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Risk management : a descriptive analysis as a basis for planning in British Columbia acute care hospitals Mysak, Marlene Hope 1982

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RISK MANAGEMENT: A DESCRIPTIVE ANALYSIS AS A BASIS FOR PLANNING IN BRITISH COLUMBIA ACUTE CARE HOSPITALS by MARLENE HOPE MYSAK B.Sc. (Nu.), The U n i v e r s i t y of A l b e r t a , 1975 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE i n THE FACULTY OF GRADUATE STUDIES (Department of Health Care and Epidemiology) We accept t h i s t h e s i s as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA September 1982 Marlene Hope Mysak In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y available for reference and study. I further agree that permission for extensive copying of t h i s thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. I t i s understood that copying or publication of t h i s thesis for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of Health Care and Epidemiology The University of B r i t i s h Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 - i i -ABSTRACT During the past five (5) to seven (7) years, the American hospital literature has reflected a growing interest in the concept of Risk Management. Today, Risk Management, as an administrative control mechanism, is well established in many hospitals in the United States. Risk Management focuses on a system of identifying, monitoring and taking corrective action for potential or actual problems (the risks) that may result in unwarranted and unplanned personal injury, property damage, or other form of loss. Ultimately, Risk Management is concerned with the hospital's overall objectives of providing safe, quality patient care while using available resources efficiently. The expression, Risk Management, has not been defined with any regularity or consistency with respect to British Columbia Acute Care Hospitals. A generalized concept of protection against risks has been evident for many years, although in Canada (and specifically, British Columbia), it has been approached functionally. For example, hospital administrators have been accustomed to providing a safe and secure environment through such means as guidelines, accreditation standards and quality assurance. In addition, they are obligated to consider legal issues relating to hospital care and to obtain appropriate insurance coverage for the various types of losses the hospital might be exposed to. A new interest in Risk Management appears to represent a possibly defensive position taken by those who anticipate increasing amounts of risk and subsequent litigation. - i i i -The question to be studied in this paper is whether there is any need for British Columbia Acute Care Hospital Administrators to move from their present rather pragmatic decision-making process for problem solving in selected areas to the more assertive and defensive approach of Risk Management. The answers were be sought by: 1. Reviewing the pertinent American literature on risk management. 2. Considering whether this presented an applicable approach to the British Columbia situation by: a. reviewing pertinent Canadian (and specifically British Columbian) literature on the same topic. b. reviewing Canadian (and specifically British Columbian) health services against their ideological background. 3. Discussing selected Risk Management considerations with: a. British Columbia legal experts in the health field. b. British Columbia insurance experts in the health field. v 4-. Discussing selected Risk Management considerations vis a vis present practices and procedures with hospital administrators (at senior and department head level) in two (2) British Columbia Community General Hospitals and covering three (3) hospital departments. The information collected from these interviews was presented in a case study format. The discussions focus on the major differences between the Canadian and American hospital industries. In addition, the variances between the findings in the literature review and the - iv -responses by the case study participants w i l l be described. The analysis w i l l draw conclusions about the need for B r i t i s h Columbia hospital administrators to change their present practices and move to a system of Risk Management. Recommendations for planning the introduction and evaluation of Risk Management in B r i t i s h Columbia Acute Care Hospitals are presented at the end of the study. - V -TABLE OF CONTENTS Page Title Page i Abstract i i Table of Contents v List of Tables v i i i List of Figures ix Acknowledgments x CHAPTER I - DEVELOPING A FRAMEWORK FOR RISK MANAGEMENT . 1 A. Introduction 1 1. Purpose of the study 2 2. Description of the study 3 CHAPTER II - DESCRIBING RISK MANAGEMENT FOR ACUTE CARE HOSPITALS 4 A. Definitions 4 B. The Overlap with Quality Assurance 6 C. Establishing a Framework for Risk Management 10 D. Relevance to British Columbia Acute Care Hospitals 12 1. Background of the United States Hospitals 12 2. Emerging Patterns in Canada and British Columbia 15 CHAPTER III - MA30R CONSIDERATIONS RELATED TO HOSPITAL RISK MANAGEMENT IN THE UNITED STATES 20 A. Selected Legal Aspects 22 1. Basic facts about the Anglo-American legal system 23 2. The changing law 25 3. The changing values 30 k. The relationship to Risk Management 32 - v i -Page B. Selected F i n a n c i a l Aspects 32 1. Changes in revenue sources and regulatory a c t i v i t i e s 34 2. Insurance management 39 3. Relationship to Risk Management 40 C. Selected Safety and Security Aspects.... 43 1. Background 44 2. Patient safety 45 3. Employee safety 46 4. V i s i t o r safety 47 5. Special problem areas 48 6. Relationship to Risk Management 49 CHAPTER IV - SELECTED ORGANIZATIONAL ASPECTS 57 A. The Hospital as a Corporation 57 B. Selected Environmental Influences 64 C. Risk Management: A Response by the Hospital Organization 66 CHAPTER V - COMPARISON OF MA30R CONSIDERATIONS TO CANADA, BRITISH COLUMBIA 70 A. Selected Legal Aspects 70 1. Basic facts about the Canadian legal system 71 2. The changing law 73 3. The changing values 79 B. Selected F i n a n c i a l Aspects 83 1. Revenue sources for hospitals 85 2. Insurance management 88 C. Selected Safety and Security Aspects... 90 D. Selected Organizational Aspects 93 CHAPTER VI - EXAMINATION OF RISK MANAGEMENT FOR HOSPITALS IN THE BRITISH COLUMBIA CONTEXT 102 A. Introduction 102 B. Methodology 103 - vii -Page C. Findings 105 1. The hospitals 105 2. The lawyers 121 3. The insurance representatives 128 D. Discussion 132 1 . The concept 132 2. The major considerations 135 3. The need 141 CHAPTER VII - SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ... 145 BIBLIOGRAPHY 150 APPENDICES Appendix A American Legal Aspects Supplement 164 Appendix B Canadian Legal Aspects Supplement 172 Appendix C Letters to Case Study Participants 180 Appendix D Interview Schedules for Case Study 184 - vi i i -LIST OF TABLES Page Table One Functions of Risk Management and Quality Assurance 7 Table Two Relationship Between Risk Management and Quality Assurance 9 Table Three Classification of American Law 23 Table Four National Health Expenditures, as Percent of GNP, United States, Selected years 1960-1977 33 Table Five Comparison of Various Forms of Malpractice Liability Insurance 41 Table Six Canadian Medical Protective Association Receipts, Actions, Expenditures Selected Years, 1945-1977 80 Table Seven Health Expenditures, as Percent of Canadian GNP, Selected Years, 1960-1978 83 Table Eight Summary of Selected Responses by Hospital Respondents 106 Table Nine Summary of Selected Responses by Legal and Insurance Representatives 122 Table Ten Major Advantages and Disadvantages for British Columbia Hospitals to Introduce Risk Management 146 - ix -LIST OF FIGURES Page Figure One Overlap Between Functions of Risk Management and Quality Assurance 8 Figure Two Framework to Demonstrate the Control Process Related to Risk Management in a Hospital Organization 11 Figure Three Interrelationship of Primary Considera-tions Related to Hospital Risk Management 21 Figure Four Hospital Organization: Evolving Corporate Structure 61 - X -ACKNOWLEDGMENTS This type of manuscript could not have been possible without the cooperation of those working in or associated with the hospital industry. These persons willingly gave of their time, often, during busy schedules and to them I extend my warmest thanks. In addition, the members of my thesis committee proved to be patient and helpful as I grappled with the thesis process. Finally, I am grateful for the encouragement and support of my friends and family. - 1 -CHAPTER I DEVELOPING A FRAMEWORK FOR RISK MANAGEMENT IN ACUTE CARE HOSPITALS A . In t roduct ion During the 1970's American health services were being severely c r i t i c i z e d . Issues of equity, a c c e s s i b i l i t y and cost of services were common debates to be heard across the country. The hospital industry was struck with what has come to be known as the "malpractice c r i s i s " . Allegations of malpractice with a general decrease in the immunity of a hospital from l i a b i l i t y seemed to have become one more element in a changing health care industry. Some may think that " c r i s i s " was too powerful a word to describe the American experience. However, i t i s clear that the method of c o n t r o l l i n g hospital l i a b i l i t y often determined whether or not a h o s p i t a l could continue to function. One of the developments for c o n t r o l l i n g l i a b i l i t y was the introduction of Risk Management for Hospitals. The introduction and outcomes of t h i s concept has been well documented in the American l i t e r a t u r e . At present, i t i s inconceivable that B r i t i s h Columbia hospitals should be confronted with a s i m i l a r experience, and yet, over the past (two) to (three) years, a growing interest in the concept has been demonstrated. The expression, Risk Management, i s being used with more f a m i l i a r i t y . Some hospital administrators in B r i t i s h Columbia have designated one of t h e i r administrative s t a f f as Risk Manager. Seminars, conferences and a r t i c l e s on Risk - 2 -Management are appearing in the Canadian context. However, introducing comprehensive Risk Management programs into B r i t i s h Columbia hospitals would be a s h i f t from present management practices and warrants further examination. 1. Purpose of the Study The question to be studied in t h i s paper i s whether B r i t i s h Columbia Acute Care Hospital Administrators need to move from t h e i r present decision-making process of problem-solving in dealing with selected r i s k areas to the more assertive and defensive approach of Risk Management. This descriptive study w i l l attempt to answer the question by analyzing: a. pertinent American, Canadian and, s p e c i f i c i a l l y B r i t i s h Columbia l i t e r a t u r e on Risk Management and selected issues related to Risk Management; b. interviews with B r i t i s h Columbia le g a l and insurance experts i n the health f i e l d ; c. interviews with B r i t i s h Columbian hospital administrators (at senior and department head le v e l ) in two (2) Community General Hospitals with sp e c i a l attention to the present practices and procedures of three (3) hospital departments. The analysis of the l i t e r a t u r e and case study w i l l include discussions about the major differences between the American and Canadian hospital i n d u s t ries and the variances found between the findings in the l i t e r a t u r e and the responses of the case study - 3 -p a r t i c i p a n t s . Conclusions w i l l be drawn about the need to change the present practices of B r i t i s h Columbia Acute Care ho s p i t a l s . The major advantages/disadvantages of introducing Risk Management w i l l be summarized and followed with recommendations for planning. 2. Description of the Study This study represents a methodological presentation of major issues surrounding the potential introduction of a new concept. The subsequent chapter begins with the development of a framework for Risk Management by introducing d e f i n i t i o n s , comparing Risk Management with Quality Assurance and addressing what relevance Risk Management has for B r i t i s h Columbia Acute Care Hospitals. Chapter III introduces the model from which the l i t e r a t u r e review i s discussed. The four constant variables are the subject matter for Chapters III through V with both the American and Canadian perspectives being presented. Chapter VI introduces the reasoning behind a case study in addition to reporting the findings and analysis. In the f i n a l chapter, conclusions are drawn regarding the need to change present management practices r e l a t i n g to r i s k s . The major advantages/disadvantages of introducing Risk Management are summarized and supplemented by recommendations for planning. - 4 -CHAPTER II DESCRIBING RISK MANAGEMENT FOR ACUTE CARE HOSPITALS A . D e f i n i t i o n s Risk and r i s k management have several d e f i n i t i o n s and interpretations as evidenced by the plethora of primarily American l i t e r a t u r e on the subject. However, there are commonalities and, from these, a framework w i l l be established for the purpose of t h i s paper. Webster's New World Dictionary defines r i s k as the chance of injury, damage or loss, and management as the control or d i r e c t i o n of behavior. Thus, r i s k management becomes a control or d i r e c t i o n of the chance of injury, damage, or l o s s . Lowrence preferred to define r i s k "as a compound measure of the p r o b a b i l i t y and magnitude of adverse e f f e c t " . 2 Presenting a paper at a conference on S o c i e t a l Risk Assessment, he viewed r i s k statements as a statement of the l i k e l i h o o d and consequences of harmful e f f e c t whether they be determined by empirical methods or guesstimate. Brown, writing about Risk Management for Hospitals, stated that r i s k had a negative connotation and implied the need for avoidance. He combined t h i s with a description of management which he considered an active e f f o r t to achieve positive r e s u l t s . Thus, his d e f i n i t i o n of r i s k management intimated a program that provides p o s i t i v e avoidance of negative r e s u l t s . How t h i s p o s i t i v e avoidance can be achieved i s i l l u s t r a t e d - 5 -in some of the more common d e f i n i t i o n s of r i s k management: "... the science for the i d e n t i f i c a t i o n , evaluation and treatment of the r i s k of f i n a n c i a l l o s s . "... the i d e n t i f i c a t i o n , i n t e r p r e t a t i o n , i s o l a t i o n , and eradication of incidents that may give r i s e to unwarranted, unplanned, or unexpected patient conditions or r e s u l t s . " 5 "... surveillance of a l l patient care operations i n order to i d e n t i f y , evaluate and take corrective action that may lead to patient injury and the loss or damage of property, with r e s u l t i n g f i n a n c i a l l o s s . " 6 "... a detection system designed to predict when the next person f a i l u r e w i l l occur and to prevent i t from happening." An acute care hospital i s a f a c i l i t y providing s e r v i c e s . . . "for the s t a b i l i z a t i o n of v i t a l processes, the r e l i e f of di s t r e s s , the establishment of diagnoses, the provision of treatment, the restoration of function and the education and t r a i n i n g of persons for s e l f care and maintenance of optimal health care status. This requires medical, nursing and paramedical s t a f f in a broad range of diagnostic and treatment s p e c i a l t i e s and equipment for a variety of care requirements." 8 - 6 -For the purpose of th i s paper, p s y c h i a t r i c acute care f a c i l i t i e s are excluded from t h i s framework. In addition, the term " h o s p i t a l " , unless s p e c i f i e d otherwise, w i l l r e f e r to acute care hospital throughout the text of t h i s paper. B. The Overlap with Quality Assurance Quality assurance, a c l i n i c a l program that focuses on quality of patient care, has obvious overlaps with r i s k management. The overlap can be determined by reviewing the function of each program (Table one). It i s noteworthy that although the functions and process of both a c t i v i t i e s are s i m i l a r , the differences in focus i s s u f f i c i e n t to preclude the coll a p s i n g g of both functions into one. This can be further i l l u s t r a t e d by the conceptual model presented in Figure One. Instead, i t has been proposed that an integrated approach may be more b e n e f i c i a l to the h o s p i t a l . The d i s t i n c t advantages of integration include: 1. Maximum use and benefit from limited resources; 2. Establishment of an optimal communication l i n k ; 3. Promotion of the development of relevant s t a f f education programs. The American Hospital Association (AHA) has studied the re l a t i o n s h i p between quality assurance and r i s k management and has emphasized the need for both types of programs. 1 0 The integrated framework has already been adapted for use in one B r i t i s h Columbia hospital and i s shown in Table Two. 1 1 The AHA manual, published - 7 -TABLE ONE FUNCTIONS OF RISK MANAGEMENT AND QUALITY ASSURANCE RISK MANAGEMENT QUALITY ASSURANCE 1. Protect f i n a n c i a l assets of the h o s p i t a l . 1. Tied to philosophy of the h o s p i t a l . 2. Protect human and intangible resources. 2. Improve the performance of professionals, protect patients. 3. Prevent injury to patients, v i s i t o r s , employees, and property. 3. Focus on quality of patient care. k. Loss reduction focusing on i n d i v i d u a l loss or on single incidents. 4. Sets quality of care d e l i v -ered against standards and measurable c r i t e r i a . 5. Loss prevention to prevent incidents by improving q u a l i t y of care through con-tinui n g and ongoing moni-t o r i n g . 5. Prevents future losses or patient i n j u r i e s by contin-uous monitoring of problem resolution areas. 6. Review of each incident and the patterns of incidents through the app l i c a t i o n of the steps in the R.M. process. 6. Searches for noncompliance with goals, objectives and standards through quality assurance process. I l l u s t r a t e d with permission: Source: O r l i k o f f , 3. and Langham, G. "WHY RISK MANAGEMENT" AND QUALITY ASSURANCE SHOULD BE INTEGRATED" Hospitals, Oune 1, 1981. -. 8 T FIGURE ONE OVERLAP BETWEEN FUNCTIONS OF RISK MANAGEMENT AND QUALITY ASSURANCE Illustrated with permission: Source: Orlikoff, 3. and Langham, G. "WHY RISK MANAGEMENT AND QUALITY ASSURANCE SHOULD BE INTEGRATED" Hospitals, June 1, 1981. - 9 -TABLE TWO RELATIONSHIP BETWEEN RISK MANAGEMENT & QUALITY ASSURANCE PROGRAMS CHARACTERISTICS RISK MANAGEMENT QUALITY ASSURANCE Purpose Minimize the Hos-p i t a l ' s losses -protect the Hospital. Assure that q u a l i t y of care provided i s optimal - evaluate s t a f f performance and and protect patients Character C r i s i s intervention Education & remedial Function Detect r i s k s to the Hospital, then prevent t h e i r re-currence or minimize t h e i r effect when they occur. Measure actual care against standards and take remedial action where care does not meet standards. Patients Involved Single patient d i s - Single patient or charged or s t i l l hos- groups of patients, p i t a l i z e d — i s o l a t e d discharged or s t i l l events. h o s p i t a l i z e d — patterns. Standard Unwritten and im-p l i c i t c r i t e r i a (what s t a f f consider and "incident" or "occurrence"). Written and e x p l i c i t c l i n i c a l l y based c r i t e r i a . Process of Review of health Review of completed Patient Care record after report health record. Review , received; possibly a medical examination of the patient. Reason for an Indi-vidual Patient's Care . Scru t i n i z e d Patient suffered an injury which was re-ported or the Hospital receives l e g a l notice. Care provided did not meet established standards. Analysis Why i s the lawyer Explanation of v a r i -suing? Is there ance e x p l i c i t c r i -harm? Who or what t e r i a . Can the v a r i -caused harm? ation be j u s t i f i e d c l i n i c a l l y ? Action May be dir e c t imme-diate patient i n t e r -vention to handle a single patient. Generally not reme-d i a l l y oriented for Hospital s t a f f . No di r e c t patient i n -tervention as i t af-fects future patients Remedially oriented for Hospital s t a f f . System Part of a monitoring Part of an o v e r a l l system. system based on a feedback loop with continuing education, s t a f f evaluation and other study a c t i -v i t i e s . I l l u s t r a t e d with Permission: HEALTH SCIENCES CENTRE, 1981 U n i v e r s i t y o f B r i t i s h C o l u m b i a - 10 -in 1980, also examines the commonalities and demonstrates how the functions of quality assurance and r i s k management can work 12 together for a more e f f e c t i v e outcome. C. Establishing a Framework for Risk Management Given the l a t i t u d e that i s apparent when discussing Risk Management, i t i s important to outline how Risk Management w i l l be defined in t h i s manuscript. Thus, for the purpose of t h i s study Risk Management i s a management process that includes s u r v e i l l a n c e of a l l hospital operations i n order to i d e n t i f y , evaluate and take corrective action for unwarranted, unplanned and unexpected s i t u a t i o n s that may lead to an i n d i v i d u a l ' s injury, property damage or l o s s . The process, as i l l u s t r a t e d in Figure Two, can be viewed as an organized or formalized control mechanism for monitoring ho s p i t a l operations. The practices referred to in the framework include p o l i c i e s , practices, and standards that may affect h o s p i t a l operations or functions. The primary considerations can be delineated into four (4) categories that include l e g a l , f i n a n c i a l , safety and secu r i t y , and organizational aspects that may influence the character of the hospital practices as s o c i e t a l expectations and demands change and feedback through the system. In addition, the overlap and r e l a t i o n s h i p with quality assurance i s acknowledged and i s included as part of the Risk Management concept in so far has been outlined in the previous section. - 11 -FIGURE TWO FRAMEWORK TO DEMONSTRATE THE CONTROL PROCESS RELATED TO RISK MANAGEMENT IN A HOSPITAL ORGANIZATION ORGANIZATIONAL LEGAL FINANCIAL Y/SECURITY ESTABLISH PRACTICES FOR MEASURING HOSPITAL FUNCTIONS * MEASURE HOSPITAL FUNCTIONS EVALUATE HOSPITAL FUNCTIONS' Satisfactory Not Satisfactory TAKE CORRECTIVE ACTION - 12 -D. Relevance to B r i t i s h Columbia Acute Care Hospitals During the f i r s t half of t h i s century, there were several hundred Canadian hospitals of varying size and varying standards. Most were located in the larger communities and spread across a vast country that was, in most areas, sparsely populated. The pioneers in the Canadian hospital and medicine f i e l d s interacted frequently with t h e i r American counterparts and i t was not unusual to f i n d Canadians in i n f l u e n t i a l positions in the United S t a t e s . 1 3 , l i + Because of t h i s close association, the developments of the American and Canadian hospital would demonstrate many s i m i l a r i t i e s both in t h e i r accomplishments and in t h e i r problems. What follows i s a b r i e f chronicle of the h i s t o r i c a l aspects in the American and Canadian hospital industry that have led to the creation of Risk Management for hos p i t a l s . Emerging patterns in Canada suggest i t i s timely to examine the need for Risk Management in B r i t i s h Columbia acute care hospitals. 1. Background of the United States Hospital During the 18th and f i r s t half of the 19th century, the American hospital was a place where the destitute could find shelter and sympathy. More often than not i t was a place to d i e . 1 5 This did not change u n t i l the l a t t e r half of the 19th century with the establishment of schools of nursing and advances in the f i e l d of medicine. However, by the turn of the century, the hospitals had changed in purpose, function and number. S i g n i f i c a n t l y , the public was beginning to r e a l i z e that some forms - 13 -of disease and injury could better be treated in a hospital environment. 1 6 Following the Flexner Report of 1910, a c t i v i t i e s escalated 17 in the organization and d e l i v e r y of health s e r v i c e s . Medical schools became associated with s p e c i f i c hospitals that were encouraged to meet ce r t a i n standards that would enhance the learning environment of the aspiring intern or s p e c i a l t y resident. Foundations were established to promote special studies i n medical and health care; associations (medical and hospital) were formed to a s s i s t in the improvement of administrative procedures, professional practice and hospital functions; and books and journals shared new experiences and knowledge. By mid century, people had been educated to appreciate a s c i e n t i f i c good 18 hospital s e r v i c e . In 1953, the American College of Physicians and Surgeons and the American Hospital Association joined forces to e s t a b l i s h the Doint Commission on Accreditation of Hospitals (3CAH) in order to standarize c e r t a i n practices and administration of a l l kinds of hospitals in the United States. By 1965, about sixty (60) percent 19 of American hospitals were being accredited by 3CAH. However, some ind i v i d u a l s have expressed concern that 3CAH standards were too low as was evidenced by the alarming increase in malpractice 20 and l i a b i l i t y s u i t s . Part of t h i s trend was related to the changing image of the h o s p i t a l . Since 1957, hospitals had not been covered under charitable immunity and had been subject to 21 corporate l i a b i l i t y . Hospital l i a b i l i t y added fuel to another - 14 -problem - the cost of hospital care. Malpractice insurance premiums were increasing to the point where many hospitals could not afford them. In the mid 1960's hospital administrators sought alt e r n a t i v e s that included group insurance, self-insurance and 2 2 patient protection programs. In the early 1970's, the protection program was expanded to include such elements as 2 3 employees, v i s i t o r s , f i r e and t h e f t . Comprehensive r i s k management programs were the outgrowth of these early d e l i b e r a t i o n s and are now ensconsed in the American hospital i n d u s t r y . 