MHA FPX 5014 Assessment 2 Internal Memo – Risk Financing MHA-FPX 5014 Health Care Quality, Risk, and Regulatory Compliance INTERNAL MEMO TO: Rochester General Hospital’s Risk Management Team RE: Assessment 2 – Risk Financing

Patient Safety Issue

Rochester General Hospital (RGH), part of Rochester Regional Health, has earned recognition for its quality healthcare services, achieving Magnet status for excellence. However, to maintain this progress and meet organizational objectives, it is essential to address the high rate of medication errors through effective risk financing. These errors not only jeopardize patient safety but also pose significant financial risks to RGH.

An evaluation of RGH’s hospital grade for spring 2021 underscores the seriousness of this issue. The performance in the medication administration domain is particularly alarming, as illustrated below (Hospital Safety Grade, 2021):

Patient Safety Risk and Key Performance Indicators

Medication errors are a leading cause of patient harm and financial loss in healthcare facilities globally (Haytham, 2016). These errors are defined as any preventable event that may lead to inappropriate medication use or patient harm under the control of healthcare professionals (AMCP, 2019). They can occur during various stages, including ordering, transcribing, dispensing, administering, or monitoring (Durham, 2016). Given the dynamic nature of the healthcare industry, characterized by evolving regulations, policies, technologies, and guidelines, medication errors present both clinical and financial risks to RGH.

Risk financing is crucial for identifying the potential costs associated with these risks and evaluating the organization’s capacity to manage them (Rhinehart, 2021). Research indicates that medication errors cost the U.S. healthcare system approximately $3 billion annually (AMCP, 2019).

To tackle this issue, RGH’s risk management team will implement key performance indicators (KPIs) and performance dashboards to monitor, assess, and mitigate risks related to medication administration. The KPIs include:

Strategies to Identify Risk Financing Issues

Risk financing involves evaluating RGH’s financial capacity and willingness to manage risks while aligning with the organization’s strategic values (Harvard University, n.d.). Key strategies include identifying, accepting, and managing risks (Indeed Editorial Team, 2020).

Identifying risks entails examining processes or events that could harm patients and lead to financial loss. For instance, medication errors can result in extended hospital stays, increased resource utilization, decreased reimbursement, and financial losses (Chen, 2017). Managing risks involves gathering data, reviewing information, and developing strategies to reduce the occurrence of these risks (NEJM Catalyst, 2018). Benchmarking can then be employed to measure progress in risk mitigation and financial performance (Institute for Safe Medication Practices, 2005).

Recommendations for Risk Financing

To mitigate medication errors at RGH, the following strategies are recommended:

1. Computerized Physician Order Entry (CPOE) with Clinical Decision Support (CDS)
2. Bar Code Medication Administration (BCMA) System
3. Confidential Incident Reporting

Implementing technologies such as CPOE and CDS has been shown to reduce medication error rates by 55% (Durham, 2016). These systems assist healthcare professionals with drug dosages, routes, and frequencies, while also providing alerts for allergies or interactions (Shah, 2016). The BCMA system ensures adherence to the five rights of medication administration (right patient, dose, drug, time, and route) and generates real-time alerts (Shah, 2016).

Confidential incident reporting will facilitate the collection of data on medication errors, enabling the development of strategies to enhance patient safety. A culture of safety will be promoted, encouragin