have been many piecemeal approaches to patient safety, a total solution has remained elusive, in part due to the lack of standardized benchmarks for comparing the performance of healthcare professionals.
By creating metrics and identifying best practices, the newly formed Safest Hospital Alliance will seek to specifically define how a truly “safe” hospital should function and provide treatment to its patients.
In the coming months, our alliance will focus on one to three core processes that cut across the hospital organization, seeking to close the gap between current performance and perfection by 80%. There is also significant financial benefit to improved patient safety. Preliminary estimates suggest that implementing the Safest Hospital template could reduce healthcare costs by 20 to 30%.
Our alliance hospitals expect to become a resource for other healthcare systems and will share program templates and offer training programs. We have assembled a blue-ribbon advisory panel comprised of safety and quality experts such as Dr. Kenneth Kizer and former U.S. Treasury Secretary Paul O’Neill to assist our efforts. The Safest Hospital Alliance also has the backing of the nation’s leading hospital quality organization, the Joint Commission on Accreditation of Healthcare Organizations.
The Safest Hospital Alliance is the healthcare industry’s first initiative to develop a total solution to hospital patients’ safety. We are just starting that journey, but our early results are already improving our operations. They are a part of what is creating our increasingly healthy income statement and balance sheet.
It is true some methods that insurers and the government use to reimburse hospitals don’t seem to financially reward safety and quality — particularly when quality preventive care keeps patients out of hospitals altogether.
But are those realities a reason for hospital leaders to shy away from “building safety in” to all of the work of the institution? I hope our example at Wellmont Health System and the important work of the Safest Hospital Alliance will show healthcare leaders they don’t have to choose between their values and their balance sheets.
Richard Salluzzo is president and chief executive officer of the not-for-profit Wellmont Health System, which operates 14 hospitals in Tennessee, Virginia, and Kentucky, and founder of the Safest Hospital Alliance.
Salluzzo is a graduate of the University of Massachusetts. He received his medical degree from Boston’s Tufts University School of Medicine and earned a master’s degree in business administration from the Katz School of Business at the University of Pittsburgh.
He is board certified in internal medicine and emergency medicine. He is a fellow of the American College of Emergency Physicians and a member of the American College of Physician Executives and the American Medical Association. He serves on the boards of directors of the Tennessee Hospital Association and the Hospital Alliance of Tennessee and is a co-chairman of the Tri-Cities Economic Development Alliance.