2 4 In addition to the changing image of the h o s p i t a l , several other factors have been put forth to explain the American s h i f t toward Risk Management. These include: 1. Increased medical technology - r e s u l t i n g in patient expectations being raised to u n r e a l i s t i c a l l y high l e v e l s at high cost. 2. Increased s p e c i a l i z a t i o n by physicians - r e s u l t i n g in a breakdown of the doctor-patient r e l a t i o n s h i p and an increase in the r i s k of errors in communication and follow-up. 3. Increased number of possible claimants and increased number of patients w i l l i n g to f i l e claims - r e s u l t i n g from easier a c c e s s i b i l i t y to health care, a generally more l i t i g o u s environment, and the courtroom being viewed as the f i r s t place a d i s s a t i s f i e d patient could turn to, as opposed to the area of l a s t resort. 4. Increased number of attorneys - e s p e c i a l l y those who s p e c i a l i z e in malpractice cases. The reluctance to sue because cases were too complicated had been eliminated. 5. Changes in law - primarily the removal of immunities for governmental and charitable i n s t i t u t i o n s , l i b e r a l i z a t i o n of the Limitations ACT, and changes in regard to l o c a l e and t r a i n i n g of expert witnesses. - 15 -6. Unsophisticated methods of Risk Management which permitted many incidents to occur which could have been prevented. 7. Awareness of Malpractice Insurance - which has, 2^nce again, removed reluctance to sue an i n d i v i d u a l . 2. Emerging Patterns in Canada and B r i t i s h Columbia To date, there i s no i n d i c a t i o n that B r i t i s h Columbia or other Canadian provinces w i l l enter into a l i a b i l i t y problem of the proportion exhibited in the United States. However, the pot e n t i a l for a s i g n i f i c a n t increase in claims appears to e x i s t . Of the contributing factors put f o r t h in the previous section, four (4) are apparent in the Canadian context. They include: 1. increased technology 2. increased s p e c i a l i z a t i o n 3. changes in law 4. unsophisticated r i s k management methods The number of attorneys s p e c i a l i z i n g i n health or hospital law i s unknown. However, there i s c e r t a i n l y a communicated inte r e s t in the legal community and evidence that there are some 2 6 2.7 lawyers on the lookout for potential l i t i g a n t s . , Economic i n s t a b i l i t y and the existence of only a handful of insurance companies w i l l i n g to provide l i a b i l i t y coverage have accentuated the problem in the United States and have the potential to do the same in B r i t i s h Columbia and across Canada. Several factors also act as deterrents or preclude the development of a l i a b i l i t y problem. The most s i g n i f i c a n t of these - 16 -i s the national health insurance program. It has increased a c c e s s i b i l i t y to health care. In addition, Canadians are reluctant to sue for something that i s given to them at what i s perceived as low cost. The awareness of Canadians about malpractice and l i a b i l i t y insurance i s unknown. However, there i s evidence that demonstrates patients are greatly misinformed about 2 8 health care benefits and costs. One other factor i s worth r e l a t i n g . Canadian physicians are well organized to protect themselves from l i t i g a t i o n through the Canadian Medical Protective Association (CMPA). This i s a nonprofit professional association whose annual membership fee had for the past six years remained at 29 $200 per annum u n t i l recently. This i s quite d i s t i n c t from the American physicians who must maintain protection from a private insurance company. At a National Conference on Health and the Law, Mr. F. Kendrick, an executive with the Marsh McLennan Insurance firm presented his views on malpractice and hospital l i a b i l i t y in the Canadian context. He urged the conference par t i c i p a n t s to give c a r e f u l consideration and action toward the following: 1. Improved working re l a t i o n s h i p s among health care workers, lawyers and the insurance industry to provide d i r e c t i o n for the future. 2. Improved management of loss prevention a c t i v i t i e s . 3. New approaches to r i s k assumption and r i s k t r a n s f e r . He strongly believed that the p o s s i b i l i t y for a malpractice 30 problem was present. S i m i l a r l y , a lawyer at the same conference stated that the legal s i t u a t i o n with regard to malpractice was - 17 -l i v e l y i n Canada. He f e l t health care had no national boundaries in the problems i t presented and, therefore, Canada could not be 3 1 b l i n d to developments in other j u r i s d i c t i o n s . More recently, Ontario hospitals have faced large increases i n t h e i r insurance premiums and, for the f i r s t time ever, insurance companies have experienced investment income f a l l i n g 3 2 below underwriting losses. The le g a l profession has been stating with increasing frequency that Canadian hospitals must es t a b l i s h mechanisms to ensure t h e i r l e g a l duty i s c a r r i e d o u t . 3 3 , 3 4 One noted professor of law has stated that Canadian hospitals have a duty to implement r i s k management systems ... or they might be imposed upon them. B r i t i s h Columbia Hospitals cannot afford to ignore these developments. It i s , therefore, timely to see i f there i s a need for B r i t i s h Columbia Acute Care Hospitals to move from t h e i r present practices to a system of Risk Management. - 18 -CHAPTER II FOOTNOTES Webster, New World Dictionary (Second College E d i t i o n 1973, pp. 493, 348, 9 W. Lowrance, "The Nature of Risk," in S o c i e t a l Risk  Assessment: How Safe i s Safe Enough edited by R. Schwing, W. Albers (New York: Plenum Press, 1980) p. 6. B. Brown, Risk Management for Hospitals (Germantown, Maryland: Aspen Systems Corporation, 1979), p. 1. ^T. Donkmyer & 3. Groves, "Taking Steps for Safety's Sake," Hospitals, (May 16, 1977), p. 60. K. Stewart, "Risk Management: No Tasks for the Timid," Trustee, ( A p r i l , 1979), p. 10. 6N. Dixon, "The Board's Role in Risk Management," Trustee, (September, 1979), p. 55. Wm. F i f e r , "Risk Management: the art of preventing 'people f a i l u r e ' , " Trustee, (September, 1977), p. 52. o B r i t i s h Columbia Department of Health, B r i t i s h Columbia  C l a s s i f i c a t i o n of Types of Health Care ( V i c t o r i a : Department of Health, 1973). Q 3. O r l i k o f f and G. Lanlam, "Why Risk Management and Quality Assurance Should be Integrated," Hospitals, (3une 1, 1981), pp. 54-55. 1 0American Hospital Association, Quality, Trending &  Management for the 1980's, (QTM 80), (Chicago: AHA, 1980) M-14, M-15. n K . M i t c h e l l , Risk Management Program (Internal documents Health Services Centre, UBC, 1981). 1 2American Hos p i t a i Association, QTM 80, M-16, M-18. 1 3 Commission on Hospital Care, Hospital Care in the U.S. (New York: Commonwealth Fund, 1947), pp. 432-453. 1 6 I b i d , pp. 454-477. 17 A. Flexner, Medical Education i n the United States and  Canada. A Report to the Carnegie Foundation for the Advancement  of Teaching (New York: Carnegie Foundation, 1910). Commission on Hospital Care, Hospital Care in the United  States, pp. 478-5B. - 19 -1 9 E . Hoyt, Condition C r i t i c a l : Our Hospital C r i s i s (New York: Holt, Rinehart and Winston, 1966), pp. 3-23. 2 0 I b i d , p. 197. 21 3. O r l i k o f f , Wm. F i f e r , A. Greely, Malpractice Prevention  and L i a b i l i t y Control for Hospitals (Chicago: Amer. Hosp. Assoc., "1981), pp. 5-16. 22 G. Morse, R. Morse, Protecting the Health Care F a c i l i t y : A System of Loss Prevention Management E f f e c t i v e for a l l Industry TBaltimore: Williams & Wilkins Co. 1974), pp. 5-10. 23 Brown, Risk Management for Hospitals: A P r a c t i c a l  Approach, forwards. 2 l t 0 r l i k o f f , et. a l . , Malpractice Prevention and L i a b i l i t y  Control for Hospitals, p. 19-22. 25 International Hospital Federation, International Seminars  on Hospital L i a b i l i t y (Lyon, France, A p r i l 24-25, 1981). 2 6 As w i l l be noted in Chapter V, much of the l i t e r a t u r e related to Risk Management in the Canadian context comes from the l e g a l community. 2 7G. Clements, interview, May 9, 1982. 2 8 Le Riche et a l . , eds., People Look at Doctors: The  Sunnybrook Health Attitude Survey (1971), p. 103. 2 9 3 . D i l l o n , interview, A p r i l 19, 1982. 30 F. Kendrick, "Malpractice - 'The Insurance Problem," in Proceedings, National Conference on Health and Law (September 23, 1975), pp. 66-75. 31 C. Scott, "Malpractice - The Legal S i t u a t i o n , " in Proceedings pp. 1-9. 3 2H. Martin, "Hospital Risk Management : A Canadian Perspective, "Health Management Forum," (Autumn, 1981), pp. 23-24. 33 L. Rozovsky, "The Hospital's R e s p o n s i b i l i t y for Quality of Care Under English Common Law," Chitty's Law Journal, (4), (1976), pp. 132-136. 3 4 E . Picard, "The L i a b i l i t y of Hospitals" (unpublished manuscript, Health Law Seminar, UBC, Spring, 1982). 3 5 3 . Magnet, "Preventing Medical Malpractice in Hospitals: Perspectives from Law and P o l i c y , " 3 Legal-Medical Quarterly, (1979), p. 197. - 20 -CHAPTER III MAJOR CONSIDERATIONS ASSOCIATED WITH HOSPITAL RISK  MANAGEMENT IN THE UNITED STATES A topic with as broad a scope as Risk Management requires a model for purposes of manageable discussion. The considerations were i d e n t i f i e d following a review of pertinent American l i t e r a t u r e on Risk Management for h o s p i t a l s . Consistently, four threads - l e g a l , f i n a n c i a l , safety and security and organizational - could be recognized. Their i n t e r r e l a t i o n s h i p i s demonstrated in Figure Three. A change or action in anyone of the "areas" can r e s u l t in a reaction in another area. For example, a breach in safety practices could result in a l e g a l s i t u a t i o n that may affect the f i n a n c i a l resources of the hospital and thus, influence the management of the safety practices. The organizational considerations (the hospital as an organization) i s at the centre with both i n t e r n a l and external influences acting upon i t . An overwhelming amount of applicable material could be presented with respect to each of the considerations. To e s t a b l i s h some parameters, each of the considerations w i l l be discussed using the following approach: a. the primary problems(s) perceived b. supplementary information c. r e l a t i o n s h i p to Risk Management Where applicable, additional explanatory information w i l l be supplied in the appendices. In t h i s manner, a broader spectrum of - 21 -FIGURE THREE INTERRELATIONSHIP OF PRIMARY CONSIDERATIONS RELATED TO HOSPITAL RISK MANAGEMENT - 22 -material can be discussed without interruption of d e f i n i t i o n s or explanation of p r i n c i p l e s . B a s i c a l l y , the purpose of the next two chapters i s to demonstrate the s i g n i f i c a n c e of each consideration upon the American hospital organization and ultimately, define the consideration's importance in the Risk Management process. A. Selected Legal Aspects The expressed concern for hospital l i a b i l i t y and accountability i s a r e l a t i v e l y contemporary issue. For many years, hospitals were covered by a charitable immunity doctrine. Then, in 1957, the New York Court of appeals established a precedent by claiming that the doctrine of charitable immunity was no longer applicable to h o s p i t a l s . This coincided with and confirmed the changing image of the hospital discussed in the previous chapter. In addition, state medical practice acts l i m i t e d license of physicians to 'natural persons'. Since, hospitals were a le g a l e n t i t y only, they could not " p r a c t i c e " medicine. The hospitals' i n a b i l i t y to control the actions of the Medical s t a f f prevented them from employing physicians. During the succeeding years, the h o s p i t a l , as an organization, continued to change with the times. Incidental to these changes were two factors that would s t r i k e at the very core of the hospital's operations: 1. changes in the law 2. development of a claims concious society. The combination of these two factors has assisted in supporting a - 23 -l i t i g a t i n g environment that presents i t s e l f as a predominant problem for the American hospital industry. Because l i t i g a t i o n or the p o t e n t i a l for l i t i g o u s claims i s a problem of such great 3 magnitude , the s i g n i f i c a n t changes in the law and the reasons for a claims conscious society w i l l be discussed in greater d e t a i l . This w i l l be supplemented by important le g a l d e f i n i t i o n s , types of l e g a l action and p r i n c i p l e s of hospital l i a b i l i t y documented in Appendix A. 1. Basic f a c t s about the Anglo-American l e g a l system American Law can be c l a s s i f i e d as public or private law depending upon i t s subject content. 4 Table Three demonstrates the type of laws or regulations applicable under each. TABLE THREE CLASSIFICATION OF AMERICAN LAW PUBLIC PRIVATE CONSTITUTION CRIMINAL ADMINISTRATION (GOVT. AGENCIES) CONTRACT PROPERTY TORTS COMMON LAW Public law defines, regulates and enforces rights where any part or agency of government i s a part to the subject matter. This includes defining r e l a t i o n s h i p s between various components of the federal state, considerations r e l a t i n g to the B i l l of Rights and protection of fundamental freedoms, crimes against the state - 24 -and the people and administrative organizations which regulate p a r t i c u l a r matters in the public i n t e r e s t . Statutes (or Public laws) are enactments of l e g i s l a t i v e bodies. They may deal with matters of public or private law. It i s important to note that the l e g i s l a t i v e d i s t r i b u t i o n of power for public a f f a i r s i s divided amongst federal, state and municipal l e v e l s . Ultimately, health i s a federal j u r i s d i c t i o n and the r e s p o n s i b i l i t y of the Department of Health, Education and Welfare. 5 In the area of private law, the law of contracts i s concerned with the sale of goods, the furnishing of services, the employment of others, and the loan of money. Property law regu-lates the ownership, employment, and d i s p o s i t i o n of property while the law of Torts defines and enforces respective duties and rights that exist between i n d i v i d u a l s but are independent of contractual agreements. Contract, property and t o r t law have developed h i s t o r i c a l l y through j u d i c i a l decisions and are referred to as common ( i . e . common to England) law guided by the doctrine of stare d e c i s i s (translated to mean to abide by decided cases). However, i t i s important to note that stare d e c i s i s i s applied v e r t i c a l l y , but not h o r i z o n t a l l y , to equal or lower courts in the same system or to courts from other systems. Thus, a state t r i a l court would be bound by decisions of t h e i r appellate or supreme courts but would not be bound by other t r i a l courts in the same state or out of state. The same holds true for the federal court system.' - 25 -Few areas of the Americans' da i l y l i f e are not governed by some type of law. One American scholar described law as the repository for the wisdom of the ages and said that e x i s t i n g laws r e f l e c t s o c i e t a l values that have reached expression through a O complex socio-economic-political process. Americans pride themselves in t h e i r l i b e r t y to pursue s e l f - i n t e r e s t s . However, i t i s the pursuit of s e l f - i n t e r e s t that introduces c o n f l i c t and, in the American context, i t i s the l e g a l system that helps to 9 e s t a b l i s h l i m i t s in order to protect the i n t e r e s t s of others. What both of these statements suggest i s that changes in s o c i e t a l values and, therefore, the laws of the land are both desirable and i n e v i t a b l e i f they are to be of service to the American populace. 2. The changing law With the change to corporate status, the hospital became subject to c e r t a i n l e g a l duties for i t s patients, employees and v i s i t o r s . These duties are not delegable to medical s t a f f or other p e r s o n n e l . 1 0 The central issue in defining the scope of duties i s what the hospital undertakes to do. In theory, t h i s should be outlined in the hospital's statement of purpose. Although the courts are s t i l l defining these duties, three s i t u a -t i o n s t r a d i t i o n a l l y and h i s t o r i c a l l y r e f l e c t a hospital's duties. Maintenance of grounds and buildings i s the f i r s t duty, and one often guided by statutory or accreditation standards. In the absence of these, the courts w i l l make th e i r decision according to the "reasonable man" standard. The p l a i n t i f f , however, must prove that the h o s p i t a l , through i t s employees, knew or should have known of a defective or dangerous condition l i k e l y to cause - 26 -i n j u r y . Secondly, the hospital has duty to exercise reasonable care in both the s e l e c t i o n and maintenance of equipment. It i s expected that equipment w i l l be properly selected to s u i t a given purpose and the patient's p a r t i c u l a r condition, and that the equipment w i l l be properly maintained in order to discover defects. Again, l i c e n s i n g , a c c r e d i t a t i o n , manufacturer's stand-ards and safety standards under the Federal Occupational Safety and Health Act (OSHA) would p r e v a i l . There i s no_ duty on the part of the hospital to provide or possess the newest, most modern equipment a v a i l a b l e . F i n a l l y , the h o s p i t a l , as a corporation has a duty to exercise reasonable care in the s e l e c t i o n and retention of professional and unprofessional s t a f f . In addition to checking c r e d e n t i a l s , background, v a l i d licensure and references, hospital administration must ensure that: - i n s e r v i c e - t r a i n i n g programs are up to date, - employees are discharged or transferred when i t i s apparent that they cannot do t h e i r assigned jobs and professionals are properly supervising those for whom 1 2 they are responsible. F a i l u r e to conform to any of these duties can result in a corporate negligence a l l e g a t i o n or decision. Negligence i s defined as "conduct which f a l l s below the standard established by law for the protection of others against 13 unreasonably great r i s k of harm." It i s the act of an unreason-able man and i s usually the r e s u l t of poor judgement, ignorance or s t u p i d i t y . Negligence i s measured by a standard of "reasonable-- 27 -ness" which i s based upon what i s expected of the i n d i v i d u a l by i n d i v i d u a l by society rather than what the i n d i v i d u a l expects of himself. The reasonable man i s assumed to have minimum percep-t i o n , memory, experience and information common to the community. If he/she i s an i n d i v i d u a l with s p e c i a l i z e d s k i l l s , the minimum standards for that occupation or profession p r e v a i l . Four elements must be proven i n order for a court to award negligence to an injured party. They include: 1. an existence of a l e g a l duty to provide a standard of care which a prudent, reasonable man would consider necessary in order to protect another from unreasonable and unnecessary harm. 2. a f a i l u r e to perform that duty. 3. a wrong or injury must be suffered 4. approximate cause between the breach of duty and the i n j u r y . l k Most negligence s u i t s in health care have been related to professional malpractice. However, with the t r a n s i t i o n to viewing a hospital as a corporation, the v u l n e r a b i l i t y for hospitals has increased. Some examples, of le g a l action s u i t s brought against hospitals include: Greater Washington, D.C., Area Council of Senior Citizens v. D i s t r i c t of Columbia where the court found the D.C. General Hospital negligent in providing adequate s t a f f , drugs and supplies and physical maintenance. 1 5 South Highlands Infirmary v. Camp where a patient was awarded damages for i n j u r i e s caused by a defective e l e c t r i c a l -s u r g i c a l instrument. 1 5 - 28 -and the more frequently occurring l i a b i l i t y s u i t s for negligence of hospital employees and medical s t a f f : The precedent setting Darling v. Charleston Community Memorial Hospital held the hospital l i a b l e for having an i n s u f f i c i e n t number of trained nurses who could recognize the progressive d e t e r i o r a t i o n of the p l a i n t i f f ' s right leg, and who would report i t appropriately. They were a d d i t i o n a l l y held l i a b l e for not requiring consultation with medical s t a f f s k i l l e d in 17 s p e c i f i c treatments. Foley v. Bishop Clarkson Memorial Hospital, a case where the hospital was in breach of standard of care by f a i l i n g to obey i t s own rules regarding history, physical examination and observation of a newly admitted patient which resulted in the 18 p l a i n t i f f ' s newborn's death. In Parker v. Port Huron Hospital the hospital was held l i a b l e for an overworked laboratory technician who had f a i l e d to follow the prescribed procedure in i d e n t i f y i n g a tube of blood sampling which ultimately resulted in a patient's death from the 19 wrong administration of blood. The l a s t cases that include the negligence of hospital employees and possibly medical s t a f f have the potential to overlap with the a p p l i c a t i o n of the doctrine of respondeat superior. Respondeat Superior Respondeat Superior l i t e r a l l y translated as " l e t the master answer", i s also known as vicarious l i a b i l i t y . In t h i s s i t u a t i o n an employer i s held l i a b l e for the wrongful acts of an employee - 29 -even though the employer's conduct i s without f a u l t . There must be a master-servant r e l a t i o n s h i p and the employer must have the righ t to control the physical conduct of the employee in the performance of the employees' s p e c i f i e d duties. Respondeat superior does not absolve the employee of the wrongful act and the hospital may under some circumstances seek indemnification from such an employee. The doctrine of respondeat superior does not apply to independent contractors for the hospital but may apply under the "borrowed servant" doctrine in c e r t a i n fact s i t u a t i o n s . This l a t t e r consideration has been most obvious in operating room cases where the surgeon was once deemed "captain of the ship" with the nurses his "borrowed servants." Under t h i s r u l e , the surgeon was held responsible for any wrongful acts of the "servants". More recently, the American courts have been deciding that the surgeon has no right to control the "servants" and, thus, the hospital has been held l i a b l e under respondeat s u p e r i o r . 2 1 This doctrine has also extended the l i a b i l i t y of hospitals for i t s medical s t a f f , p a r t i c u l a r l y i f they are f u l l - t i m e employees of the h o s p i t a l , but also for the independent p r a c t i t i o n e r s _if i t i s deemed that the hospital was negligent in s e l e c t i n g him or i f the h o s p i t a l was found to have directed the physician in the way and 22 manner of treating patients. In summary, i t i s evident that a s h i f t or changes in the law, with respect to hospital l i a b i l i t y , have occurred since the hospital's change to corporate status. In addition to addressing corporate duties, one law professor has noted the following: - 30 -- the courts have d i f f i c u l t y in discriminating between corporate negligence and respondeat superior. - respondeat superior judgements are now addressing both administrative and professional a c t i v i t i e s . - the "borrowed servant" doctrine i s slowly disappearing and hospitals are held accountable for a l l a c t i v i t i e s . - the courts tendency to find an employment re l a t i o n s h i p between the hospital and the physician. C l e a r l y , the scope of hospital l i a b i l i t y has increased in d e f i n i t i o n and has no clear boundaries. This affirms the p o s i t i o n taken e a r l i e r that the law i s a r e f l e c t i o n of s o c i e t a l values. The succeeding discussion w i l l address some of the changing expectations and values of the American people. 3. The Changing Values Ninety (90) percent of a l l s u i t s brought against hospitals and doctors have occurred since 1964. Clearly the American people are more w i l l i n g to seek le g a l action. Why i t i s so may depend on how the problem i s defined. Some of the more common arguments include: - what today i s considered malpractice, yesterday (15-20 years ago) was considered an unfortunate mistake - the "physician's f r a t e r n i t y " i s diminishing and there i s a great l i k e l i h o o d i n finding a physician who w i l l t e s t i f y against another physician. - malpractice s u i t s were costly and above the means of the average American c i t i z e n . - the physician cared for the whole family and often was a friend of the family. - there were less choices (of treatment, etc.) available and the patient had fewer expectations. - 31 -These are augmented by: - consumer's view of health care as a product - patients' awareness of t h e i r r i g hts - breakdown of the physician-patient r e l a t i o n s h i p - high consumer expectations - i n e v i t a b i l i t y - lack of informed c o n s e n t 2 6 and - the growth in medical technology - involvement of more personnel in the treatment sequence - inadequate e f f o r t s by hospitals to prevent adverse incidents 27 - rapid escalation i n the d o l l a r amount of damages. The role of the hospital has expanded. Today, more than ever, more types of health care are delivered through the h o s p i t a l . In turn, the "duties" of the hospital have increased and i t should not be surp r i s i n g that there i s an increased p r o b a b i l i t y that the hospital w i l l be accused when something goes 28 wrong. Among t h i s deluge of reasoning a pattern does begin to surface that r e l a t e s to the proposition stated at the beginning of th i s section. The image of health care, health care i n s t i t u t i o n s and health care workers has changed. Concurrently, the consumers of health care have changed in t h e i r awareness, t h e i r expectations and t h e i r demands for compensation when, and i f , personal injury or i n s u l t a r i s e s . L o g i c a l l y , one could expect a change in one (hos p i t a l structure, purpose) t r i g g e r i n g a change in the other (public awareness, expectations) and, as noted e a r l i e r , r e f l e c t i n g i t s e l f in a change in the laws. - 32 -4. The Relationship to Risk Management The preceding discussion outlined the s i g n i f i c a n c e of the law i n the hospital's operations. The law can provide impetus for the hospital changing i t s ways or the h o s p i t a l , through i t s own design, can provide a basis for changes in the law. I t i s also apparent that i n the past ten (10) to f i f t e e n (15) years, the hospital industry has had to face a problem of increasing l i t i g a t i o n . Seemingly, c o n t r o l l i n g hospital l i a b i l i t y has become as important a goal as patient care. One method that has been well received by the hospital industry i s the Risk Management process. I t addresses l i a b i l i t y control through a comprehensive process of attempting to prevent, or at least minimize untoward or negative r e s u l t s of patient care. I t has expanded to include minimization of problems that could p o t e n t i a l l y harm employees, v i s i t o r s or the organization i t s e l f . Fundamentally, l e g a l aspects of hospital and health care administration proved to be a primary reason for the development of Risk Management in the hospital sector. B. Selected Financial Aspects The health care system i n the United States i s under severe c r i t i c i s m . ^ One of the primary concerns i s the cost of health care and there i s considerable quantitative data to support t h i s concern. Total national expenditures for health care more than quadrupled between 1960 and 1974,^0 and increased somewhat more in the l a t t e r 1970's.^ Table Four i l l u s t r a t e s what the trend i s i n - 33 -TABLE FOUR NATIONAL HEALTH EXPENDITURES AS PERCENT OF GNP, UNITED STATES, SELECTED YEARS 1960-1977. F i s c a l Year Percent of Gross National Product 1960 5.2 1965 5.9 1970 7.2 1975 8.5 1977 8.8 Source: Williams, S.3. & Torrens, P.R. Introduction to Health Services New York: 3ohn Wiley & Sons, 1980, p. 289 terms of the Gross National Product (GNP). An additional concern i s that health care expenditures are increasing at a faster rate 3 2 than the GNP as a whole. Noted e a r l i e r was the image of the modern hospital - the place for patients to receive many of the health care services, the hub of the American health care system. This gives the hos p i t a l high p r o f i l e , subject to scrutiny, and makes i t very expensive. Nearly si x t y (60) percent of a l l federal health expenditures and f i f t y (50) percent of a l l state and l o c a l 3 3 government health expenditures are spent on hospital care. - 34 -C l e a r l y , hospitals are an expensive enterprise. This presents another problem of great magnitude to the hospital industry and i t i s under increasing pressure, bothinternally and externally, to curb health expenditures. As changes in the law and s o c i e t a l values were s i g n i f i c a n t in the l e g a l environment, so i t w i l l be demonstrated that changes i n revenue structure, controls and, i n d i r e c t l y , s o c i e t a l values or attitudes toward the health care system have a s i g n i f i c a n t impact on the f i n a n c i a l management of the h o s p i t a l . The demands are clear - decrease or control cost, increase or maintain quality of care. In turn, one of the issues the hospital industry must address i s how best to protect the hospital's resources within the turbulent environment. 1. Changes in revenue sources and regulatory a c t i v i t i e s There are two p r i n c i p a l modes of hospital ownership in the United States: - public: ownership at f e d e r a l , state or municipal government l e v e l - private: voluntary ( n o t - f o r - p r o f i t ) proprietary ( f o r - p r o f i t ) . 4 Revenue sources for these hospitals have come from d i r e c t payment, 3 5 government subsidy or t h i r d party reimbursement. In the past, proprietary hospitals r e l i e d upon philanthropic donations. These have been fewer in recent years and t h i s type of hospital i s more 3 6 l i k e l y to resort to debt financing for new projects. Following the acceptance and u t i l i z a t i o n of hospital insurance, most hospitals have become voluntary and must depend upon t h i r d parties - 35 -as t h e i r major source of revenue. This presents another type of problem because even with dependable payments from the t h i r d party, concern has been expressed that the reimbursable costs are 3 8 far d i f f e r e n t from f u l l operating costs. This means that h o s p i t a l administrators are often hard pressed to meet the f i n a n c i a l requirements for progressive patient care. The high and p e r s i s t e n t l y climbing cost of hospital care i s of such great concern that i t i s c e n t r a l to much of the public O Q p o l i c y in health care. Some of the factors c i t e d for the i n f l a t i o n a r y costs are increased a c c e s s i b i l i t y and u t i l i z a t i o n by a more educated and affluent society, hospital services that are changed in i n t e n s i t y , scope and s o p h i s t i c a t i o n because of advanced medical technology and knowledge, and administrative costs for 40 complying with regulatory acts. Many of these acts were an attempt by the federal government to provide f i n a n c i a l assistance and to control costs within the hospital industry. They have a s i g n i f i c a n t impact on both the operating and c a p i t a l budgets of the hospital and therefore s h a l l be described in b r i e f . Control on F a c i l i t i e s and Services The Hill-Burton Act (1946) was the f i r s t form of planning l e g i s l a t i o n enacted by the federal government. In order to p a r t i c i p a t e the state had to submit and adopt a plan that was based upon a needs assessment. In turn, a hospital could apply for federal assistance _if i t s project was in alignment with the state plan. - 36 -The Comprehensive Health Planning and Public Service Amendments (1966) was another federal enactment that provided assistance to states for some of the cost of comprehensive planning e f f o r t s . Again, the focus was for a state plan and monetary assistance for construction of health f a c i l i t i e s providing the f a c i l i t y was part of the state p l a n . 4 2 In 1972, the S o c i a l Security Amendment (Section 1122) demanded that medicare and medicaid participant c a p i t a l projects over $150,000 be rejected unless they were approved by a state agency. In addition, each participant was required to submit an annual operating budget and a three year projected c a p i t a l expenditures budget. 4 3 Most recently, the National Health Planning and Resources Development Act (1974) established a network of statewide and areawide planning agencies. The program i s designed to l i n k federal funding more c l o s e l y with state regulation. A major emphasis was the implementation of " c e r t i f i c a t e s of need" approved by the state agency for any c a p i t a l projects in excess of Control of U t i l i z a t i o n . With the establishment of Medicare in 1965, p a r t i c i p a t i n g hospitals were mandated to set up U t i l i z a t i o n Review Committees to determine whether patients required h o s p i t a l i z a t i o n and to determine whether t h e i r length of stay was appropriate. This was followed, in 1972 by the S o c i a l Security Amendments which created Professional Standards Review Organizations (PSRO). These organizations were empowered to determine that Medicare/Medicaid - 37 -patients were receiving only appropriate and necessary services.' t J In addition, there are state and other forms of control that have the potential to affect the hospitals' revenues. These take the form of controls on q u a l i t y . A l l states license t h e i r hospitals and are obligated to set standards, conduct inspections, issue l i c e n s e s , close f a c i l t i e s that do not meet standards, and provide consultative services. However, there does not appear to be consistency in these stand-ards or how they are enforced.^ 6 Hospitals p a r t i c i p a t i n g in medicare and medicaid must be c e r t i f i e d by a state agency in order that the b e n e f i c i a r i e s of care receive a minimal acceptable standard of care. Again, the enforcement of the standards does not appear to be consistently or s t r i n g e n t l y administered. 1 + 7 Accreditation i s a p r o f e s s i o n a l l y sponsored and voluntary process carried out by the 3oint Commission on Accreditation of Hospitals (3CAH). Accreditation focuses on highest r e l a t i v e stan-ds dards of performance rather than minimal standards. Cost Controls Since hospital operating revenues are l a r g e l y attained from actual use of services, a s i g n i f i c a n t cost constraint has been the contractual agreements of Blue Cross, Medicare/Medicaid Programs and other t h i r d parties that reimburse hospitals for c e r t a i n costs only - in e f f e c t d i c t a t i n g the day to day charge (rate) suitable - 38 -for a p a r t i c u l a r h o s p i t a l . In addition, some states have i n s t i t u t e d public rate setting agencies that e s t a b l i s h , in advance, the rates at which hospitals w i l l be reimbursed for care 50 provided to certain groups of patients. This background information provides evidence of a pattern that has been emerging and most c e r t a i n l y a f f e c t s the f i n a n c i a l management of a h o s p i t a l . F i r s t of a l l , there i s evidence of alarming increases in costs of health care and p a r t i c u l a r l y in the hospital sector. Second, the hospital i s a big and v i s i b l e business and one, that the consumer i s w i l l i n g and ready to use. The consumer i s also w i l l i n g and ready to seek f i n a n c i a l compensation for any injury or i n s u l t occurring during the period of being a patient. F i n a l l y , there i s evidence that the revenue sources and regulatory a c t i v i t i e s , as they are today, decrease the f l e x i b i l i t y of hospital revenues and leave minimal maneuverability in the f i n a n c i a l management of the h o s p i t a l . Other factors could adversely a f f e c t the hospital's f i n a n c i a l s t a b i l i t y . These include such things as property damage and t h e f t . The hospital has always been in a position to protect i t s resources. In the past, d i f f e r e n t forms of loss transfer were r e l i e d upon to cover accidental or unplanned expenditures. There were many commercial insurer c a r r i e r s that offered t h i s s e r v i c e . It was also common for the insurance c a r r i e r s to provide claim surveillance and management, incident i n v e s t i g a t i o n and equipment safety as part of the conditions of coverage. 5 1 This worked well u n t i l the "malpractice c r i s i s " of 1974-75. During t h i s period - 39 -h o s p i t a l insurance premiums quadrupled. Even so, many commercial c a r r i e r s could not withstand the number of claims and 5 3 high settlement awards and withdrew from the market. Since that time, insurance management has become a more c r i t i c a l aspect of maintaining the f i n a n c i a l s t a b i l i t y of the hospital and for t h i s reason warrants further discussion. 2. Insurance Management The American Hospital Association believes that insurance should be purchased for those r i s k s that could involve loss so great that the hospital's f i n a n c i a l structure would be 5 k threatened. In addition, i t i s the potential amount of the loss rather than the p r o b a b i l i t y of loss that i s of utmost importance. Regulatory agencies within each state control insurance a c t i v i t i e s of each company doing business within the state. The controls oversee premium rates, insurer's solvency, policy form, permitted investments, cancellations and refusals to renew 5 5 e x i s t i n g p o l i c i e s . The other major considerations with respect to purchase of insurance are 1) the a v a i l a b i l i t y and c a p a b i l i t y of the insurance mechanism and 2) the current state of the underwriting a r t . 5 6 There are four d i v i s i o n s of insurance that apply d i r e c t l y to h o s p i t a l s : 1. Property Insurance provides protection against or destruction of the hospital's physical property, e.g. f i r e , radioactive contamination, water damage, vandalism. 2. Consequential Loss Insurance provides protection for i n d i r e c t loss of p r o f i t s , commissions and income. - 40 -3. L i a b i l i t y Insurance for loss through l e g a l imposition. 4. Theft Insurance f o r ^ l o s s from theft by employees and non-employees. L i a b i l i t y insurance has been the most unstable of these d i v i s i o n s . T r a d i t i o n a l l y , commercial c a r r i e r s offered t h i s type of policy in one of two forms. A claims-made policy covered only those claims that were made during the tenure of the p o l i c y . An occurrence policy would cover claims f i l e d after the expiry date of the policy providing that the incident occurred during the time 5 8 the policy was in e f f e c t . This proved to be inadequate for both the insurance c a r r i e r s and the h o s p i t a l s . Insurance c a r r i e r s were suf f e r i n g the e f f e c t s of heavy f i n a n c i a l losses from the economic i n s t a b i l i t y and the increase in claims and amount of awards. Hospitals were having d i f f i c u l t y finding the resources to put 59 toward s p i r a l i n g premiums. Because of the acuteness of the problem, hospitals were forced to seek a l t e r n a t i v e s to the conventional commercial l i a b i l i t y insurance. This l a t t e r form i s 6 0 compared with some of the options in Table Five. A l l of these al t e r n a t i v e s required the hospital to e s t a b l i s h i n t e r n a l a c t i v i t i e s in order to reduce exposure to t h e i r r i s k s . In addition, the remaining commercial c a r r i e r s demanded that hospitals develop t h e i r own formal i n t e r n a l r i s k management programs as a condition of coverage. 3. Relationship to Risk Management In the preceding section, i t was suggested that the l e g a l - 41 -TABLE FIVE COMPARISON OF VARIOUS FORMS OF MALPRACTICE LIABILITY INSURANCE* TYPE OF INSURANCE ADVANTAGES DISADVANTAGES Commercial Insurance 1. Transfer l i a b i l i t y for catastrophic loss to another party. 2. May give hospital the services of an experi-enced r i s k management and claims investiga-tion/defence team. 3. More "comfortable" than other a l t e r n a t i v e s . 1. Cost of premiums may sharply exceed hospital's own loss experience. 2. Cost of agent/broker commissions. 3. Limited incentive for hosp i t a l to control r i s k s . 4. Future malpractic c r i s i s may induce the insurer to suddenly withdraw from the market. doint Underwriting Associations 1. By acting as an under-writing agent or re-insurer, such associa-tions can provide an insurance market where no other market e x i s t s . 1. Limited coverage i s subject to r i g i d terms. 2. Limited excess insur-ance i s available through commercial c a r r i e r s . 3. Limited r i s k management services are av a i l a b l e . 4. Temporary measure only; w i l l not provide long-term solutions to to hospital's insurance ance problems. Captive Insurance Companies 1. Pooling r i s k s s t a b i -l i z e s cost. 2. Larger l i m i t s of l i a b -i l i t y possible. 3. Can be less expensive than commercial or self-insurance. 4. Hospitals can benefit from the r i s k manage-ment experiences of other p a r t i c i p a t i n g h o s p i t a l s . 1. Gaining consensus on captive's goals and strategies can be d i f -f i c u l t . 2. Obtaining i n i t i a l f i n -ancing s u f f i c i e n t to cover a l l members can be d i f f i c u l t . 3. Possible i n e f f i c i e n t operation due to i n -experience. - 42 -TABLE FIVE CONTINUED Funded Self-Insurance 1. Can be less expensive i f h o spital can predict and control r i s k s e f f e c t i v e l y . 2. Provides d e f i n i t e i n -centives for h o s p i t a l to prevent and control r i s k s . 3. Risk management program can be finetuned to the needs of the h o s p i t a l . 1. Hospital must assess i t s own r i s k s . 2. Excess l i a b i l i t y i n -surance may be d i f f i -c u l t to obtain. 3. Complex accounting problems, e s p e c i a l l y given the p o s s i b i l i t y of "once in a l i f e t i m e claim." 4. Mechanisms must conform to t h i r d part payer guidelines in order to receive reimbursement. Nonfunded Self-Insurance (going bare) 1. May be necessary a l t e r -native for hospitals with severe cash flow problems. 1. A single successful claim, or a series of claims, could bankrupt the h o s p i t a l . Reprinted, with permission from: Malpractice Prevention and L i a b i l i t y Controls for Hospitals, American Hospital Association, copyright, 1981. - 43 -impetus provided a fundamental reasoning for the development of Risk Management Programs in the hospital sector. This section has attempted to examine selected f i n a n c i a l aspects - the constraints, the public expectations, and the means of protecting the hospital's assets. The l a t t e r could not be brought forward without a b r i e f discussion on insurance management. Once again, c o n t r o l l i n g l i a b i l i t y , t h i s time from a f i n a n c i a l and insurance viewpoint became an important objective for the h o s p i t a l . Risk Management originated i n the insurance industry i n order to minimize, through insurance, predictable l o s s e s . 6 2 The term " r i s k management" has taken on a more focused meaning for hospitals -encompassing prediction of r i s k of patient injury, avoidance of exposure to predicted and other r i s k , and minimization of claims l o s s . In t h i s way Risk Management i s directed toward protecting the vast quantity of resources in the hospital industry and curbing the costs associated with the l i t i g a t i o n and insurance process. C. Selected Safety and Security Aspects A hospital exists to provide health care services and society demands that the care be exceptionally well provided. In t h i s respect, there i s l i t t l e room for mediocrity. A hospital must provide a safe and secure environment for the patient, v i s i t o r and employee. Not to do so would be incongruous with i t s purpose, the outcome of which could be personal injury and subsequent l e g a l action and f i n a n c i a l l o s s . 6 5 - 44 -The planning for a safe and secure environment should be a relatively straightforward procedure. The elements are easily identifiable, the measures are directed toward and for people and the objectives are to reduce the hazards ever present in the hospital environment. The major problem for any safety and security program has been the compliance of those involved or those who should be involved.ee As with the preceding discussions on legal and financial aspects, two dominant themes stand out: a. historical background and developments b. attitudes of those directly involved. In addition , because of the nature of the organization, some problems unique to the hospital setting will be discussed. 1. Background It was not until the mid 1940's that the American Hospital became actively involved with safety. A Hospital Safety service was established in 1949 in cooperation with the National Safety Council. Only in the last two decades have hospitals examined their safety status and closed the gap between their accident 67 rates and those of other industries. The problem was significant enough that regulations have been established through agencies such as the Joint Commission on Accreditaton of Hospitals, Federal Social Security Safety Law and the Occupational Safety and Health Act (OSHA) of 1970. Thus, the hospital's responsibility to protect patients, visitors and employees became 68 a legal as well as a moral responsibility. - 45 -The development of safety programs f o r h o s p i t a l s p a r a l l e l e d other developments i n the h o s p i t a l s e c t o r . For example, i t was during t h i s time period that work had begun on s t a n d a r d i z i n g acceptable p r a c t i c e s f o r h o s p i t a l s . This work e v e n t u a l l y culminated i n the o r g a n i z a t i o n of the Ooint Commission on A c c r e d i t a t i o n of H o s p i t a l s (1953). Safety p r a c t i c e s had been acknowledged p r i o r to t h i s time but had been l a r g e l y part of the employee's or p r o f e s s i o n a l ' s t r a i n i n g program. Now, however, there was acknowledgment that safety was a l e g i t i m i z e d issue and 69 one that the h o s p i t a l a d m i n i s t r a t i o n must concern i t s e l f with. One of the e a r l y problems experienced i n promoting safety programs was motivating the p a t i e n t , the employee and the v i s i t o r 7 0 t o p r a c t i c e safe h a b i t s . To some degree, the a t t i t u d e s and p r a c t i c e s of these i n d i v i d u a l s remain a problem, today. Thus, the problems and the advances with each group w i l l be discussed b r i e f l y . 2. P a t i e n t Safety The p a t i e n t i s the main f a c t o r i n the safety program of a h o s p i t a l since the system i s b u i l t around the p a t i e n t ' s 71 i n c a p a c i t y . Many studies have shown that the greatest p a t i e n t hazard i n the h o s p i t a l s e t t i n g i s r e l a t e d to f a l l s . 7 2 , 7 3 , 7 t t Other types of problems that d i r e c t l y a f f e c t p a t i e n t s or pat i e n t care i n c l u d e d e f e c t i v e e l e c t r i c a l and mechanical devices, a d m i n i s t r a t i o n of medications and treatments, t r a n s p o r t a t i o n and i d e n t i f i c a t i o n procedures. S p e c i a l c o n s i d e r a t i o n s must be given - 46 -to p e d i a t r i c and mentally disoriented patients. , , Up u n t i l 1973, the l i t e r a t u r e was sparse in reference to hospital safety. Much has been written since, and patient safety through accident 78 prevention i s a recognized objective for h o s p i t a l s . I n i t i a l l y , patient safety programs were directed at employees. That i s , the emphasis was on reducing patient i n j u r i e s 7 9 through employee actions. This approach f a i l e d to recognize the patient's behavior and response to the hospital environment. In more recent years, the s t a f f are encouraged, where appropriate, to orient the patient to safety p r a c t i c e s . 8 0 3. Employee Safety Studies of employee accidents in hospitals indicate that f a l l s and improper l i f t i n g of heavy objects or patients account for two-thirds of the more serious d i s a b l i n g i n j u r i e s . 8 1 , 8 2 The remaining accidents involve e l e c t r i c i t y , moving machinery, transportation, incorrect use of tools and improper handling of o q equipment, explosive gases and flammables. A study by the National I n s t i t u t e for Occupational Safety in Health (NIOSH) determined that less than eight (8) percent of the p a r t i c i p a t i n g hospitals had i n f e r i o r and i n e f f e c t i v e occupational Safety and Health programs for t h e i r employees despite the fact that OSHA was seven years o l d . An additional concern in recent years has been the e f f e c t of stress on the hospital employee. , The problem areas in employee safety have been recognized. One of the challenges for administrators and employee representatives - 47 -continues to be determining what strategies would best overcome • -i 87 88 89 the problems. , , Once again, a major factor i n the success of any program established i s the compliance rate. No amount of rules, regulations or guidelines w i l l motivate the employee unless there 90 i s a po s i t i v e interest to conform with them. In motivating employees to perform safely, a t t i t u d e , acceptance and enthusiasm 91 for the subject are c r i t i c a l to the whole process. The foregoing comments rel a t e to a l l hospital employees. In addition, many of the health professional associations have established standards by which safety to practice issues are monitored. 4. V i s i t o r Safety On an around-the-clock basis, the hospital i s entered by 9 2 many v i s i t o r s to every department and to v i r t u a l l y every room. The v i s i t o r s are a broad but i d e n t i f i a b l e group that the hos p i t a l s t a f f have minimal contact with - and thus are d i f f i c u l t to forewarn, reprove or reprimand for f a i l u r e to respect established safety codes. V i s i t o r s are highly susceptible to injury, either through t h e i r own negligence or u n f a m i l i a r i t y with safety 9 3 standards or through the negligence of hospital employees. The v i s i t o r can be an unsuspecting victim of the hazards inherent in a hospital environment. He simply does not know, he i s not motivated to think "safety." In many cases, he may be preoccupied with the reason for his v i s i t to the h o s p i t a l . That i s why a v i s i t o r safety program should provide a broad base - 48 -covering both i n t e r n a l and external (anywhere on hospital grounds) areas. It i s well to remember that t h i s type of v i s i t o r protection plan also protects patients and employees. 9 4 A comprehensive protection plan would provide consideration for grounds, emergency areas, entrances, auxilary buildings, construction s i t e s , smoking areas, s t a i r s , corridors and f l o o r s , c a f e t e r i a , and e l e v a t o r s . 9 5 5. Special Problem Areas: F i r e i s a hazard that confronts every industry. However, the fact that one survey demonstrated that there were f i f t e e n h o s p i t a l f i r e s occuring each day in the United States points to the severity of the problem. 9 6 The two leading causes of h o s p i t a l f i r e s were, unsurprisingly, smoking and e l e c t r i c i t y - both preventable. At t h i s time, f i r e prevention i s a moral o b l i g a t i o n ... and a voluntary process under 3CAH standards. In addition there may be statutory regulations that dictate such things as the use of s p r i n k l e r s or f i r e detection devices, number and description of f i r e e x i t s and the use of f i r e - r e s i s t a n t 9 7 construction materials. The very nature of the hospital's business presents two add i t i o n a l problems that are generally uncommon to other i n d u s t r i e s . Microrganisms of various types are e a s i l y transmitted i n the hospital environment. Thus, most hospitals have adopted minimal standards of i n f e c t i o n control that are recommended by Q Q XAH. Once again, the danger of exposure i s to patients, s t a f f - 49 -and v i s i t o r s . F i n a l l y , one of the unpredictable events in l i f e are d i s a s t e r s and h o s p i t a l s must be prepared to deal with the r e s u l t s . Thankfully, disaster plans rarely have to be activated. However, because i t i s often a question of "when", hospitals are encouraged to formally plan and to test t h e i r plan for i t s e f f e c t i v e n e s s . 9 9 From the preceding discussion, the h o s p i t a l can be viewed as a "warring zone" with p o t e n t i a l dangers for anyone who dares enter i t s borders. However, i t i s also known that prevention and preparedness help to reduce the dangers and hazards. Safety programs have become more sophisticated and comprehensive with the development of such organizations as the National Safety Council and NIOSH. A key factor that came out of the discussions i s the problem of keeping the i n d i v i d u a l s (patients, employees and v i s i t o r s ) enthusiastic, motivated and educated in safety p r a c t i c e s . Although, patient, employee and v i s i t o r groups and some unique problems were discussed, i t i s recommended that a comprehensive safety program be conducted by a l l employees and f o r everyone. The program must deal with the problems of the entire f a c i l i t y - not with c e r t a i n trouble areas, or with c e r t a i n people. It must encompass every employee, every patient, and every v i s i t o r i f i t i s to be s u c c e s s f u l . 1 0 0 6. Relationship to Risk Management Legal and f i n a n c i a l a c t i v i t i e s can be the outcome of people-related, safety and security problems. Individuals with - 50 -safety and security r e s p o n s i b i l i t i e s must choose the s p e c i f i c procedures that w i l l a s s i s t in meeting the needs of the hos p i t a l and the people who enter i t . I d e a l l y , the process of planning a safety program follows the process of Risk Management. In point of f a c t , safety and security conciousness may be the vehicle by which Risk Management can achieve i t s objectives. To neglect or downplay t h i s function i s to i n v i t e l e g a l action and f i n a n c i a l l o s s . - 51 -CHAPTER II I FOOTNOTES Section A 13. O r l i k o f f , Wm. F i f e r , H. Greeley, Malpractice Prevention  and L i a b i l i t y Control for Hospitals (Chicago: American Hospital Association, 1981), pp. 5-18. 2 I b i d . 3 I b i d , pp. 17-24. A. Southwick, The Law of Hospital and Health Care  Administration (University of Michigan: Health Administration Press, 1978), Chapter 1. 5 I b i d . 6 I b i d . 7 I b i d . g H. Green, "The Role of Law in Determining the A c c e p t a b i l i t y of Risk," in S o c i e t a l Risk Assessment: How Safe i s  Safe Enough? ed. by R. Schwing and W. Albers (New York: Plenum Press, 1980) pp. 255-267. 9 I b i d . 1 0Southwick, The Law of Hospital and Health Care  Administration Chapter XII. U I b i d . 1 2 I b i d . 13 R. Mehr and B. Hedges, Risk Management: Concepts and  Applications (Homewood, I l l i n o i s : Richard D. Irwin Inc., 1974) Chapter 9. 1 1 + I b i d . 1 5 G r e a t e r Washington, D.C., Area Council of Senior C i t i z e n s v. D i s t r i c t of Columbia, 406 F. Supp. 768 (1975). 1 6SouthHighlands Infirmary v. Camp, 180 So 2d 904 (Ala. 1965). 17 Darling v. Charleston Community Memorial Hospital, 211 N.E. 2nd 253 ( I I I . 1965) . - 52 -1 8 F o l e y v. Bishop Clarkson Memorial Hospital, 173 N.W. 2d 881 (Nebr. 1970). 1 9Parker v. Port Huron Hospital, 105 N.W. 1 (Mich. 1960). 2 0D. Warren, Problems in Hospital Law (Germantown, Maryland: Aspen Systems Corporation, 1978), Chapter 7. I b i d . 23 Southwick, The Law of Hospital and Health Care  Administration, Chapter XII. 2 h A. Salmon, "A System Approach Can Ensure High Quality Care and Low Costs", Hospitals, March 16, 1979, p. 53. 25 International Hospital Federation, United States Presentation to the International Seminar on Hospital L i a b i l i t y , Lyon, France, A p r i l 24-25, 1981. 26 A. Salmon, "A System Approach Can Ensure High Quality Care and Low Costs", pp. 53 & 79. 2 7 0 r l i k o f f et a l . , Malpractice Prevention and L i a b i l i t y  Control for Hospitals, p. 21. o o Southwick, The Law of Hospital and Health Care  Administration, Chapter XII. Section B 2 9 V . S i d e l and R. S i d e l , A Healthy State: An International  Perspective on the C r i s i s i n United States Medical Care (New York: Pantheon Books, 1977) 104. 3 0U.S. Department of Health, Education, & Welfare, Trends A f f e c t i n g the U.S. Health Care System, Cambridge Research I n s t i t u t e , Pubs. HRA 76-14503. (Germantown, Md. Aspens Systems Corporation, 1976), p. 151. 31 S. Williams and P. Torrens, Introduction to Health  Services (New York: Oohn Wiley & Sons, 1980), p. 289-291. 3 2 I b i d . 33, 'Ibid. 'S. Go (New York: Springer Publishing Company, 1977), Chapter 7. 3 4 S . d nas et a l , Health Care Delivery i n the United States - 53 -3 5 I b i d , Chapter 9. 3 6 I b i d . 3^H. Berman and H. Weeks, The F i n a n c i a l Management of  Hospitals, 3rd edition (Annarbor: Hospital Administration Press, 1976), Chapter 4. 3 8 I b i d . 3 9 Williams and Torrens, Introduction to Health Services, Chapter 5. ^ I b i d . 41 Warren, Problems in Hospital Law, Chapter 14. 1 + 2 I b i d . " i b i d . I b i d . Lt5U.S. Department of Health, Education and Welfare, Trends  a f f e c t i n g the U.S. Health Care System, p. 137. ^ W i l l i a m s and Torrens, Introduction to Health Services, Chapter 10. I b i d . " i b i d . 49 Berman and Weeks, F i n a n c i a l Management of Hospitals, Chapter 6. 5 0U.S. Department of Health, Education and Welfare, Trends  Af f e c t i n g the U.S. Health Care System, p. 137. 5 1B. Brown, Risk Management for Hospitals (Germantown Aspen Systems Corporations, 1979), p. 108. 5 2 V. DiPaulo, "Risk Management: S p i r a l i n g Premiums Predicted," Modern Health Care, (December, 1979), pp. 56-62. 53 3. O r l i k o f f , Wm. F i f e r , and H. Greeley, Malpractice  Prevention and L i a b i l i t y Control for Hospitals (Chicago: American Hospital Association, 1981), p. 29. 5 1*American Hospital Association, Manual on Insurance for  Hospitals and Related Health Care F a c i l i t i e s (Chicago: AHA, 1965), Chapter 1. - 54 -5 5 Warren, Problems i n Hospital Law, Chapter 14. 5 6Mehr and Hedges, Risk Management: Concepts and  Applications, Chapter 6. 57 American Hospital Association, Manual on Insurance for  Hospitals and Related Health Care F a c i l i t i e s , Chapter 1. C Q O r l i k o f f , et a l . , Malpractice Prevention and L i a b i l i t y  Control for Hospitals, Chapter 4. 59 International Hospital Federation, Proceedings from  International Services on Hospital L i a b i l i t y , Lyon, France, A p r i l 24-25, 1981. 6 1 0 r l i k o f f et a l , Malpractice Prevention and L i a b i l i t y  Control for Hospitals, Chapter 4. 6 2 Mehr and Hedges, Risk Management: Concepts and  Application, Chapter 6. 63 O r l i k o f f et a l , Malpractice Prevention and L i a b i l i t y  Control, Chapter 4. Section C 6 4G. Newman, "Basic Elements of a Loss Control Program," Hospital Progress, (November, 1974), pp. 46-49. 6 5American Hospital Association and National Safety Council, Safety Guide for Health Care I n s t i t u t i o n s (Chicago: American Hospital Association and National Safety Council, 1972), Chapter 1. 6 6 C . Oppman, "Staff Training V i t a l For Risk Management," Hospitals, (December 16, 1979), pp. 95-98. 6 7 American Hospital Association and National Safety Council, Safety Guide for Health Care I n s t i t u t i o n s , Chapter 1. 6 8 I b i d . 69 R. Bond and N. Vick, " H i s t o r i c and Administrative Aspects of Environmental Health and Safety in Health Care F a c i l i t i e s , " in Environmental Health & Safety in Health Care F a c i l i t i e s , ed. by R. Bond, G. Michaelson, and R. DeRoss (New York: McMillan Publishing Company, 1973), pp. 2-25. 70 American Hospital Association and National Safety Council, Hospital Safety Manual (U.S.A. American Hospital Association and National Safety Council, 1954), pp. 27-31. 71 R. Waite, "Hospital Safety Needed," Journal of  Environmental Health, (November/December, 1969), p. 124. - 55 -7 2 American Hospital Association and National Safety Council, Safety Guide f o r Health Care I n s t i t u t i o n s , Chapter 6. 73 " 'Bed bugs' help patients," Hospitals, (Duly 1, 1975), p. 33. 7V. Sehested and T. Severin-Neilson, " F a l l s By Hospitalized E l d e r l y Patients: Causes and Prevention," G e r i a t r i c s , ( A p r i l , 1977), pp. 101-108. 7 5 American Hospital Association and National Safety Council, Safety Guide for Health Care I n s t i t u t i o n s , pp. 73-96. 76 V. Simpson, "Safety and Security: Annual Administrative Review," Hospitals, ( A p r i l 1, 1974), pp. 97-101. 77W. Regan, "Patient who F e l l into Convex Wall Mirror Sued C l i n i c , " Hospital Progress, (March, 1978), pp. 32-37. 78 R. Brandt, "Accident Prevention: The Past Holds the Key to the Future," Modern Hospital, (Ouly, 1973), p. 98. 7 9 American Hospital Associ Hospital Safety Manual, pp. 71-82 8 0 American Hospital Association and National Safety Council, Safety Guide for Health Care I n s t i t u t i o n s , pp. 73-96. 7 9 American Hospital Associationand National Safety Council, 81 , "Study Says Hospitals Neglect Their Employee's Health, Safety", Hospitals, Aug. 16, 1975, pp. 114-115. 8 2 American Hospital Association and National Safety Council, Safety Guide for Health Care I n s t i t u t i o n s , pp. 59-71. 8 3 I b i d . Oh I. Shepard, "Hospitals Aren't Safe Enough", Hospital  Progress, November, 1977, pp. 85-87. Q C G. Calhoun, "Hospitals are High Stress Employers", Hospitals, dune 16, 1980. 86 R. Smith, "Those People Aren't People Anymore...," Hospital Topics, (November/December, 1979), pp. 14-15. E. Bertz, R. Monda, 3. Sprague, "Viewing the Hospital as a Working Environment," Hospitals, (October 16, 1976), pp. 107-112. Q O 3. Morgan and P. Wozniak, "Reducing Direct and Indirect Losses," Hospital Progress, (November, 1977), pp. 88-89. - 56 -8 9 M. Brown, "Hazards in the Hospital: Educating the Workforce Through the Union," American Journal of Public Health, (October, 1979), pp. 1040-1043. 9 0 American Hospital Association and National Safety Council Safety Guide for Health Care I n s t i t u t i o n s , pp. 13-27. 9 1 I b i d . 92 American Hospital Association and National Safety Council, Safety Guide for Health Care I n s t i t u t i o n s , pp. 45-56. 9 3 I b i d . 9 k W. Regan, "Safeguards at Construction Site Protect Hospital from L i a b i l i t y , " Hospital Progress, (July, 1979), pp. 28-30. 9 5 American Hospital Association and National Safety Council, Safety Guide for Health Care I n s t i t u t i o n s , pp. 45-56. 9 6 I b i d , pp. 185-208. 9 7 I b i d . 9 8 E. Bertz, R. diMonda, J . Sprague, "Viewing the Hospital as a Working Environment,". 9 9 V.E. Simpson, "Safety and Security: Annual Administrative Review,". 1 0 0American Hospital Association and National Safety Council, Safety Guide for Health Care I n s t i t u t i o n s , pp. 8, 9. - 57 -CHAPTER IV SELECTED ORGANIZATIONAL ASPECTS In the previous two chapters, two paradigms were introduced (Figure Two and Figure Three) that described d i f f e r e n t aspects of Risk Management. In each of these paradigms, the organizational aspects were treated d i f f e r e n t l y than the l e g a l , f i n a n c i a l and safety/security aspects. This was planned for two reasons: 1. The organization i s unique and the differences can aff e c t the implementation of Risk Management. 2. The other three aspects act upon the organization and are highly interdependent within the organization. However, the discussion on organizational aspects w i l l follow a pattern s i m i l i a r to that seen i n the previous chapter. F i r s t of a l l , the evolution of the modern hospital brought with i t c h a r a c t e r i s t i c s that even today, make the organization d i f f e r e n t from organizations in other i n d u s t r i e s . Secondly, the attitudes and actions, both i n t e r n a l and external, can p o t e n t i a l l y have a great impact on the hospital's operations. These issues w i l l be discussed i n the context of an organization s t r i v i n g toward meeting the needs of the society i t serves. F i n a l l y , Risk Management w i l l be discussed in terms of an administrative response to the growing demand for accountability and c o n t r o l . A. The Hospital as a Corporation* The h i s t o r i c a l background of the American hospital was * Since the majority of hospitals are voluntary, n o t - f o r - p r o f i t , discussion i s limited to t h i s type of h o s p i t a l . - 58 -discussed in Chapter II and need not be repeated here. However, i t i s important to re-emphasize the role of the medical profession i n the development of the modern h o s p i t a l . What follows i s a description of the modern h o s p i t a l . A general (acute care) hospital i s an organization that mobilizes the s k i l l s and e f f o r t s of a number of widely divergent groups of professional, semiprofessional and nonprofessional personnel in order to provide a highly personalized service to i t s p a t i e n t s . 1 Although i t may define other objectives, the h o s p i t a l ' s chief and singular concern i s the l i f e and health of i t s patients. In general, the hospital's objectives tend to be more abstract than those of other i n d u s t r i e s . However, because of i t s uniqueness, i t i s c l e a r that the h o s p i t a l , as a corporate organization, has c e r t a i n duties toward the public i t serves. As an organization, the hospital r e l i e s upon an extensive d i v i s i o n of labor among i t s members, upon a complex organizational structure which encompasses many d i f f e r e n t departments, s t a f f s , o f f i c e s and positions, and upon an elaborate system of coordina-q t i o n of tasks, functions and s o c i a l i n t e r a c t i o n s . A l l of these factors make the i n d i v i d u a l s working within the hospital highly dependent on each other and necessitate heavy reliance for coordi-nation of a c t i v i t i e s on a voluntary, informal and expedient basis. The hospital i s very much a labor-intensive, human system. It has developed into a quasi-bureaucratic organization that r e l i e s upon formal p o l i c i e s , formal written rules and regulations and formal authority for c o n t r o l l i n g the behaviour and worker - 59 -r e l a t i o n s h i p s of i t s members. The authoritarian nature of the hospital i s one of i t s d i s t i n c t c h a r a c t e r i s t i c s and i s deemed necessary in order to mobilize resources in times of c r i s e s or emergencies. Therefore, l i n e s of authority and r e s p o n s i b i l i t y should be c l e a r l y drawn. Simultaneously, basic acceptance of authority has to be assured and d i s c i p l i n e has to be maintained. 5 In r e a l i t y , the l i n e s of authority are anything but c l e a r . During the developmental period of the American h o s p i t a l , i t became evident that two l i n e s of authority-lay and professional-exist in the h o s p i t a l . 6 Most hospital organization charts do not r e f l e c t the true influence of the professional medical s t a f f . The dual authority issue i s often a source of c o n f l i c t and f r u s t r a t i o n when administrative ( h i e r a r c h i a l ) concerns overlap professional (functional) concerns. This c o n f l i c t has been heightened post 1965 with more government involvement in health care, increased expectations and demands by the public and the c r i t i c a l pressures from e v e r - r i s i n g 7 health care costs. As a r e s u l t , a "management revolution" occurred with enormous pressure for greater accountability by health care organizations for increased e f f i c i e n c y - - t h a t i s , q u a l i t y care at less cost. To complicate the issue, authority i s also shared to some degree by the governing body (board of t r u s t e e s ) . Thus, the power base in the modern American Hospital i s shared (unequally) and fragmented into what i s commonly known as the " t r o i k a " . 8 Recently, many hospitals have been adopting a corporate - 60 -organizational model. (See Figure Four) In t h i s form, the governing authority delegates power to the chief executive o f f i c e r (CEO) who i s responsible for a l l a c t i v i t i e s within the h o s p i t a l , including medical care. Although, t h i s may be desirable administratively, i t ignores the influence of the medical s t a f f and i s unlikely to be f u l l y accepted by them. 9 With the courts declaring the h o s p i t a l , through i t s governing authority, as responsible for the medical pra c t i c e rendered, i t i s in e v i t a b l e that there w i l l be increased control on what physicians do in the hospital s e t t i n g . Even with the corporate structure, and administrative i n t r u s i o n into medical a c t i v i t i e s , i t i s anticipated that the t r o i k a w i l l remain as a dominant c h a r a c t e r i s t i c of the American h o s p i t a l . 1 0 However, one of the concerns about t h i s authority structure i s that the r e l a t i o n s h i p s and power bases within the t r o i k a are always i n a negotiable state. As a r e s u l t , the hospital i s l e f t , on a day-to-day basis, with no le g a l or organizational means of c o n t r o l l i n g the services that i t was set up to re n d e r . 1 1 Ultimately, t h i s has the potential to e f f e c t the accountability of the hospital (as a c o r p o r a t i o n ) — t h e very thing for which there are both increased demands and expectations. Since t h i s authority structure can be so v o l a t i l e , the roles and relationships of the t r o i k a w i l l be discussed following a b r i e f description on how the hospital corporation i s formed. The hospital i s designated as a corporation following the issuance of a charter by the state. It possesses only those FIGURE FOUR HOSPITAL ORGANIZATION EVOLVING CORPORATE STRUCTURE Direct Reporting Advisory Relationship GOVERNING AUTHORITY Chief Executive O f f i c e r Chief of Medical S t a f f Governing Authority Committees President of Medical Staff Medical S t a f f Committees T Chiefs of Service Vice President-Nursing Vice President-F i s c a l A f f a i r s Vice President-A n c i l l a r y Services i ON Vice President-Development and Community Relations Medical Staff Source: With permission of: 3. Rakich and K. Darr, editors Hospital Organization and Management: Textbook and Readings (New York, Spectrum Publications Inc., 1978), p. 6. - 62 -powers that are granted by virtue of the statute under which the corporation i s formed. Some states have general incorporation laws pertaining to non-profit i n s t i t u t i o n s which are quite separ-ate from laws governing charitable i n s t i t u t i o n s . Non-profit i n s t i t u t i o n s do not require a membership to perpetuate t h e i r governing boards. In a non-elective type of corporation, members of the board may select new members. In a membership type of corporation, members elect the governing board-and i n some 1 2 instances t h i s could be a nonmember. Board of Governors The board members are the bridge between the hospital and the l o c a l community. Legally and morally, the board has the u l t i -mate r e s p o n s i b i l i t y and authority for operation of the ho s p i t a l . Their functions include determining p o l i c i e s with r e l a t i o n to com-munity needs, maintaining proper professional standards through appointment and review of medical s t a f f , coordinating c l i n i c a l professional i n t e r e s t s with the adminstrative, f i n a n c i a l and comm-unity needs, providing adequate financing and control of expenses, keeping f u l l y informed on hospital matters and selecting an admin-13 strator for the h o s p i t a l . The degree of supervision over adminstration varies, but generally board members do not become involved with routine operational matters. The board deals c h i e f l y with the adminstrator and medical s t a f f . In both cases, the r e l a t i o n s h i p can be strained by the problem of lay versus - 63 -expert authority. Another important issue i n hos p i t a l governance i s the absence of c l e a r l y - e s t a b l i s h e d standards of conduct that members of the board should demonstrate to properly perform t h e i r duties and avoid l i a b i l i t y . 1 5 This issue r e f l e c t s i t s e l f in the board's a b i l i t y to assess the nature and l i m i t s of i t s i n s t i t u t i o n a l a c c o u n t a b i l i t y . The Administrator The administrator i s formally responsible to the sponsors of the organization ( i e . the board of goverors). His/Her function i s to "manage" the h o s p i t a l . In t h i s role the administrator i s expected to create and adhere to a set of objectives, to at t a i n and d i s t r i b u t e economic resources e f f i c i e n t l y , to u t i l i z e human 1 6 resources and to f a c i l i t a t e change within the hospital s e t t i n g . He/She must work for and along with the hospital board members to whom he/she are accountable. The administrator must also be able to work with and gain cooperation of the medical s t a f f . When the board members hire and set conditions of employment for administrators and when physicians d i r e c t the hospital's f i n a n c i a l future by c o n t r o l l i n g patient admissions and discharges, i t i s often the administrative leverage that i s l o s t during a major 1 7 c o n f l i c t of the t r o i k a . Because of the subleties i n medical s t a f f and board member r e l a t i o n s h i p s , the greatest s k i l l an administrator can develop i s the art of developing rapport with others. - 64 -The Medical S t a f f The medical s t a f f i s the organization of physicians who have appointments to admit and treat patients in the h o s p i t a l . Accreditation standards require that the physicians be "organized" and have o v e r a l l r e s p o n s i b i l i t y for the quality of a l l medical care provided to patients. They must monitor the e t h i c a l conduct and professional practices of t h e i r members and be accountable to 18 the governing board. In t h i s respect, they must es t a b l i s h medical s t a f f bylaws, rules and regulations in order to maintain a framework for self-government. The Chief of St a f f (appointed by the board) has the r e s p o n s i b i l i t y for enforcing medical s t a f f bylaws. The President or Chairman of the medical s t a f f i s elected by the physicians and works c l o s e l y with the Chief of S t a f f . Undoubtedly, the greatest single factor that can aff e c t the smooth operations of a hospital i s the type of working r e l a t i o n s h i p developed with the medical s t a f f . For t h i s reason, there has been a move toward providing increased p a r t i c i p a t i o n by physicians in 19 the organization's management. B. Selected Env i ronmental Influences Other Professional Groups One of the important underlying purposes of a hospital i s that i t provides a base that allows for career opportunities for 20 i t s employees and medical s t a f f . Many of the other groups employed within the hospital are struggling for professional status (nursing, pharmacy, technologists) and undoubtedly, t h i s - 65 -produces additional stress on an organization with an already 21 fragmented power base. In addition, i t has been suggested that the s p e c i a l i z a t i o n and p r o l i f e r a t i o n of health "professionals" has led to a substantial misunderstanding of the roles, functions and q u a l i f i c a t i o n s of these groups. In turn, t h i s can affect the use, cost and a b i l i t y to control the quality and mobility of these health care workers. A c o n f l i c t between the aspiring or estab-lished professional group and administration often arises i f administration attempts to place controls on a group that consi-ders i t s e l f capable and responsible for "practice" issues. One of the weapons used against the employer to address t h i s issue i s unionism. Unions Whether the group i s professional or nonprofessional, the union objectives remain s i m i l a r . Unions are concerned with socio-economic issues such as wages, security and the work environ-2 3 ment. The professionals are p a r t i c u l a r l y concerned that they have the weight to carry out professional judgments in the areas of standard, performance and quality of services that they thems-24 elves provide. This by i t s e l f i s not a problem and considering the s p e c i a l i z a t i o n of the groups appears quite j u s t i f i a b l e . However, the cumulative e f f e c t to define standards, performance and quality by several unions, often in competition with each other, can be costly to the hospital organization. In the United States a hospital i s an organization that has an uncertain revenue - 66 -base and i s guided by federal government controls and t h i r d party reimbursement schemes. Add to t h i s the administrative cost to the h o s p i t a l for each of the group's preferred method of monitoring quality and standards, and i t i s no wonder that the American ho s p i t a l industry fears the cost of unionism. Approximately twelve (12) percent of American hospital workers are organized. Hospital unionization has the p o t e n t i a l to place additional pressure on an organization that already has a fragmented authority/power structure and d i f f i c u l t y i n maintaining c r e d i b i -l i t y with a public which increasingly questions i t s accounta-b i l i t y . C. Risk Management: A Response by the Hospital Organization As noted in Chapter I I , during the l a t t e r part of t h i s century both the American hospital and i t s problems became more v i s i b l e to the general public. Concurrently, the era of consumer-ism and demand for health care as a right came to the f o r e f r o n t . Given the enormity and variety of pressures the hospital organiza-t i o n was being confronted with, i t had l i t t l e i n the way of a l t e r -natives when tr y i n g to demonstrate that i t was doing everything reasonable to provide safe, good care at a reasonable cost. One of the popular alte r n a t i v e s during the 1970's became Risk Manage-ment - a process designed to eliminate claims against a hospital (and f i n a n c i a l loss) by attempting to prevent incidents that could re s u l t in personal injury, property damage or other form of harm. - 67 -Risk Management can also be designated as a control pro-cess. (Figure II) T h e o r e t i c a l l y , a control process i s technical i n nature and focuses on monitoring the organization's a c t i v i t i e s or operations for i t i s believed that the gathering and u t i l i -zation of resources should r e s u l t in the accomplishment of pre-determined objectives. The c o n t r o l l i n g process e n t a i l s such actions as determining standards against which the organization's resultant a c t i v i t y can be measured, esta b l i s h i n g techniques for measurement and es t a b l i s h i n g methods for taking c o r r e c t i v e action. H i s t o r i c a l l y , these tasks have been d i f f i c u l t for the ho s p i t a l because "the product" i s , in f a c t , a service. However, t h i s does not mean that the process i s impossible, nor should i t be ignored. The in v e s t i g a t i o n of the le g a l duties (of the h o s p i t a l ) , the f i d u c i a r y r e s p o n s i b i l i t y of the board and the accountability of the key actors (the t r o i k a ) , along with other developments outlined in the previous chapters, point out the need for an e f f e c t i v e control process. Risk Management was one of the al t e r n a t i v e s available and one the hospital introduced on i t s own i n i t i a t i v e . This method of s e l f - r e g u l a t i o n f i t t e d well with the American ideology of l i b e r t y and free enterprise. Its e f f e c t i v e -ness and scope are yet to be determined. - 68 -CHAPTER IV FOOTNOTES 1 B. Georgopoulous and F. Mann, "The Hospital as an Organization," in Patients, Physicians and I l l n e s s , 3rd ed. by E.G. Oaco (New Yorkfi The Free Press, 1979) pp. 296-305. L. Ranta, Health Law Class, University of B r i t i s h Columbia, A p r i l 6, 1982. q Georgopoulous and Mann, "The Hospital as an Organization." 4 I b i d . 5 I b i d . 6 H. Smith, "Two Lines of Authority: The Hospital's Dilemma," in Patients, Physicians and I l l n e s s , ed. by E . Oaco (New York: The Free Press, 1958) pp. 468-477. ; 3. Rakich, B. Longest and T. O'Donovan, Managing Health  Care Organizations (Philadelphia: W.B. Saunders Company, 1977), pp. 1-14. 3. Rakich and K. Darr, eds., Hospital Organization and  Management: Text and Readings (New York: Spectrum Publication Inc., 1978), pp. T^TT. 9 I b i d . 1 0 I b i d . ^Rakich, Longest, O'Donovan, Managing Health Care  Organizations, pp. 183-194. ll*T. Burling, E . Lentz, R. Wilson, "The Board of Trustees," in Hospital Organization and Management: Textbook and Readings, ed. by 3. Rakich and K. Darr, pp. 75-83. 1 5 L . P r y b i l and D. Starkweather, "Current Perspectives on Hospital Governance," in Hospital Organization and Management:  Textbook and Readings, ed. by 3. Rakich and K. Darr, pp. 84-89. 1 6 R a k i c h , Longest and O'Donovan, Managing Health Care  Organizations, pp. 183-194. 1 7 E . Oohnson, "The Lessons of a Profession," in Hospital  Organization and Management, ed. by 3. Rakich and K. Darr, pp. 117-123. 18 3oint Commission on Accreditation of Hospitals: Accreditation Manual (Chicago: 3CAH, 1973). - 69 -1 9 Rakich, Longest and 0'Donovan, Managing Health Care  Organizations, p. 194. 20 3. Stoner, Management, (Englewood C l i f f s , New Jersey: P r e n t i c e - H a l l , Inc., 1978) p. 10. 2 1 R. Schulz and A. Oohnson, Management of Hospitals, (New York: McGraw-Hill Book Company, 1976) pp. 90-126. 2 Z I b i d . 2 3 I b i d , pp. 237-254. D. Matlock, "Goals and Trends i n the Union of Health Professionals," Hospital Progress, (Feb. 1972), pp. 40-43. 25 Stoner, Management, p. 565-589. 2 6 3 . O r l i k o f f , W. F i f e r , & H Greely, Malpractice Prevention  and L i a b i l i t y Control for Hospitals, (Chicago, American Hospital Association, 1981) p. 34. - 70 -CHAPTER V COMPARISON OF MAJOR CONSIDERATIONS TO CANADA, BRITISH COLUMBIA In order to determine whether there i s a need for B r i t i s h Columbia Acute Care Hospital Administrators to move toward Risk Management, one must go beyond describing the motivating variables in the United States and speculating whether they are or are not applicable i n Canada or p a r t i c u l a r l y i n B r i t i s h Columbia. The next step, and the theme of t h i s chapter i s to address the same considerations-legal, f i n a n c i a l , s a f e t y / s e c u r i t y , and organizational-but in the Canadian context. Where i t i s required, or reasonable, s p e c i f i c reference i s made to the s i t u a t i o n i n B r i t i s h Columbia. The format w i l l be much the same as that seen in Chapters III and IV except that, the s i m i l a r i t i e s and differences between the Canadian hospital and i t s American counterpart w i l l be emphasized. In addition, there i s no discussion on the r e l a t i o n s h i p to Risk Management. This approach w i l l aid the reader in in t e r p r e t i n g the s i g n i f i c a n c e of the re s u l t s of the case study and the conclusions in the subsequent chapters. A . Selected Legal Aspects In Chapter II, i t was noted that B r i t i s h Columbia (possibly, most Canadian provinces), had the potential to experience an increase in hospital related l i a b i l i t y claims. That there are s i m i l a r i t i e s i n the h i s t o r i c a l developments of the Canadian and American hospitals i s not s u r p r i s i n g . For many years - 71 -they shared a common base within the Hospital Association of the United States and Canada. Although t h i s organization eventually s p l i t into two separate e n t i t i e s , both Associations' members have continued to share t h e i r knowledge and experiences though journals and combined conferences and seminars. One of the major differences between the two countries i s t h e i r respective l e g a l systems. This section begins with a description of some of the (few) s i m i l a r i t i e s and outlines the impact of statutory law (the major d i f f e r e n c e ) . The two " l e g a l aspects" that so affected the future and operations of the American hospital w i l l be discussed in the Canadian ( p a r t i c u l a r l y B r i t i s h Columbia) context. These include changes in the law and public attitudes/values toward l i t i g a t i o n . 1. Basic f a c t s about the Canadian l e g a l system S u p e r f i c i a l l y , the American and Canadian le g a l systems share a few s i m i l i a r i t i e s . Both systems include public and private law, the l a t t e r also developing h i s t o r i c a l l y through j u d i c i a l decisions based upon the p r i n c i p l e s of English common law and supplemented by statute law. Both systems use a h i e r a r c h i a l approach to make binding the decisions of higher courts. However, the s i m i l a r i t y ends there. In Canada, the primary source of law i s statutory - an act of the Parliament of Canada or of a P r o v i n c i a l Legislature. Through the provisions of the o r i g i n a l B r i t i s h North American Act (B.N.A.) of 1867 and r e t i t l e d the Constitution Act, 1867 in - l i -the Constitution Act, 1982, the d i v i s i o n s for l e g i s l a t i v e authority were established. In t h i s manner, Health (and hospitals) became primarily a p r o v i n c i a l matter. In addition, "subordinate l e g i s l a t i o n " in the form of bylaws, ordinances, statutory instruments, orders-in-council, rules and regulations may be enacted by a person, body or t r i b u n a l granted the authority through a sovereign l e g i s l a t i v e body. 4 Under the B r i t i s h doctrine of parliamentary sovereignty, Canadian l e g i s l a t u r e s can make or unmake any laws, provided they do so in accordance with the l i m i t a t i o n s set out in the Constitution A c t s . 5 In turn, t h i s a f f e c t s the r e l a t i o n s h i p between statutory and common/case law. F i r s t , Parliament has the authority to repeal or modify any p r i n c i p l e s set out in case law. Secondly, much of common law i s developed through adjudication of new fact s i t u a t i o n s and i n t e r p r e t a t i o n of e x i s t i n g statutory . . 6 provisions. Other, less s i g n i f i c a n t , sources of law include the royal prerogative that i s exercised through the Governor-General of Canada or Lieutenant-Governor of a province. An example of t h i s practiced i n some provinces i s t o r t i o u s immunity for the Crown. Custom and convention, morality and j u r i s t i c writings of scholars are a d d i t i o n a l , miscellaneous sources of law.' The province of B r i t i s h Columbia acquired English law through the early settlement by the Hudson's Bay Company. However, the Law and Equity Act, R.S.B.C., 1979, c. 224, expressly provides for the reception of English law as i t existed on - 73 -November 19th, 1858. Of course many statutes have been added or changed since that date. Those s i g n i f i c a n t to the B r i t i s h Columbia hospital industry are*: Hospital Act, RSBC, 1979, c. 176 Hospital D i s t r i c t Finance Act, RSBC, 1979, c. 179 Hospital Act Regulations, Amended, 1979 Hospital Insurance Act RSBC, 1979, c. 180 Limitations Act, RSBC, 1979, c. 37 Medical P r a c t i t i o n e r s Act, RSBC, 1979, c. 254 Soci e t i e s Act, R.S.B.C., 1979, c. 390 Early Canadian hospitals, as charitable i n s t i t u t i o n s , had inherited some protection against l i a b i l i t y through English common law. This protection ended in 1909 when an English Court of Appeal concluded that a hospital had cer t a i n undertakings toward the patient. The charitable status was never tested i n the Canadian courts. As in the United States, Medical Practioners' Acts (RSBC, 1979, c. 254 as example) allow only a person to be registered for the practice of medicine. A hospital cannot be licensed to practise medicine, only to provide medical services. 2. The changing law Similar to the American s i t u a t i o n a patient in Canada may be in a position to take le g a l action against a hospital on a contractual or to r t i o u s matter providing that a duty of care (to the patient) i s established and has been violated in some manner. A duty of care i s found where there i s a re l a t i o n s h i p *Some s p e c i f i c notations in r e l a t i o n to these Acts and other leg a l aspects are made in Appendix B. - 74 -between the parties such that each i s required to avoid acts or omissions which could be foreseen as l i k e l y to injure the other. In Canada, duties may be created through statutes (eg. Hospital Act), hospital bylaws and regulations of professional bodies. To date, the following precedents have been established as d i r e c t duties of a hospital to a patient: 1. to select competent and q u a l i f i e d employees 2. to i n s t r u c t , and supervise them 3. to provide proper f a c i l i t i e s and equipment 4. to es t a b l i s h systems necessary to the safe operation of the h o s p i t a l . 1 0 One authority on hospital law states that the key factor i n es t a b l i s h i n g duty and the patient-hospital r e l a t i o n s h i p i s to determine what the hospital undertakes to do for the patient. However, t h i s factor i s also the major d i f f i c u l t y i n applying t o r t and contract theories of law. Today, there i s s t i l l uncertainty in Canada as to which of two things a ho s p i t a l i s obliged to provide: 1. medical treatment, or 2. competent medical s t a f f and appropriate s u p e r v i s i o n . 1 1 Thus far the most s i g n i f i c a n t Canadian case related to le g a l duty has been Yepremian v. Scarborough General Hospital. In t h i s case a 17 year old man was taken to a doctor's o f f i c e with a recent stated onset of polyuria and polydipsia and, subsequently diagnosed with t o n s i l l i t i s . As his condition deteriotated, he was taken to the defendant hospital where he was examined by an emergency physician. Because of his comatose state he was admitted to intensive care and examined further by an i n t e r n i s t . A day l a t e r , a nurses' observation led to the diagnosis of diabetes. However, the i n t e r n i s t ' s treatment i s believed to have led to Ypremian's cardiac arrest and resultant permanent brain damage. The question of medical negligence put aside, the t r i a l court found the hospital l i a b l e for breach of duty because: - 75 -a. Yepremian had no freedom of choice on the matter of which hospital or which doctor would treat him. b. The hospital by v i r t u e of the provisions of the Public Hospitals Act had an o b l i g a t i o n to provide service to the public and had the opportunity of c o n t r o l l i n g the quality of medical service. c. The expectations of the public are t h a ^ a hospital w i l l provide a complete range of treatment. This decision was overturned in the appeals court and s e t t l e d p r ior to a hearing at the Supreme Court of Canada l e v e l . The matter of l e g a l duty had been b r i e f l y explored with no clear d i r e c t i o n for i n t e r p r e t a t i o n . As w i l l be seen in subsequent cases, the question and scope of legal duty (of the hospital) i s at the base of most action s u i t s against a h o s p i t a l . H i s t o r i c a l l y , a hospital's d i r e c t l i a b i l i t y to the patient was usually founded on the contract between i t and the patient. Aside from express or written contracts, factors relevant to finding implied terms (of contract) include l e g i s l a t i o n , h o s p i t a l by-laws and public expectations. However, ascertaining terms and breaches in contract have been d i f f i c u l t and the courts appear reluctant to subject the hospital-patient r e l a t i o n s h i p to a thorough, conclusive contractual analysis. Technically, the contract between hospital-patient i s intertwined with the l e g a l duties of the h o s p i t a l . Contract actions generally have a s u b s t a n t i a l l y longer l i m i t a t i o n period, and are less expensive to prove. However, the scope of l i a b i l i t y i s much broader in - 76 -Canadian t o r t law, and most actions against hospitals are in t h i s area or a combination of contract and t o r t law. 1 5 The premises for t o r t and contract law v i o l a t i o n s are imbued in the determination of leg a l duties and standards of care. The Canadian courts look toward the "reasonable man" p r i n c i p l e in determining what i s an acceptable l e v e l of care. In addition, they w i l l examine l e g i s l a t i o n , regulations, hospital by-laws and ask for evidence from accreditation and professional bodies. It i s by no means an easy determination. The lack of c l a r i t y in these areas appears to have the potential for increasing the scope of h o s p i t a l l i a b i l i t y i n Canada. In Canada, the hospital has been viewed as a corporation with organizational duties and l i a b l e under the doctrine of corporate negligence since 1915. 1 6 The duties which are non-delegable, have been noted at the beginning of t h i s section and need not be repeated. A key aspect of the theory of corporate negligence i s that the re l a t i o n s h i p of the hospital and the professional i s i r r e l e v a n t . Where the courts have held that the hos p i t a l has a non-delegable duty, that duty arises and p e r s i s t s whether the corporation acts through independent contractors or 17 through i t s own employees. I t , therefore, goes beyond the doctrines of vicarious l i a b i l i t y (respondeat superior) and s i g n i -f i c a n t l y broadens the base for hospital l i a b i l i t y . In essence, i t has been the decided cases supra 1915 that have established the le g a l duties of hospital corporations. Case examples that involve le g a l duty and/or corporate negligence include: - 77 -AYNSLEY V. TORONTO GENERAL HOSPITAL where the defendant hospital was held l i a b l e for not providing s u f f i c i e n t care and control over an anesthetist resident, thus, contributing to a 18 patient's cardiac arrest and subsequent permanent brain damage, or LAIDLAW V. LIONS GATE HOSPITAL where the hospital was held l i a b l e for the actions of two recovery room nurses. The s t a f f i n g and break period for the defendent nurses contributed to a patient's respiratory d i s t r e s s and subsequent permanent brain damage. 1 9or MILLER V. UNITY UNION HOSPITAL where the hospital was sued but acquitted from a patient's allegations of sustaining severe i n j u r i e s from s l i p p i n g on "water spots" on the hospital hallway f l o o r s . The court held that the defendent hospital took reasonable precautions i n attempting to prevent damage from an unusual danger. 2 0 In MURPHY V. ST. CATHERINE'S GENERAL HOSPITAL, a hospital was held l i a b l e for the injury suffered by a patient when an intern , i n giving an intravenous i n j e c t i o n , severed the catheter leaving over nine inches of i t in the patient's vein. It was found that the hospital was responsible for providing i n s t r u c t i o n , d i r e c t i o n and supervision to i t s s t a f f for the use of the 21 Intracath ... and not having done so i s negligence. The p r i n c i p l e s of Respondeat Superior or vi c a r i o u s l i a b i l i t y have been undergoing changes since 1942 when an English Court of Appeal held a hospital l i a b l e for a radiology technician - 78 -who negligently administered some grenz ray treatments. From t h i s time u n t i l the present, the question of vicarious l i a b i l i t y for- the professional, p a r t i c u l a r l y the physician, within the hospital setting has been undecided. One l e g a l authority suggests that the p r i n c i p l e i s antiquated and should have been extinguished 23 and replaced with a more p r a c t i c a l doctrine. It does have a p o s i t i v e aspect in providing a means for s h i f t i n g the burden of losses. Thus, in the Canadian courts emphasis has been placed on e s t a b l i s h i n g a means to test for vicarious l i a b i l i t y . In i t s application to h o s p i t a l s , two tests have been established: 1. The control t e s t asks whether the h o s p i t a l has control over "how" the employee does a job. In the past, professionals were excluded from the control t e s t . However, in YPREMIAN V. SCARBOROUGH GENERAL HOSPITAL, the control test was used, and the 2 4 h o s p i t a l was not l i a b l e for the actions of the named physicians. 2. The organization test focuses on the "when" and "where" of the action. That i s , i t i s s i g n i f i c a n t to determine the r e l a t i o n s h i p of the employee ( f u l l time or_ independent contractor) and to d i f f e r e n t i a t e whether t h i s person's work i s an i n t e g r a l part of the organization or an accessory to i t . However, i t seems that neither test has been applied consistently or with t o t a l l y 25 s a t i s f a c t o r y r e s u l t s . The test i s most c r u c i a l in l e g a l actions involving medical malpractice. This i s evident in HOSPITAL NOTRE DAME de 1'ESPERANCE V. LAURENT where the courts at various l e v e l s followed d i f f e r e n t patterns of reasoning for the l i a b i l i t y of the defendent h o s p i t a l . In t h i s case, a surgeon f a i l e d to properly diagnose and treat a f r a c t u r e . At the Supreme Court of Canada - 79 -l e v e l , i t was resolved that the hospital could not be held l i a b l e for the actions of medical s t a f f who were in an independent contractor p o s i t i o n . This decision was questioned by Justice Holland (at t r i a l level) and Justice B l a i r (at appeal level) i n the YEPREMIAN V. SCARBOROUGH GENERAL HOSPITAL. The preceding discussion has made clear the fundamental differ e n c e between the American and Canadian l e g a l systems, p a r t i c u l a r l y in the area of l e g i s l a t i v e / s t a t u t o r y authority. In addition, the Canadian hospital has been l e g a l l y recognized as a corporation since 1909. Even with these differences, the courts of both countries appear to confront the same type of issues for which there are no clear d i r e c t i o n s or answers. These include: 1. the scope of a hospital's l e g a l duties. 2. the acceptable standards of care intertwined with l e g a l duties. 3. the employment re l a t i o n s h i p between hospital-physician, and consistent application of respondeat superior. 3. The changing values The extent of hospital related l i a b i l i t y i s unknown both from a national and p r o v i n c i a l viewpoint. Hospitals are insured through private companies. S t a t i s t i c s need not be nor are they made public. In many cases, hospitals are served notice of writ along with the doctors. Therefore, s t a t i s t i c s released by the Canadian Medical Protective Association (CMPA) may or may not be r e f l e c t i v e of what i s happening in the hospital industry (Table S i x ) . There i s no way of i d e n t i f y i n g those actions where hospitals were involved. - 80 -TABLE SIX CMPA RECEIPTS, ACTIONS, EXPENDITURES Selected Years, 1945-1979 YEAR DUES $ NO. OF WRITS SERVED AWARDS SETTLEMENTS LEGAL COSTS MEMBERSHIP 1945 5 9 n i l $ 6,216 3,367 1950 5 11 (4 11 ,770 settlements) 7,616 6,389 1955 20 11 (3 54,864 awards, 9 settlements) 21,056 8,983 1960 20 16 (1 49,259 award, 5 settlements) 23,755 12,243 1965 15 49 (3 168,119 awards, 12 settlements) 67,553 15,940 1970 35 80 (8 223,951 awards, 21 settlements) 238,818 21,959 1972 50 152 (4 253,371 awards, 29 settlements) 427,250 24,945 1974 50 168 (9 896,858 awards, 58 settlements) 766,916 29,096 1976 200 234 (7 2,664,103 awards, 64 settlements) 1,119,657 31,421 1978 200 323 (14 1,280,861 awards, 67 settlements) 1,455,587 32,175 1979 200 343 (17 5,358,311 awards, 92 settlements) 1,834,392 33,202 Source: Canadian Medical Protective Association Annual Reports, 1955-1980. - 81 -One must look upon these s t a t i s t i c s with a c r i t i c a l eye and remember that there i s a four (4) to six (6) year lag from the time the writ i s served to the time of settlement. It i s d i f f i c u l t to ascertain what the range (in d o l l a r s ) of the awards and settlements might have been. It i s apparent that during the 1970's, more writs were served and s e t t l e d at higher cost. It i s l i k e l y that more Canadians are now w i l l i n g to s e t t l e t h e i r personal i n j u r y / i n s u l t claims in the legal arena. However, precedents have been established by way of three (3) judgements delivered by the Supreme Court of Canada in 1978. The " t r i l o g y " o u t l i n e s p r i n c i p l e s to guide t r i a l courts in the assessment of damages in personal injury cases. In t h i s manner, $100,000 has been established as a maximum for non-pecuniary loss although i t was acknowledged that t h i s amount can and should be exceeded in O Q exceptional cases. The lack of s t a t i s t i c s and empirical data has not stopped subjective discussion regarding changing trends in hospital l i t i g a t i o n . Notably, most of the discussion has come from the l e g a l profession. Rozovsky, a leading spokesman in Canadian hospital law, has emphasized that a hospital's duty (to a patient) i s determined by public expectaction. In turn, public expectations are formed by the services the hospital undertakes to provide for the patient. C l e a r l y , he f e e l s that the public "reasonably" expects the hospital to be the hub of health care services - services that are provided with "reasonable" standard and s k i l l . Another stresses that the modern patient has strong, - 82 -well-defined l e g a l r e l a t i o n s h i p s with his h o s p i t a l . If the hospital i s in breach of the duties owed a patient, the h o s p i t a l may be found to be in a position of reimbursing the patient for a 3 0 wrongdoing. F i n a l l y , an Ontario professor of law states that the grand age of consumer protectionism has not bypassed the hospital corporations. Segments of the Canadian le g a l community support expansion of c i v i l l i a b i l i t y and view hospital corporation 31 as having deep pockets, well able to absorb f i n a n c i a l losses. There i s also speculation about the potential f u e l i n g e f f e c t of 3 2 the enshrined rights in the new Constitution Act. There are several major differences between the Canadian and American le g a l and health care systems. Amongst these differences, there are some common public reactions. Both Americans and Canadians have high expectations of what health care services should o f f e r or bring to them, and both appear d i s i l l u s i o n e d with the breakdown in patient-hospital and patient-doctor r e l a t i o n s h i p s . Combined with a w i l l i n g l e g a l community, t h i s can provide a f e r t i l e ground for potential l i t i g a t i o n against a h o s p i t a l . It i s only recently that Canadian courts have come squarely to the crossroads of hospital q q l i a b i l i t y . At t h i s time, i t i s not clear the d i r e c t i o n they w i l l take. Canadian, and p a r t i c u l a r l y B r i t i s h Columbia courts of law have not been subject to the same type or frequency of experiences/changes as t h e i r American counterparts. However, i t seems in e v i t a b l e that changes ( i n law) w i l l occur over the next decade that may e f f e c t the health consumer's potential to sue a - 83 -h o s p i t a l and the hospital's immunity against these s u i t s . In turn, t h i s d i r e c t l y challenges the hospital's a b i l i t y to defend the a c t i v i t i e s that occur within the hospital s e t t i n g . B. Selected Financial Aspects S i m i l a r l y to the United States, the debate about Canadian health care costs both nationally and p r o v i n c i a l l y has increased in both scope and frequency. Whether Canada i s in a c r i s i s state i s often a matter of opinion. Certainly, health costs as a proportion of GNP appears to have s t a b i l i z e d as can be noted in Table Seven. It i s the yearly percentage growth (in absolute TABLE SEVEN HEALTH EXPENDITURES AS PERCENT OF CANADIAN GNP: SELECTED YEARS 1960-1978 YEAR 1960 1971 1978 Total percent of GNP -to Health 5.62 7.3 7.0 To Hospitals 1.65 2.68 2.89 To Physicians 0.93 1.32 1.11 Source: R.G. Evans, Professor of Economics University of B r i t i s h Columbia Vancouver, B.C., 1981. terms) that translates into m i l l i o n s of d o l l a r s that has the federal and p r o v i n c i a l governments concerned about the cost of health care s e r v i c e s . 3 4 This i s e s p e c i a l l y true at a time of - 84 -d e c l i n i n g revenues. As early as 1970, the i n s a t i a b l e demand of 35 our health care system was recognized. The various p r o v i n c i a l governments have responded d i f f e r e n t l y to the pressure of cost c o n t r o l . In B r i t i s h Columbia, the pressure began to become more evident in 1980 with an apparent attempt by the government in V i c t o r i a to gain better f i n a n c i a l control within Health and other public spending sectors. This has become more overt in recent months with Premier Bennett's announcement of a r e s t r a i n t program that would l i m i t public expenditures to 10% per annum over the next two years. Hospitals continue to be a major target of any cost control e f f o r t s as they remain the most v i s i b l e and most expensive of health care se r v i c e s . Even though i n s t i t u t i o n a l service (primarily hospital) costs during the l a t e 1970's were reduced from approximately 85 percent to 65 percent per health d o l l a r , concern continues over the financing and the a l t e r n a t i v e s to i n s t i t u t i o n a l services that 3 7 are supported by the p r o v i n c i a l governments. Considering that since 1964 and the Report of the Royal Commission on Health Services, provinces have st e a d i l y worked toward achieving the p r i n c i p l e s outlined in the Health Charter for Canadians, i t i s not s u r p r i s i n g that the Canadian public's expectations for health services ( p a r t i c u l a r l y hospital services) are r i g h t f u l l y high. Subsequently, any government debate over cost control or cost sharing i s as much p o l i t i c a l as i t i s f i n a n c i a l . The stakes are high in both cases. - 85 -1. Revenue Sources for Hospitals Today, acute care hospitals in Canada are non-profit, public or voluntary i n s t i t u t i o n s . A l l of these hospitals receive payment from government for the services they provide. The method and nature of government financing for hospital services has changed dramatically over the past t h i r t y - f i v e years. The government of Saskatchewan led the way for providing universal and compulsory h o s p i t a l i z a t i o n coverage with the introduction of the Saskatchewan Hospital Services Plan in January, 1947. B r i t i s h Columbia followed suit and implemented a s i m i l a r plan in 1949. These plans were financed by premiums and p r o v i n c i a l tax revenues. During the same period, the federal government had gained s u f f i c i e n t support to introduce National Health Grants which were to aid the provinces in health planning, h o s p i t a l construction and professional t r a i n i n g . This was f o l -lowed by the Hospital Insurance and Diagnostic Services Act of 1958 which allowed for p a r t i c i p a t i n g provinces to receive national funding in order to provide necessary inpatient services and f a c i l i t i e s at the standard ward l e v e l . B r i t i s h Columbia was one of the f i v e provinces that pressed for the program. Under t h i s arrangement, the Government of Canada contributed, out of c o n s o l i -dated revenue, approximately f i f t y (50) percent of hospital oper-ating costs based on a formula which gave sp e c i a l help to the poorer provinces. The p r o v i n c i a l governments were responsible for the remaining costs and were also responsible for d i s t r i b u t i n g the 38 funds to the hospitals, in t h e i r p a r t i c u l a r province. - 86 -Insurance coverage for physician services was incorporated in 1967, and this ten (10) year delay i s often c i t e d as the major reason for the rapid escalation in hospital u t i l i z a t i o n and cost in the 1960's because patients came to hospitals rather than doctor's o f f i c e s . Furthermore, the cost-sharing formula appeared to reduce the incentive to economize as p r o v i n c i a l governments opted for programs that could be cost-shared with the Government of Canada and gave lesser p r i o r i t y to extended care and community 3 9 oriented programs. The increasing costs during the 1970's, p a r t i c u l a r l y for hospital services, and beginning c r i t i c i s m of these public expenditures led to renewed financing negotiations which ultimately resulted in the Federal-Provincial F i s c a l Arrangements and Established Programs Financing Act, (EPF) 1977. In general, the EPF Act allowed for a reduction in federal block grant, an increase in tax points for the provinces and a block grant for extended health services. The ultimate aims of these f i s c a l arrangements were to make federal expenditures more predictable, give more f l e x i b i l i t y to the provinces in a l l o c a t i o n of funds and to provide incentives for c o n t r o l l i n g health c o s t s . 1 4 0 The EPF Act i s currently being renegotiated and although i t i s unclear what type of changes w i l l be made, i t i s a ce r t a i n t y that there w i l l be changes to r e f l e c t the ever-present concern of h o s p i t a l expenditures. Since 1958, B r i t i s h Columbia hospital operating and c a p i t a l costs (including building) have been covered primarily through government programs. In B r i t i s h Columbia, other sources of - 87 -revenue, that usually represent ten (10) percent of the t o t a l include monies received from the Worker's Compensation Board, Federal government and residents from other provinces. Revenues can also be generated through charges for private and semi-private accommodation, emergency and out patient s e r v i c e s . c a f e t e r i a sales and services to other organizations. There have been few successful regulatory controls in health and p a r t i c u l a r l y hospital s e r v i c e s . Bed closures, or c l o s i n g of some i n s t i t u t i o n s , and enforced budget allotments have been p o l i t i c a l l y unpalatable. Furthermore, i t has been d i f f i c u l t to measure hospital e f f i c i e n c y , to compare one hospital's performance against another or to decrease the impact of physician desires in the hospital s e t t i n g . This along with monetary rewards for inpatient days and per diems reduces the e f f e c t of the few 41 controls there are. I t appears i n e v i t a b l e , that as the health care crunch continues, e x i s t i n g controls w i l l be enforced more consi s t e n t l y and/or newer, wider reaching controls w i l l be implemented. It i s also c e r t a i n that, as the r h e t o r i c on cost-control and i n d i v i d u a l r e s p o n s i b i l i t y continues, there i s bound to be an impact on both the quantity and quality of h o s p i t a l services a v a i l a b l e . To date, there have been no s p e c i f i e d controls on quality or u t i l i z a t i o n comparable to the American scene. The controls, such as they are, have been enforced through the government holding the purse s t r i n g s . Whatever the outcome of the current hospital c r i s i s debate, the fact remains that hospitals are a big business in B r i t i s h Columbia. As such, they - 88 -have accumulated a wealth of resources ( c a p i t a l and manpower) over the years. They, l i k e t h e i r American counterparts, have looked at various methods of protecting t h e i r assets and preparing for loss transfer through insurance management. 2. Insurance Management for Hospitals The importance of obtaining a comprehensive insurance package for hospitals has been recognized for many years. E s p e c i a l l y since many early hospitals originated in what were once private homes, and with fewer f i r e regulations to adhere to, the p r o b a b i l i t y of a f i r e occurring was quite high. Other concerns included public l i a b i l i t y , t h eft and destruction of hospital property and damage to the b o i l e r system. 1 + 3 The determination of the type and scope of coverage needed was managed by either the chief hospital clerk (smaller hospitals) or a committee with s p e c i a l s k i l l s in the insurance f i e l d that could review the a l t e r n a t i v e s a v a i l a b l e . Insurance coverage was to a degree optional, and the government had, qu i e t l y on occasion, provided the funding for a l i a b i l i t y award. U n t i l the 1970's, most insurance brokerage firms handled insurance for hospitals with reasonably priced premiums. Suddenly, during the early 1970's hosp i t a l premiums increased rather rapidly and concurrently brokerage firms started to withdraw from providing coverage for h o s p i t a l s . The reasons for t h i s are unclear, although many in the industry believe i t was a r e f l e c t i o n of what was then happening in the United S t a t e s . 4 5 B r i t i s h Columbia hospitals responded to t h i s - 89 -by working together through the cooperation of the B r i t i s h Columbia Health Association (BCHA) and Marsh & McLennan Insurance to develop a comprehensive insurance package. The insurance program i s voluntary and open to a l l member hospitals of BCHA. The program includes coverage for property, l i a b i l i t y , crime, 46 b o i l e r & machinery, t r a v e l & volunteer accidents. Each p a r t i c i p a t i n g h o s p i t a l , i n consultation with Marsh & McLennan, determines the amount and scope of coverage required for t h e i r needs. Premiums are based s o l e l y upon size of h o s p i t a l . Presently, there are no discussions regarding captive or self-insurance, nor i s there any apparent need for them. Although Risk Management has been discussed at the BCHA l e v e l , i t i s primarily at inves t i g a t i n g the educational role that can be undertaken. At t h i s time, Marsh & McLennan has no intention of introducing a Risk Management option in Canada or introducing special rates for those hospitals that introduce formalized Risk Management Practices. Insurance premiums for hospitals have remained r e l a t i v e l y stable over the past f i v e years. For example, the average cost of l i a b i l i t y insurance per hospital increased 0.4% between March 1978 and March 1982 in the Marsh & Mchennen plan. This time period also demonstrated actual decreases for three successive years. Unless claims s e t t l e d increase rapidly or a trend toward hospital l i a b i l i t y for professional medical malpractice develops, the premiums are expected to increase at a nominal rate. Evidently, insurance management for B r i t i s h Columbia hospital i s not a major concern during t h i s time period. - 90 -From a f i n a n c i a l viewpoint, the resource structure between the American and Canadian hospital industries i s quite d i f f e r e n t . Remarkably, the outcome of t h e i r e f f o r t s appears much the same. Both, are concerned with hospital costs, both are perceived as large, expensive and v i s i b l e businesses, and both are struggling for more f i n a n c i a l maneuverability within the r e s t r a i n t s of government controls. Here, the United States appears to have more formalized enactments while the Canadians have comprehensive government control, largely interpreted through the provinces Hospital Insurance Act and Hospital Act. As was seen in the previous section, Canadians are w i l l i n g to take l e g a l action, although c e r t a i n l y not to the degree the Americans do so. Thus, although insurance management i s important, i t i s not percieved as a problem in the Canadian context and the hospital industry has not a c t i v e l y had to look at a l t e r n a t i v e s . C. Selected Safety and Security Aspects The development of safety and security programs in Canadian hospitals i s d i f f i c u l t to trace. There i s no Canadian counterpart to NIOSH and l i t t l e documentation that provides the h i s t o r i c a l , p o l i t i c a l and organizational perspective of changing trends in t h i s area. However, t h i s i s not to say that safety and security measures/programs were, or are not, an issue. Surveying old issues of Canadian Hospital, the o f f i c i a l publication of the Canadian Hospital Association, gives some ind i c a t i o n of what hospital administrators/trustees of the day - 91 -were concerned about. During the post war and reconstruction period, many a r t i c l e s appeared on the importance and implementation of both disaster and f i r e protection p l a n s . 4 8 , 4 9 , 5 0 , 5 1 , 5 2 F i r e protection was important because many of the hospitals were wooden frames and the f i r e regulations were less stringent. The impact of the atomic bomb i n i t i a t e d much of the disaster planning. Considering that hospital construction reached a peak during the 1950's, i t was not surprising to see frequent a r t i c l e s on the new hospitals supplemented with a r t i c l e s o u t l i n i n g how to wash walls, care for f l o o r s , and equipment. The l a t t e r appeared to be more technical in nature rather than focusing on the inherent safety aspects. The 1960's proved to be a developmental period for hospital standards. Although the Canadian College on Hospital Accreditation was i n i t i a t e d in 1950 with assistance from the United States, Canadians did not assume f u l l r e s p o n s i b i l i t y u n t i l 1959. Accreditation was encouraged and concern for safety procedures with a focus on patient care were C5 CU CC CC outlined. , , , By 1970, approximately 62% of Canadian hospitals had entered the accreditation program. During the early 1970's, leg a l issues related to hospital service started to appear. Between 1973 and 1975, regular, monthly a r t i c l e s were appearing concerning the l e g a l i t i e s of manufacturers' r e s p o n s i b i l i t y , licensure, t h e f t , negligence and patient care i s s u e s . 5 8 , 5 9 , 6 0 The l a t t e r part of the 1970's returned to hospital standards issues with a focus on both patient care and 61 62 63 employee practices and benefits. , , In addition, quality - 92 -care and patient care issues are documented in the medical, nursing and other health care worker journals based from experiences in Canada, the U.S. and other countries. The impact of the hospital on the employee i s more d i f f i c u l t to trace h i s t o r i c a l l y . However, i t appears that changes have occurred concurrent with union organization and development, Worker's Compensation developments and general knowledge of stresses in the ho s p i t a l environment that could affect employee performance. These type of issues .... standards, patient safety, employer safety and legal aspects continue to be important in the 1980's. 6 1*, 6 5 , 6 6 , 6 7 Another equally important concern that has evolved over the past few years i s the po t e n t i a l impact from 6 8 69 advances in the health technologies. , With respect to safety and security programs, Canadian hospita l s appeared to follow a s i m i l a r pattern to the United States. Safety and security developments progressed with developments in other parts of the hospital sector. The accreditation bodies contributed a great deal to increasing standards. Other outside agencies -- government, WCB, F i r e Protection, unions and professions appeared to have an influence on the industry as well. The process may have d i f f e r e d because of differences noted in other chapters of t h i s manuscript. However, the problem for both countries i s the same — compliance with safety practices and attempting to make safety everybody's business. - 93 -D. Selected Organizational Aspects The developments i n the Canadian and American ho s p i t a l industry very nearly p a r a l l e l e d each other. S t r u c t u r a l l y , the Canadian and American hospital share many s i m i l a r i t i e s . ^ 0 These w i l l be outlined followed by a description of some of the dif f e r e n c e s . In Chapter IV, the modern American hospital was described with emphasis placed on some of i t s unique c h a r a c t e r i s t i c s . These same c h a r a c t e r i s t i c s , which include an extensive d i v i s i o n of labor i n a labor-intensive industry, a semi-bureaucratic status and a fragmented authority structure that could e f f e c t the e f f i c i e n c y and e f f e c t i v e s s of the organization, could very well describe the Canadian h o s p i t a l . In addition, many B r i t i s h Columbia h o s p i t a l s are converting to a corporate organizational model and are attempting to achieve active medical p a r t i c i p a t i o n at the executive administrative l e v e l . The Canadian hospital i s also shaped by l e g i s l a t i o n and by the p r i n c i p l e s of corporate law. 7 1 However, in contrast to the United States, the majority of hospitals are formed by a soc i e t y . The society i s comprised of community people who are interested i n the development of a h o s p i t a l . The So c i e t i e s Act requires that a l l S o c i e t i e s be registered with the Registrar of Companies. Notably, the Society does not control the hospital but only sponsors i t . Thus, i t provides a means to perpetuate the board of governors and allow for the operation of a h o s p i t a l . In p r a c t i c a l - 94 -terms there i s no r e l a t i o n s h i p between the Society and the h o s p i t a l . The Society does have Directors who may or may not be members of the hospital board. The r e s p o n s i b i l i t i e s of the board are conferred by statute (eg. Hospital A c t ) . The Society i s obligated to develop a c o n s t i t u t i o n , but the hospital i s not. Soci e t i e s do not require insurance coverage and most do not. However, unlike the practice i n the United States, a board member must be a Society member. As a board member, the i n d i v i d u a l has 7 2 no protection from l e g a l s u i t . Two s i g n i f i c a n t B r i t i s h Columbia l e g i s l a t i v e changes d i r e c t l y a f f e c t the hospital's operations. The f i r s t i s the p r o v i n c i a l government's Hospital Insurance Act which t o t a l l y controls the amount of the hospital's operating expenditures. The second i s a 1970 change in the Hospital Act which allows the Minister of Health to replace a hospital board, appoint a public administrator, implement a board of review on the hospital and withhold funds i f necessary. These type of p o l i c i e s are a strong indicator of the power of government in the structure and adminstration of the B r i t i s h Columbia h o s p i t a l . What i s less clear i s the legal accountability of government i f a hospital i s l i a b l e for breach of duty because of f i n a n c i a l d i f f i c u l t i e s or during a period of time when a public administrator or board of review i s i n s t a l l e d . At t h i s time, i t appears that l e g a l accountability for a hospital i s retained at the Board l e v e l . Two other factors can a l t e r the hospital's operations --the professions and the unions. Bearing resemblance to those i n - 95 -the United States, the professions unquestionably influence the type and quality of services a hospital provides. In B r i t i s h Columbia, there are twenty health professions empowered by fourteen statutory acts and there are several more groups pressing for t h i s status and power. The unions, because of t h e i r purpose, are noticeably more v i s i b l e . In contrast to the United States, with the exception of most management, almost a l l personnel are unionized in Canadian h o s p i t a l s . In B r i t i s h Columbia, each health care group has a c e r t i f i e d bargaining agent that negotiates with a cent r a l i z e d unit, the Health Labour Relations Association (HLRA). HLRA represents the hospitals d i r e c t l y and the government i n d i r e c t l y — but the hospitals are obligated comply with the outcome of the bargaining process even though t h e i r funding l e v e l s from government may not be changed. The physicians negotiate d i r e c t l y with the government since t h e i r fee payments come out of the government controlled Medical Services Plan. Recently, concern has been expressed that unionism i s overshadowing professionalism and that the power of the union movement has the p o t e n t i a l to imbalance the administrator's already f r a g i l e power base. S t r u c t u r a l l y , the Canadian and American hospitals appear to have many s i m i l a r i t i e s . From a macroscopic viewpoint the Canadian ho s p i t a l very much resembles the American h o s p i t a l . And yet there are differences — differences in regulation that d i r e c t l y a f f e c t the hospital's cash flow and governance. In addition, unionism i s a l i v e and prospering in the Canadian hospital industry. - 96 -Fundamental to a l l of the variances noted in t h i s chapter, i s a difference in ideology. The Americans value l i b e r t y , entrepreneurism and tend to shy away from state regulations. The Canadians, in dir e c t contrast appear more comfortable and concerned with equity issues, looking to and depending upon the government to solve the nation's/provinces' problems — p a r t i c u l a r l y with s o c i a l issues. State regulation i s common — a fact of l i f e for every Canadian. - 97 -CHAPTER V FOOTNOTES 1G. Agnew, Canadian Hospital, 1920 to 1970, A Dramatic Half  Century (Toronto: University of Toronto Press, 1974), p. 58-78. 2 The exception i s Quebec which for h i s t o r i c a l reasons has a system s i m i l a r to that found in Continental Europe. Quebec w i l l not be discussed i n t h i s paper. 3 E. Picard, Legal L i a b i l i t y of Doctors and Hospitals i n  Canada (Toronto: Carswell Company Ltd., 1978), p. 2. 4 G. G a l l , The Canadian Legal System (Toronto: Carswell Company Ltd., 1977), pp. 23-24. 5 3 . D i l l o n , Interview, A p r i l 19, 1982. G a l l , The Canadian Legal System, p. 26-27. ; l b i d . , pp. 28-29. E. Picard, The L i a b i l i t y of Hospitals, Health Law Seminar, UBC, (Spring, 1982). (unpublished paper). 9 I b i d . 1 0 P i c a r d , Legal L i a b i l i t y of Doctors and Hospitals i n Canada, pp. 251-326. 1 1 L . Rozovsky, "The Hospital's R e s p o n s i b i l i t y for Quality of Care Under English Common Law," Chitty's Law Journal, Vol. 24, No. 4, (1976), pp. 132-136. 1 2Yepremian V. Scarborough General Hospital (1980) 13 C.C.L.T-., 105 (Ont. C.A.) 1 3 Picard, Legal L i a b i l i t y of Doctors and Hospitals i n  Canada, p. 248-250. 14 3. Magnet, " L i a b i l i t y of a Hospital for the Negligent Acts of Professionals," (1978), 3 C.C.L.T., 135. 1 5 P i c a r d , Legal L i a b i l i t y of Doctors and Hospitals i n  Canada, pp. 51-58, 249. 1 6 3 . Magnet, "Corporate Negligence as a Basis for Hospital L i a b i l i t y — A Comment on Ypremian v. Scarborough General Hospital," (1978), 6 C.C.L.T., 121-131. 1 7 I b i d . - 98 -1 8Aynslev, V. Toronto General Hospital (1972), S.C.R., 435 (S.C.C.). 1 9Laidlaw V. Lions Gate Hospital (1969), 20 W.W.R., 727 (B.C.S.C.) 2 0 M i l l e r v. Unity Union Hospital (1975), 55 D.L.R. (3d) 475 (Sask, C.A.). 21 Murphy v. St. Catherine's General Hospital (1963), 41 D.L.R. (2d), 697 (Ont. H.C.). 2 2 A.Linden, "Changing Patterns of Hospital L i a b i l i t y in Canada" (1966-67) 5 A l t a . L.R., 212. 23 3. Magnet, "Vicarious L i a b i l i t y and the Professional Employee" (1978), 6 C.C.L.T., 208. 24 3. D i l l o n , Health Law Seminar, University of B r i t i s h Columbia, March 22, 1982. 25 Magnet, "Vicarious L i a b i l i t y and the Professional Employee". 2 6 Hospital Notre Dame de l'Esperance v. Laurent (1978), 3 C.C.L.T., 109 (S.C.C.). 27 Yepremian v. Scarborough General Hospital (1980), 13 C.C.L.), 105 (Ont. C.A.). 2 8 L i n d a l v. Lindal (1981) 129 D.L.R. (3d) 263 (S.C.C.). 2 9 Rozovsky, "The Hospital's Re s p o n s i b i l i t y for Quality of Care Under English Common Law". 30 Picard, L i a b i l i t y of Hospitals. 31 3. Magnet, "Preventing Medical Malpractice in Hospitals: Perspectives from Law and Po l i c y , "Legal Medical Quarterly, Vol. 3, No. 3, (1979), pp. 197-203. 3 2 3 . D i l l o n , Interview, A p r i l , 1982. 33 Magnet, "Preventing Medical Malpractice in Hospitals: Perspectives from Law and P o l i c y " . Financial Aspects 34 3. Bennett and 3. Krasny, "Health-Care in Canada: A Series on the Nation's Health", The F i n a n c i a l Post, (March 26 -May 7, 1977). - 99 -3 5 Canada, Department of National Health and Welfare, Task  Force Reports on the Cost of Health Services in Canada, 1-3 (Toronto: Queen's P r i n t e r , 1970). 3 6 A. Campbell, 3. M i l l e r , M. Mysak and M. Warner, Changing  Strategies for B r i t i s h Columbia Health Management: From Program  Development to Cost Control, Health Services Planning Discussion University of B r i t i s h Columbia, May, 1981. 37 M. Warner, "Governments and Health Care in Canada: The Sharing of Costs and Control, "Journal of Contemporary Business, Vol. 9, No. 4, pp. 111-125. 38 3. Hastings, "Federal-Provincial Insurance for Hospital and Physicians' Care in Canada, "International Journal of Health  Services, Vol. 1, No. 4, (1971), pp. 398-414. 39 J . Van Loon, "From Shared Cost to Block Funding and Beyond: The P o l i t i c s of Health Insurance in Canada", Journal of  Health P o l i t i c s and Law, Winter, (1978), pp. 454-478. I b i d . 4 1 J . Migue and G. Belanger, The Pric e of Health (Toronto: The MacMillan Company of Canada, 1974) , pp. 21-42. 4 2 "Are You Insured? Coverage via Committee," Canadian Hospital, (July, 1958), pp. 60-61. " 3 I b i d . L. Detwiller, Interview, June 11, 1982. 4 5 J . Atkins, Interview, June 1982. 4 6Marsh and McLennan, Insurance Booklet (Vancouver: Marsh and McLennan, 1982). ^ A t k i n s , Interview, June 1982. Safety and Security Wm. Loveday, "Every Hospital Must Stand Prepared," Canadian Hospitals, (September, 1950), pp. 44, 102. ' t 9F. S i l v e r s i d e s , "Evacuation Reaction," Canadian Hospital, (October, 1950), pp. 35, 80. 5 0R. McLean, "Let's Not Have F i r e , Part I," Canadian  Hospital, ( A p r i l , 1951), pp. 43-45. - 100 -5 1 C . Thompson, "Eliminate F i r e Hazard," Canadian Hospital (December, 1951), pp. 35, 84. 52 G. F r i t h , "At Nanaimo: A Disaster Plan in Readiness," Canadian Hospital, (3uly, 1958), pp. 48-50. 5 3 3. Turner, "Hospital Standards," Canadian Hospital, (March, 1962), pp. 36-38. 54 M. B l a i r , "Hospital accidents and the two hundred d o l l a r s t i t c h , " Canadian Hospital, ( A p r i l 1967), pp. 50-51. 5 5 C . Hartleib, "Medication Procedures i n Hospitals," Canadian Hospital, (Duly, 1967), pp. 44-46. 5 6 3 . Dixon, "Infection Control i n the OR," Canadian  Hospital, CJuly, 1967), pp. 48-51. 5 ;G. Agnew, Canadian Hospitals, 1920 to 1970: A Dramatic  Half Century (Toronto: University of Toronto Press, 1974), p. 39. 58 L. Rozovsky, "Malpractice and Professional L i a b i l i t y , " Canadian Hospital, ( A p r i l , 1970), pp. 20-22. 5 9 L. Rozovsky, "Do Hospitals Deserve Special Protection," Dimensions i n Health Service, (dune, 1974), pp. 17-19. 6 0 L . Rozovsky, "The Hospital's R e s p o n s i b i l i t y to V i s i t o r s , " Dimension Health Service, (August, 1974), pp. 10-12. 6 1N. Maguire, R.E. Van Wagoner, "Hearing Loss Among Hospital Employees", Dimensions i n Health Service, (January, 1977), pp. 16-17. 6 2 E . LeBourdais, "Accidents in Canadian Hospitals: ACHA Survey," Dimensions i n Health Service, (February, 1977), pp. 25-28. 6 3 S . Hnatko, "Protection Protocol for Hepatitis B," Dimensions i n Health Service, (February, 1977), pp. 36-38. 64 R. Shaw, "Creating Back Care Awareness," Dimensions i n  Health Service, (February, 1981), pp. 32-33. 6 5 E . Robertson, "The I n v i s i b l e F i r e Safety Feature — Attitude," Dimensions i n Health Service, ( A p r i l , 1981), pp. 20-23. 6 6G. Barnes, "Promises, Promises, the leg a l status of sales t a l k , " Dimensions i n Health Service, Part I, (September, 1981), pp. 20-25. - 101 -6 /G. Barnes, "Hospital L i a b i l i t y — no fat l e f t to trim" Dimensions i n Health Services, (March, 1982), pp. 38-40. 68 L. LaVecchin, "Health Care Technological Standards," Dimensions i n Health Service, (February, 1981), pp. 28-29. 6 9 M. Lee, "Eliminating Chemical Redundancy, Cost and Hazard," Dimensions in Health Service, ( A p r i l , 1982), pp. 14, 15. /'°0. H a l l , "Some Perspectives in the provision of Medical Services," Canadian Journal of Economics and P o l i t i c a l Science, (November, 1954), pp. 456-466. n P i c a r d , L i a b i l i t y of Hospitals. ; 2 L . Ranta, Health Law Class, University of B r i t i s h Columbia, A p r i l 6, 1982. 7 3 E. Grossman, "Administration and the Professional Associations," Dimensions i n Health Service, (February, 1978), pp. 23-24. - 102 -CHAPTER VI EXAMINATION OF RISK MANAGEMENT FOR HOSPITALS IN THE BRITISH COLUMBIA CONTEXT A . In t roduct ion Thus f a r , the relevant American and Canadian l i t e r a t u r e applicable to Risk Management has been reviewed. Notations related to B r i t i s h Columbia have been made where i t was possible. However, in keeping with the purpose of t h i s project, (to determine a need in B r i t i s h Columbia) i t was obvious that more information and data were required about the opinons, a t t i t u d e s , and a c t i v i t i e s of the key actors. This would include minimally, the hospital administrators, and i d e a l l y , other hospital personnel and representatives from the le g a l and insurance community. This chapter addresses how t h i s was achieved and i s followed by a discussion of the fi n d i n g s . I n i t i a l l y , the investigator had planned to use a survey questionnaire that would be sent to a l l hospital administrators in the province. The t o o l was to attempt to i d e n t i f y what hospital administrators were thinking and doing along the l i n e s of Risk Management. Anonymity would be maintained and analysis would include such variables as bed s i z e , employee numbers and types of ser v i c e s . The task of developing an appropriate questionnaire soon became horrendous for the following reasons: 1. There was no clear or u n i v e r s a l l y accepted d e f i n i t i o n of Risk Management. - 103 -2. The boundaries or parameters of Risk Management appeared to adapt to a hospital's needs. Therefore, i t became d i f f i c u l t to determine what issues should or should not be included in a questionnaire of reasonable length. 3. It was not known how f a m i l i a r the population group was with the subject matter. It was d i f f i c u l t to phrase non-leading questions that were s u f f i c i e n t l y clear to these unfamiliar, and concurrently, were not too s i m p l i s t i c for those who were f a m i l i a r with the subject matter. 4. Some of the requested data would be of a se n s i t i v e nature and concern was expressed about the response rate. After several attempts, t h i s approach was abandoned in favour of a case study. In t h i s manner, the investigator would be in face to face contact with the subject being questioned. The study parameters were more e a s i l y defined and c l a r i f i c a t i o n s about any of the questions could be made immediately. B. Methodology This in v e s t i g a t i o n i s a des c r i p t i v e survey using interview schedules in a case study approach to c o l l e c t the data. The data are largely subjective in nature. The sample i s purposive and includes representatives from two (2) Community General Hospitals in one (1) B r i t i s h Columbia - 104 -regional hospital d i s t r i c t . The hospitals were chosen because they are s i m i l a r in size and in the services they o f f e r . The major difference i s that Hospital A has designated a Risk Manager while Hospital B has not. The hospital representatives include the chief executive o f f i c e r and three (3) l i n e managers — two (2) of which are professional (nursing and pharmacy), one (1) i s managing a non-professional department (housekeeping). In addition two (2) lawyers and two (2) insurance executives f a m i l i a r with the hospital industry were interviewed. Each interviewee was approached i n d i v i d u a l l y by telephone to request p a r t i c i p a t i o n in the study. This contact was followed by a l e t t e r of thanks that included purpose of the study and some common d e f i n i t i o n s of Risk Management (Appendix C). Anonymity of the i n d i v i d u a l s and agencies was offered, and, therefore, many of the p a r t i c i p a n t s have not been i d e n t i f i e d . The interviews were a l l conducted by the investigator during the period of May-3une, 1982. Each interview was approximately one and one half (1-1/2) hours long. A l l interview questions evolved around the four major considerations — l e g a l , f i n a n c i a l , safety/security and or g a n i z a t i o n a l . In addition, an attempt was made to i d e n t i f y the respondents' understanding of Risk Management (Appendix D -interview schedules). The interview schedules were pre-tested i n March and A p r i l , 1982 using non-participants of the study but i n d i v i d u a l s with s i m i l a r backgrounds. This f i e l d t e s ting was done in order to: - 105 -1. Determine whether necessary data could be c o l l e c t e d from the respondent during the time predicted. 2. Test the c l a r i t y of the questions. 3. Test the appropriateness of the questions. 4. Test the s e n s i t i v i t y of the questions. The analysis of the responses was accomplished by a l l o c a t i n g the questions into the previously mentioned categories. Thus, each of the responses was recorded by category and the variances amongst the respondents were compared and noted. The study group i s small and selected and, therefore, could not be considered t r u l y representative of B r i t i s h Columbia's hospital industry. However, the study group does l e g i t i m a t e l y give an i n d i c a t i o n of the type of expression of ideas that can be generated using t h i s method. C. Findings The findings w i l l include a summary of responses by the Hospitals A and B lawyer and insurance representatives. This w i l l be suceeded by a discussion of the s i m i l a r i t i e s and differences amongst a l l the respondents. 1. The Hospitals (Table Eight summarizes the responses of the hospital groups) Hospital A Hospital A i s the f a c i l i t y with the designated Risk Manager. The Risk Manager r e s p o n s i b i l i t i e s are assigned to one of the Assistant Administrators. These duties were assigned in 1975 following what appeared to be an insurance "crunch". His terms of TABLE EIGHT SUMMARY OF SELECTED RESPONSES BY HOSPITAL RESPONDENTS DUNE, 1981 CATEGORY HOSPITAL A HOSPITAL B Administrator Nursing Pharmacy Housekeeping Administrator Nursing Pharmacy Housekeeping General: Definition Identify risks, reduce their frequency, and effects , maintain insurance costs Promote patient safety through employee safety, legal/finan-cial implica-tions Identify risks, and act to prevent harmful effects Identify risks and do something about them Insurance coverage, preventative practices that lead to safe environ-ment Identify risks and take corrective action. •Dislikes term "risk". Not familiar Not familiar Methods for Identifying risks Incident reports Staff reports Committee Work Inspections Audits Safety committee Staff reports Incident Reports Employee health WCB Drug monitoring Drug usage Incident reports Special studies Staff reports Safety committee Inspections Infection control Staff reports Committee reports Incident reports WCB reports •Methods as good as people using them. Incident reports Staff reports Committee reports Assistant Director of Nursing reports Self-monitor-ing Staff reports Other unit reports Inspections Staff reports Incident reports Written complaints Supervisory activities I o ON I TABLE EIGHT CONTINUED CATEGORY HOSPITAL A HOSPITAL B Adm i n i s t r a t o r Nursing Pharmacy Housekeeping Admi n i s t r a t o r Nursing Pharmacy Housekeeping Managing Q u a l i t y assurance Measuring standards Au d i t s Committees Q u a l i t y assurance elements -a u d i t s , Nurse Schedu-l i n g procedure Q u a l i t y assurance Education Counselling Newsletter Supervising Education/ c o u n s e l l i n g I n v e s t i g a t i n g ^Consistent enforcement of standards & procedures a problem Q u a l i t y assurance (nursing only) Audits P r o f e s s i o n a l r e s p o n s i -b i l i t i e s Q u a l i t y assurance - although too new to determine impact Education/ c o u n s e l l i n g Education T r a i n i n g Maintaining standards L e g a l : Concerns No. and cost of i n v e s t i -g a t i n g claims t h a t hos-p i t a l s should not be invol v e d with Loss of property, mostly p a t i e n t s r i n g s , g l a s s e s , dentures. o TABLE EIGHT CONTINUED CATEGORY HOSPITAL A HOSPITAL B Administrator Nursing Pharmacy Housekeeping Administrator Nursing Pharmacy Housekeeping Pt. care: Employees Dept./profes-s i o n a l res-p o n s i b i l i t y . Professional responsi-b i l i t y . Professional responsi-b i l i t y ; dept. inservice Director responsible for keeping s t a f f aware of l e g a l issues. Dept./Profes-s i o n a l res-p o n s i b i l i t y . P r o f e s s i o n a l responsi-b i l i t y a l -though need to be more aware; dept. i n s e r v i c e . Professional responsi-b i l i t y . Director i n -forms s t a f f of l e g a l aspects. Med. Sta f f Support medi-c a l s t a f f a c t i v i t i e s , indep. status of M.D. Support Medi-c a l s t a f f a c t i v i t i e s -resistance to audits, etc. Attorney Meet regu-l a r l y , should be aware of ho s p i t a l , a c t i v i t i e s . Meet as need a r i s e s . F i n a n c i a l : Costs of R.M. Too d i f f u s e to determine Depends on how structured. Probably no more than now. Addi t i o n a l : f u l l t i m e Risk manager, documentation Need to define boun-daries f i r s t . No comment Don't know, perhaps extra s t a f f . Additional s t a f f and t r a i n i n g . I o C D I TABLE EIGHT CONTINUED CATEGORY HOSPITAL A HOSPITAL B Administrator Nursing Pharmacy Housekeeping Administrator Nursing Pharmacy Housekeeping Incentive Is f i n a n c i a l incentive-age of consumer-ism. No incentives for R.M. Insurance Based on hos p i t a l ' s performance, services and ho s p i t a l i n -dustry. No changes required. Premium based on hospital industry & other f a c t o r s . No changes required. Safety/ Security: Responsibi-l i t y Delegated to safety commi-ttee-depart-mental re-presentation. Also pro-f e s s i o n a l responsi-b i l i t i e s Everyone's concern. Safety commi-tee and pro-fessional committees eg. Infection control I.V. admini-s t r a t i o n , patient care. Safety and professional committees eg. Pharmacy & Thera-peutics, Intravenous Safety comm-tee, int e r n a l responsi-b i l i t i e s . Safety every-one's busi-ness- p r i n c i -ples as good as people using them; delegated f u n c t i o n a l l y . Dept. res-p o n s i b i l i t y , committees i n t e r n a l & interdept. as needed. Dept. respon-s i b l e . In-terdept com-mittee as needed. Dept. respon-s i b l e . In-terdep com-munication as needed. I o TABLE EIGHT CONTINUED CATEGORY HOSPITAL A HOSPITAL B Administrator Nursing Pharmacy Housekeeping Administrator Nursing Pharmacy Housekeeping Organiza-t i o n a l : Accounta-b i l i t y Must be able to j u s t i f y services & qu a l i t y of services. Public more aware of hos-p i t a l , board; more v i s i b l e & demanding more from ad-mi n i s t r a t i o n . Med. S t a f f More Admin, i n t r u s i o n . More admin, co n t r o l , necessity for documentation Control Process Very necessary -hospitals more complex Necessary Necessary Necessary Require some form of moni-to r i n g , w i l l vary by i n s t i t u t i o n s Develop pro-f e s s i o n a l l y dept. moni-tors them-selves For some places Sometimes a l l need a watch-dog Risk Management: Differences to US A matter of degree; how, what s t r a t e -gies used. More formal-ized & com-prehensive. More advanced. Better capa-b i l i t y of enforcing p o l i c i e s & procedures. Don't know Few d i f f e r e n -ces, or un-c l e a r . Don't know Don't know I TABLE EIGHT CONTINUED CATEGORY HOSPITAL A HOSPITAL B Administrator Nursing Pharmacy Housekeeping Administrator Nursing Pharmacy Housekeeping Strategy Rating for B.C. US more ag-gressive than Canada, an offensive move. No comment. S h i f t to e f f i c i e n c y . S h i f t to consistency. Not a s h i f t , only formal-i z i n g what i s done now. A defensive s h i f t . Don't know. Don't know. High J u s t i f i a b l e i f caught loopholes i n present system High High High for some hos p i t a l s . High Maybe high for some. Depends on h o s p i t a l . - 112 -reference were to investigate, plan and implement those measures that would reduce the frequency of r i s k related accidents and help to maintain insurance costs at a reasonable l e v e l . A formalized Risk management program has not been implemented. The Risk Manager serves on r i s k - o r i e n t e d committees (e.g. safety, employee rela t i o n s ) and screens reports of incidents that may lead to a claim against the h o s p i t a l . A l l of Hospital A's respondents demonstrated f a m i l i a r i t y with the concept of Risk Management. Although they had d i f f e r i n g d e f i n i t i o n s , they appeared to have a clear conception of what a " r i s k " was — and that the management included varying degrees of "doing something about i t " . Further questioning elucidated the methods used in i d e n t i f y i n g r i s k s . The most common were the reports ( s t a f f and hazard) received by the safety committee and the d i f f e r e n t types of inspections ( i n t e r n a l and external) and audits. The other methods used were review of incident reports, employee health reports and departmental reports. Monitoring the r i s k s i t u a t i o n s was handled in various ways that included q u a l i t y assurance and audits (professional departments), and measurement of standards and supervision (non-professional departments). Education and counselling were seen to be key factors i n correcting an unacceptable standard. The safety committee was deemed important and i n f l u e n t i a l in keeping s t a f f aware of safety and for acting upon the complaints they received. The hospital adminstration and other departments had established p o l i c i e s , procedures, and standards. Of a l l types l i s t e d in the survey, - 113 -nine (9) were not written. However, the two (2) professional departments both added s i g n i f i c a n t policy l i s t i n g s . A l l of the p o l i c i e s and procedures were developed through committee structure. A l l the l i n e managers thought that most p o l i c i e s , procedures had a safety focus. The chief executive o f f i c e r tended to view them from an organizational/administrative viewpoint. Enforcement of these p o l i c i e s was a major task. Evaluation and feedback was done primarily by the l i n e manager or occasionally through committee structure. The Risk Manager reviewed the available data and reported s i g n i f i c a n t events to the Executive Committee. In respect to legal aspects, none of the respondents had any major concerns. The administrator interviewed thought the ho s p i t a l had "fared" well as far as number and type of claims. His major complaint was that hospitals were often named on a writ when i t was a medical concern. This cost the hospital in terms of time to carry out an i n v e s t i g a t i o n . At t h i s time, there were no sa l a r i e d physicians on s t a f f apart from the Medical Director and t h i s was a s i t u a t i o n the board and administration wanted to maintain. Employee obligations/duties were lar g e l y a departmental concern. This was confirmed by the l i n e managers, although the two (2) professional managers also considered i t a professional r e s p o n s i b i l i t y . F i n a l l y , the Chief Executive O f f i c e r thought i t important to communicate regularly with the hospital attorney. This person should be aware of what the major events/concerns were. The Risk Manager should also have easy access to the ho s p i t a l attorney. - 114 -From a f i n a n c i a l viewpoint, none of the respondents could i d e n t i f y actual costs of implementing a Risk Management program. The "costs" were thought to be too d i f f u s e and spread amongst many employees in many departments. One manager thought that the only a d d i t i o n a l cost of a formalized program might be the additional documentation as other mechanisms were already in place. The adminstrator thought there was a f i n a n c i a l incentive in promoting Risk Management because t h i s was the age of consumerism. The administrator believed that the hospital insurance program was comprehensive and that no changes were required. He also believed that the insurance premium was based upon the hospital's performance, the services i t offered (e.g. number of high r i s k areas) and what was happening in the hospital industry in general. Safety and security issues were largely the r e s p o n s i b i l i t y of the Safety Committee. Since t h i s committee had representation from every Department and a l l l e v e l s of the hospital hierarchy, i t was f e l t to be e f f e c t i v e and i n f l u e n t i a l in maintaining and promoting prevention a c t i v i t i e s . In addition to t h i s , each department had some method of planning and monitoring safety a c t i v i t i e s . This included patient care, employee and v i s i t o r r elated issues. There was also a mechanism for interdepartmental cooperation and coordination as the need arose. Organizationally, a l l the respondents f e l t that the board, and in p a r t i c u l a r , administration were in a position to j u s t i f y the services and the q u a l i t y of services rendered. In turn, the l i n e managers f e l t they had been delegated r e s p o n s i b i l i t y and - 115 -authority for operational matters within t h e i r j u r i d i c t i o n . It i s i n t e r e s t i n g to note that the managers of the professional depart-ments responded more in the context of professional standards while the non-professional manager spoke of complying with i n t e r -nal and Worker's Compensation Board p o l i c i e s . A l l respondents spoke p o s i t i v e l y about both professional and union a c t i v i t i e s . The professional a c t i v i t i e s , p a r t i c u l a r l y regarding c l i n i c a l issues, were seen as contributing to the quality of patient care. The hospital administrator did think that in the past few years, there had been more administrative i n t r u s i o n into medical a c t i -v i t i e s . This was largely because hospitals were being named as co-defendents in medical malpractice s u i t s . It was f e l t that union a c t i v i t i e s generated more employee p a r t i c i p a t i o n and r e s p o n s i b i l i t y and had assisted in improving services by promoting a safer environment, and thus "safer" patient care. This type of a c t i v i t y was not seen as contributing toward or i n h i b i t i n g the implementation of Risk Management programs. F i n a l l y , a l l respondents agreed that a control process such as Risk Management was e s s e n t i a l in the hospital s e t t i n g . Because they considered t h e i r present a c t i v i t i e s as less formal-ized and less comprehensive than in the United States, they consi-dered that Canadians ( B r i t i s h Columbians) should be more proactive on t h i s issue. In addition, t h i s should not be looked upon as a defensive strategy — but a offensive move that would f a c i l i t a t e consistency and improve e f f i c i e n c y . In t h i s respect, a l l - 116 -respondents rated the need to move toward a formalized Risk Management as a high p r i o r i t y . Hospital B Hospital B i s the f a c i l i t y without a designated Risk Manager. They have, however, established mechanisms i n order to promote preventive practices that lead to a safe hospital environment. These w i l l be delineated shortly. The respondents from hospital B demonstrated varying degrees of f a m i l i a r i t y with the concept of Risk Management. Two (2) of the l i n e managers had not heard about i t in any context p r i o r to the investigator's contact. One of the managers had heard and read about i t and gave one of the common d e f i n i t i o n s . This i n d i v i d u a l also suggested that the term " r i s k " could be confusing and because of the complexity of the hospital s e t t i n g gave too broad a base for a viable program. She also thought that i t had a negative connotation. The hospital administrator (chief executive o f f i c e r ) related the preventive practices to insurance coverage and f i n a n c i a l l o s s . As noted e a r l i e r , mechanisms were i n place to promote preventive a c t i v i t i e s . The most common method of i d e n t i f y i n g safe or unsafe practices was through d i r e c t s t a f f reporting and supervisory type of a c t i v i t i e s including inspection. Other incidents or patterns were i d e n t i f i e d through committee discussion and reports, analysis of incident reports, departmental reports, and external agency reports (e.g. WCB). The administrator stressed that these type of a c t i v i t i e s were only as good as the - 117 -people using them. Monitoring safety practices was largely a departmental concern and handled in a variety of ways. Audits had been introduced in the nursing and medical departments. Recently, nursing has also i n i t i a t e d a quality assurance program. The professional departments were expected to follow professional standards. Training and educational a c t i v i t i e s were considered to be key elements in monitoring and managing " r i s k " areas. There was a strong b e l i e f by one (1) manager that developing awareness would help to change behaviour. Administration and other departments have developed p o l i c i e s , procedures and standards. Of the twenty eight (28) l i s t e d , there were no indexes for ten (10). Each of the l i n e managers i d e n t i f i e d additional p o l i c i e s which could be s i g n i f i c a n t to Risk Management. A l l of the procedures and standards were developed through departmental delegation. The emphasis-safety, administrative e f f i c i e n c y or other-depended on the type of policy and the frame of reference of the i n d i v i d u a l who developed i t . The departments were also delegated the r e s p o n s i b i l i t y of enforcement. The l i n e managers f e l t that the p o l i c i e s , procedures and standards were e f f e c t i v e . The hospital administrator, once again, stressed that the p o l i c i e s et a l were only as e f f e c t i v e as the people using them. He conjectured that there would probably be gaps in t h e i r use and enforcement. Evaluation and feedback was done primarily by the l i n e manager and sometimes through committee structure. Committees were also used for interdepartmental concerns. The senior executive s t a f f rarely became involved in the process. - 118 -In respect to l e g a l aspects, none of the respondents had any major concerns. The administrator stated that l i a b i l i t y for personal injury was not a problem. The greatest concern was loss of property such as patients' dentures, glasses and rings. Patient care, i n general, was not a l e g a l concern. The administrator did state some concern for the medical s t a f f ' s resistance to such a c t i v i t i e s as peer reviews. Employee duties/obligations were a departmental concern. Once again, the professionals were expected to be self-motivated in keeping abreast of l e g a l issues. However, one (1) of the managers f e l t t h i s was not c a r r i e d out to the degree i t should be. The manager of the non-professional department thought i t was his duty to inform his s t a f f about le g a l considerations. Most of t h i s information was related to Workers' Compensation regulations. F i n a l l y , communication with the hospital attorney occurred on a need basis. If a claim was involved, the insurance lawyer was included in the i n v e s t i g a t i o n . However, the role of the h o s p i t a l s t a f f was perceived to be just to provide the requested data. From a f i n a n c i a l viewpoint, none of the respondents wanted to speculate about the costs of a Risk Management program. Two of the l i n e managers did not anticipate a d d i t i o n a l costs because from what had been discussed thus f a r , i t appeared that they had the elements of a Risk Management program. The other l i n e manager thought that additional costs might be needed for more s t a f f and t r a i n i n g programs. Not to implement Risk Management translated into maintaining the status quo. The hospital administrator - 119 -declined discussion of cost unless boundaries and terms of reference were established. He did not see any incentives to move toward Risk Management ( f i n a n c i a l or otherwise) and questioned whether i t was wise to delegate the management of r i s k s to one person ( i e . i t should be everybody's business). The administrator also thought that the present insurance program was comprehensive and met the needs of the h o s p i t a l . He believed that the insurance premium was related to what was happening in the hospital industry and speculated that other factors might be included since insurance was a f o r - p r o f i t business. It was c l e a r that safety and security issues were a r e s p o n s i b i l i t y of the l i n e managers. The hospital administrator confirmed t h i s p r a c t i c e . In turn, issues that required discussion were handled i n t e r n a l l y , within a s p e c i f i c department, and generally on a one to one basis. If other departments were involved, either a committee or d i r e c t contact with the s p e c i f i c manager(s) involved resolved the problem. Once again the administrator emphasized that safety was everyone's business, and that safety p r i n c i p l e s were only as good as the people using them. Organizationally, the administrator thought that the public was now more aware of the hospital and i t s functions. The hospital board had become more v i s i b l e and because of t h i s was demanding more from administrators in a l l areas of hospital operations. The l i n e managers thought they had been delegated f u l l r e s p o n s i b i l i t y and authority for a l l professional and departmental operations. This also translated into having t o t a l - 120 -d i s c r e t i o n over how r i s k s i t u a t i o n s should be managed. There were mixed reactions toward the question r e f e r r i n g to the impact of professionals and unions. The professional managers valued the input of t h e i r professional s t a f f i n decisions about departmental a f f a i r s . The unions, or rather the r e s u l t s of the c o l l e c t i v e bargaining process, were considered a fact of l i f e , something you had to abide by. One manager stated that c o l l e c t i v e bargaining may have contributed to an improved working environment and s t a f f scheduling but i t also contributed to low morale because the combination of high wage settlements and a recent r e s t r a i n t program necessitated many s t a f f l a y o f f s . The h o s p i t a l administra-tor expressed concern that professional standards were losing t h e i r grip because of union demands. To the organization ( h o s p i t a l ) , t h i s was a counter productive element. The adminis-t r a t o r also stated that there was l i k e l y to be more and imposed administrative control over the medical s t a f f and p a r t i c u l a r l y a need for more documentation from medical s t a f f committees as more pressure was placed on the board to j u s t i f y quality of service. F i n a l l y , there were varying degrees of agreement regarding the need for a control process in the hospital s e t t i n g . The administrator thought some type of monitoring was needed although i t would vary by h o s p i t a l . His general f e e l i n g was that the human element (for mistakes, accidents) would always be present, could not be c o n t r o l l e d , and one would have to hope that the "reasonable man" standard would p r e v a i l . The l i n e managers a l l had d i f f e r e n t opinions. One of the managers (professional department) f e l t that - 121 -controls were necessary but should be monitored by the professionals. Another f e l t that some hospitals would benefit from such a process. He did not think that Hospital B needed Risk Management. The t h i r d manager thought that everyone needed a watchdog some of the time. The respondents saw none or few differences between t h e i r perception of Risk Management and what they were doing at present. I n t e r e s t i n g l y , a l l but one ( 1 ) l i n e manager considered that i t was a high p r i o r i t y for hospitals to move toward Risk Management programs. The reason for t h i s discrepancy was that two of the respondents thought other hospitals (and i n d i r e c t l y , Hospital B) would benefit more from the structure. One respondent thought i t was necessary for Hospital B to move toward Risk Management because public pressure was beginning to demand i t . The one dissenting manager stated i t was not a high p r i o r i t y for Hospital B but might be useful to some of the other h o s p i t a l s . 2 . The Lawyers (Table Nine summarizes responses from the lawyers and insurance representatives) Lawyer A had been i n private practice for several years and had acted as counsel for both patients and h o s p i t a l s . In more recent years he has worked with government agencies as a l e g a l consultant for health care issues. He described Risk Management as es t a b l i s h i n g p o l i c i e s and procedures to protect the organization (hospital) from exposure to l e g a l s u i t . From a l e g a l perspective, he was concerned that issues r e l a t i n g to systems within the hospital setting were not being TABLE NINE SUMMARY OF SELECTED RESPONSES BY LEGAL AND INSURANCE REPRESENTATIVES CATEGORY LAWYER A LAWYER B INSURER A INSURER B General: D e f i n i t i o n Establishing p o l i c i e s , procedures to protect the hospital from l e g a l s u i t . Assumes i t refers to monitoring functions within h o s p i t a l . I d e n t i f y i n g , moni-t o r i n g , evaluating, and taking c o r r e c t i v e action for r i s k s i t u a t i o n s . Decreasing r i s k s i t u a -t ions and thereby decreasing p o s s i b i l i t y of f i n a n c i a l l o s s . Legal: Concerns Consistency in doing peer reviews, review-ing bylaws, p o l i c i e s , access and confiden-t i a l t y of medical records, elements present that provoke increase in l e g a l s u i t s . D i f f e r e n t i a t i o n of roles in corporate structure, l i a b i l i t y of hospital trustees, information manage-ment, decreasing standards of care, impact of labor issues P o t e n t i a l to follow US pattern, many gaps i n present control mechan-isms, dealing with more aggressive public and lawyers. Need to monitor le g a l cases, no major concerns - Canada w i l l not follow US pattern because of financing formulae C o n t r o l l i n g L i a b i l i t y Hospital should retain lawyer s k i l l e d in health law, who at-tends professional seminars, conducts l e g a l audits of hos-p i t a l s ' p o l i c i e s and procedures, encourag-es to become human again in t h e i r patient r e l a t i o n s h i p s . Lawyers (hospital) could be more active by informing hospitals of changes in l e g i s -l a t i o n , monitoring l e g a l cases and con-ducting legal audits. F u l l y support need to become more s o p h i s t i -cated i n control pro-grams. Hospitals in a bubble about to burst -w i l l soon f e e l s o c i a l impact of public, law-yers and judges. L i a b i l i t y not a prob-lem in B.C. Hospitals, have mechanisms for providing high stand-ard of care. TABLE NINE CONTINUED CATEGORY LAWYER A LAWYER B INSURER A INSURER B Educational Role Attorney Relationship Continuing education on legal aspects im-portant on regular basis (informed and formal). On i n v i t a t i o n a l basis-but important. Very important - and part of company's r o l e / p o s i t i o n . Firm has the resources to help. Only within the i n -surance framework. Health Association should take the lead. Hospital lawyer should v i s i t regularly - know i t s u f f i c i e n t l y well to be able to i d e n t i f y l e g a l r i s k s . Hospital lawyer con-tacted on need basis. Larger hospitals should consider i n -house attorney. Attorney retained to review claims, provide consultant services for program. Attorney retained to review claims. Hos-p i t a l s should have own attorney. F i n a n c i a l : Premium Incentive Based on hospital s i z e , service, performance, ho s p i t a l industry, type of employees and other f a c t o r s . Not righ t now, firm's program and marketing may be influencing competitor to keep pre-miums down. Questions gov't r o l e . Based on hos p i t a l s i z e . None - coverage adequate at very reasonable cost. TABLE NINE CONTINUED CATEGORY LAWYER A LAWYER B INSURER A INSURER B Organizational Needs to be resolved: granting of p r i v i l e g e s and to what extent re-lat i o n s h i p i s changing. Es s e n t i a l to close gaps in present system This area has the greatest potential to change dramatically. Some form of consis-tent monitoring re-quired . Requires monitoring but not the greatest con-cern right now. Require more than basic insurance - need a co n t r o l program. Requires c a r e f u l moni-t o r i n g - t h i s i s what could change insur-ance management. Mechanisms i n place now to provide high standard of care. Relationships: (Dr./Hospital) Control Process Risk US organized, formal-ized. Someone i s accountable for clo s -ing the loopholes. Don't know Level of s o p h i s t i -c a t i o n , coverage and ser v i c e . Don't know - achieving high standards i s the important thing. Management: Differences to US Strategy Rating for B.C. Need to change -hospitals leaving themselves open to l i t i g a t i o n , present system inadequate. Changes required that w i l l address concerns. May not be incentive to change - but need i s there. Only need to change i f known i t would increase q u a l i t y of care. HIGH R.M. could help in monitoring function, but not r e a l l y essen-t i a l or high p r i o r i t y . HIGH NONE - not convinced R.M. has done much for c o n t r o l l i n g l i a b i l i t y , patient care i s the issue and i f that i s taken care of - so i s l i a b i l i t y . - 125 -addressed adequately. Some examples of these issues included consistency in doing peer reviews and audits, consistency in reviewing hospital bylaws and p o l i c i e s , and access to and c o n f i d e n t i a l i t y of medical records. At present, he did not think i t was l i k e l y that B r i t i s h Columbia hospitals would experience a l i a b i l i t y problem of a magnitude si m i l a r to the United States. However, he thought there were many of the elements present. These included advancements in medical technology, breakdown in communication, high expectations and a l i t i g i o u s environment. He noted that the deterring factors were no jury duty ( j u r i e s tend to favour the p l a i n t i f f ) , the National Health Insurance scheme, and the fact that there were many more lawyers in the United States who a c t i v e l y looked for people i n a po s i t i o n to sue. Lawyer A also thought that i t would be advantageous for hospitals to obtain and use t h e i r l e g a l counsel more wisely. This incorporated retaining lawyers s k i l l e d in health law, encouraging them to attend and report on professional health law seminars, commanding leg a l audits on hospital p o l i c i e s and procedures on a regular basis, receiving assistance i n developing consent manuals and requesting both formal and informal educational seminars on l e g a l aspects for the hospital s t a f f . He also thought that the hospital attorney had a role in i d e n t i f y i n g l e g a l r i s k s for the h o s p i t a l . In t h i s respect the attorney should be a regular v i s i t o r to the hospital and know i t s u f f i c i e n t l y well to provide l e g a l advice. The larger hospitals should consider employing an in-house attorney. - 126 -In response to questions related to organizational issues, lawyer A's chief concern was that the doctor-hospital r e l a t i o n s h i p had to be examined and resolved. This included examining such aspects as the extent to which the r e l a t i o n s h i p had changed and the method of granting and renewing medical p r i v i l e g e s . Lawyer A did not think that the professional or union demands were of concern at present. However, there was a p o t e n t i a l for serious c o n f l i c t i f quality care issues were negotiated at the bargaining t a b l e . F i n a l l y , Lawyer A was of the opinion that a formalized and organized process such as Risk Management was required in B r i t i s h Columbia h o s p i t a l s . Someone should be accountable for closing the loopholes in the present system. To not change the inadequacy of the present system would be to sanction leaving the hospitals open to l i t i g a t i o n . Lawyer B Lawyer B had been in practice for several years and had both patients and hospitals as c l i e n t s . She was not f a m i l i a r with the concept of Risk Management although assumed i t related to monitoring functions carried out in the hospital s e t t i n g . As a lawyer working with health care c l i e n t s , her chief concerns were the unsettled state of health care issues that had a l e g a l impact. The d i f f e r e n t i a t i o n of society, administrative and government roles within the corporate structure, the l i a b i l i t y of h o s p i t a l trustees, c o n f i d e n t i a l i t y of medical records, decreasing - 127 -standards of care and the f i n a n c i a l impact of labor disputes were some of the issues mentioned. Lawyer B did not think that B r i t i s h Columbia hospitals were in a position to experience a serious l i a b i l i t y problem because there were too few successful cases, the costs were high and the awards low, the national insurance system acted as a psychological deterrent, B r i t i s h Columbians were not a l i t i g i o u s society, and s u i t s were often the r e s u l t of interpersonal c o n f l i c t s that could be s e t t l e d out of court. Lawyer B also thought the hospital attorney could be of more assistance in c o n t r o l l i n g l i a b i l i t y . At present, lawyers are often c a l l e d in after a problem has arisen. However, the attorney could monitor and inform the hospital about the outcomes of applicable cases, inform the h o s p i t a l about changes in l e g i s l a t i o n and review hospital p o l i c i e s from a l e g a l perspective. The attorney could also be i n v i t e d to provide educational seminars. Large hospitals should consider retaining an in-house lawyer. Small and average sized hospitals should r e t a i n a lawyer and contract on a need-be basis. The l a t t e r incorporates presentative measures that use the attorney to help control l i a b i l i t y . Regarding, the organizational issues, Lawyer B thought that the whole area of doctor-hospital r e l a t i o n s h i p s and accountability was wide open and had the p o t e n t i a l to change dramatically over the next few years. A c r i t i c a l d e t a i l would always be what the hospital undertakes to do. Lawyer B did not think that professional or union demands were of p a r t i c u l a r concern at - 128 -present. From a c o l l e c t i v e bargaining point of view, hospitals did not have the authority to give control of standards to unions or p r a c t i t i o n e r s other than what was already covered i n the various p r a c t i t i o n e r acts. F i n a l l y , Lawyer B did not have any firm opinion about the need for Risk Management. Although changes were necessary, she was not f a m i l i a r enough with Risk Management to state whether i t would make a di f f e r e n c e . 3. The Insurance Representatives  Insurer A Insurer A i s a representative of a firm that o f f e r s Risk Management/Insurance Brokerage Services, and management consultant services p a r t i c u l a r l y i n the areas of employee benefits and loss c o n t r o l . The firm has been attempting to i n t e r e s t B r i t i s h Columbian hospitals toward implementing Risk Management. Insurer A described Risk Management in terms of i d e n t i f y i n g , monitoring, evaluating and taking c o r r e c t i v e action for unplanned, amd unwarranted (risk) s i t u a t i o n s . He stated that his impression was that the concept was not well known and not at a l l practiced in the B r i t i s h Columbia hospital industry. However, through his contacts with hospital and government representatives, a d e f i n i t e i n t e r e s t in the topic had been expressed. For Insurer A, marketing insurance coverage was considered to be only one aspect to the tasks set before him. He was concerned that there were so few insurance c a r r i e r s w i l l i n g to - 129 -provide l i a b i l i t y coverage for ho s p i t a l s . He was equally concerned that there were i n s u f f i c i e n t c a r r i e r s with the f i n a n c i a l s e c u r i t y to provide adequate coverage for h o s p i t a l s . Stated i n another form, he was concerned about the insolvency of c a r r i e r s presently providing hospital coverage. For these type of reasons, his firm has taken an affirmative position on Risk Management. It i s the firm's hope that with a move toward Risk Management, more of the secure insurance c a r r i e r s w i l l re-enter the market. Insurer A's firm has developed an in-house 'control' program that incorporates i d e n t i f y i n g conditions that may lead to lo s s , reducing the chance of loss through prevention a c t i v i t i e s , minimizing the ef f e c t of loss i f i t occurs and f i n a n c i a l planning for l o s s . This i s supplemented by an external professional team that can provide loss control assistance. Educational assistance would also be provided through t h i s resource team. The r i s k financing (insurance purchase) aspect i s planned in conjunction with the firm. An assessment i s completed that considers such factors as hospital s i z e , type and number of services, numbers and types of employees (including students), the hospital's past performance, type of policy (claims vs. occurrence), and general i n d i c a t o r s in the hos p i t a l industry. The compilation and review of these factors r e s u l t s in the development of a comprehensive insurance plan with a premium adjusted to r e f l e c t the amount of the hospital's r i s k t r a n s f e r . There i s only one major competitor for r i s k transfer plans in B r i t i s h Columbia. Insurer A believed that his firm's marketing of Risk Management had kept hospital - 130 -insurance premiums at below market value. This l e f t the hospitals with no present f i n a n c i a l incentive to move toward Risk Management. He also questioned whether government, during a time of economic r e s t r a i n t , would allow apportionment of costs to a new program. Regardless, Insurer A thought there were numerous advantages for the firm, insuring agency and hospital to implement a control program such as Risk Management. The advantages include less l i k e l i h o o d of high indemnity claims, more insurance c a r r i e r s i n the market, more p r o b a b i l i t y of p r o f i t s and a more secure income from the consulting component. In addition, the hospitals had the benefit of using the expertise and experience of t h e i r American counterparts and closing the gaps in t h e i r presently unsophisticated methods. They could manage r i s k s and prepare for the increasing aggressiveness of the public and the lawyers. The l a t t e r i s viewed as an impact r e s u l t i n g from s o c i a l i n f l a t i o n . I f anything, i t underlines the inadequacy of a basic insurance coverage and stresses the need for a more comprehensive control program. Insurer B Insurer B i s a representative of a firm that o f f e r s primarily Insurance Brokerage Services. The firm represents the majority of B r i t i s h Columbian acute care hospitals and does not have an o f f i c i a l position on Risk Management for Canadian h o s p i t a l s . Insurer B described Risk Management as a method of decreasing r i s k s i n order to decrease the l i k e l i h o o d of f i n a n c i a l - 131 -l o s s . He considered the l e v e l of knowledge amongst hos p i t a l administrators as being generally low. However he considered t h e i r l e v e l of practice, or methods that they were presently using, as being generally high. Insurer B thought that the B r i t i s h Columbian standard of hospital care was very good. Marketing insurance or r i s k transfer plans was Insurer B's primary r e s p o n s i b i l i t y . Educational services could be provided within the insurance framework, but generally, he thought that t h i s should be a function of the Health Association. He was not p a r t i c u l a r l y concerned about the number of insuring agencies in the market. He stated that some underwriters had cash flow problems and did not follow p r i n c i p l e s . However, t h i s did not automatically r e s u l t in increased premiums or an insurance crunch. He s t i l l had the maneuverability to negotiate a comprehensive insurance plan at a very reasonable premium for his hospital c l i e n t s . The premium i s based upon hospital s i z e . Insurer B was responsible for designing the insurance package, answering c l i e n t s ' questions and providing reassurance about the coverage. He stated that there was f l e x i b i l i t y within the basic design so that a policy could be developed to meet a hospital's needs. Insurer B did not think there were any incentives for h o s p i t a l s to implement Risk Management. He noted that monitoring and improving the quality of care was important and thought Risk Management might a s s i s t in that respect. He i s unconvinced that Risk Management has been e f f e c t i v e in c o n t r o l l i n g l i a b i l i t y . - 132 -Furthermore, he did not think c o n t r o l l i n g l i a b i l i t y would ever become a problem in B r i t i s h Columbia or anywhere in Canada because of the type of hospital financing. He thought that the only s i t u a t i o n that might t r i g g e r a sudden increase in premiums would be a decision by the courts to change the independent contractor status between doctor and h o s p i t a l . For the time being, he believed hospitals' were maintaining high standards of care and there was no urgency to consider Risk Management or make provisions for changes in a premium adjustment for those hospitals who decide to implement Risk Management. D. Discussion The discussion w i l l take the approach of a comparative analysis incorporating issues a r i s i n g from the l i t e r a t u r e review and r e s u l t s from the case study. I t i s subdivided into three (3) areas: the concept, the major considerations and the need for a co n t r o l process such as Risk Management in B r i t i s h Columbia h o s p i t a l s . 1. The Concept Three issues warrant further discussion. These include the d e f i n i t i o n ( s ) , process and evaluation of Risk Management as a process. D e f i n i t i o n s should provide c l a r i t y of meaning. This was not be found during t h i s i n v e s t i g a t i o n of Risk Management for Hospitals. Certainly there are commonalities in the d e f i n i t i o n s that were presented in Chapter I I . However, i t was also evident - 133 -that the various writers had d i f f e r e n t f o c i when addressing the term Risk Management. For example, preventative medical malpractice was a common focus, loss control and loss t r a n s f e r , another, while a t h i r d author addressed preventing people problems. Although the v a r i a t i o n provides some o r i g i n a l i t y , i t also confuses the reader who i s l e f t wondering about the parameters of Risk Management. This i s confirmed by the respondents in the case study. Each i n d i v i d u a l described Risk Management in a d i f f e r e n t manner. Once again, the d i f f e r e n t f o c i were present — promoting patient safety, reducing r i s k s to reduce l o s s , and protecting the h o s p i t a l . One respondent related her confusion about the concept. She also expressed concern regarding the negativism associated with the term " r i s k " . It was not a term that would i n s t i l l confidence in a public that was becoming increasingly aggressive and angry. The concept, whatever i t i s c a l l e d , should be f l e x i b l e and adaptable to each organization i f i t i s to survive. Moreover, i t should also have a clear d e f i n i t i o n and purpose i f i t s underlying p r i n c i p l e s are to be c o r r e c t l y applied. The Risk Management process has several i d e n t i f i a b l e steps. Unsurprisingly, the steps may vary according to the p a r t i c u l a r author being read. Whatever the d i v i s i o n , the methods of i d e n t i f y i n g r i s k s remain common. The more popular include incident reporting, audits, s t a f f and committee reports, and inspection. Management of pot e n t i a l r i s k s often include quality assurance programs, education and counselling and development of - 134 -p o l i c i e s , procedures and standards. The obscure feature in a l l of t h i s i s the l e v e l of s o p h i s t i c a t i o n used in coordinating a l l of these a c t i v i t i e s . They can only be e f f e c t i v e i f there i s ongoing planning, coordinating and review. In the United States i t i s common practice for these functions to be carried out by a f u l l time Risk Manager. The hospital respondents in the case study were able to i d e n t i f y the same methods as measures they used to i d e n t i f y r i s k or problem type s i t u a t i o n s . However, Hospital A respondents, who were w i l l i n g to comment on differences between Risk Management and present practices, thought i t was a matter of comprehensiveness, organization and consistency. These c h a r a c t e r i s t i c s are probably more congruent with a f u l l t i m e Risk Manager. S i m i l i a r l y , Lawyer A and Insurer A, who were both f a m i l i a r with Risk Management, were able to i d e n t i f y the steps and the more common methods of i d e n t i -fying and managing r i s k s . The difference for them was in the l e v e l of s o p h i s t i c a t i o n and followthrough. U n t i l someone was delegated to "catch the loopholes," Canadian hospitals would continue to expose themselves to unnecessary r i s k s . There has been much written on Risk Management and most of i t s elements. One s a l i e n t observation has been the lack of empirical data to demonstrate the effectiveness of Risk Management programs. Indeed, following the review of the l i t e r a t u r e one s t i l l has to wonder i f Risk Management makes any difference and i f so, to what. It appears, that in the American context, Risk Management does make a difference to the f i n a n c i a l v i a b i l i t y of a - 135 -h o s p i t a l . However, i t i s less clear whether Risk Management tech-niques have increased safety and security practices and decreased l e g a l concerns. This confusion may be p a r t i a l l y directed to the equivocal parameters of Risk Management. These p e r p l e x i t i e s are confirmed in the responses obtained in the case study. Insurer B was not at a l l convinced that Risk Management would change the performance of the h o s p i t a l s . The hospitals thought they were doing an adequate and good job but could not a t t r i b u t e i t to anything as s p e c i f i c as Risk Management techniques. However, Risk Management has continued to thri v e in the United States. It may be that i t i s very e f f e c t i v e or i t may be that there i s a lack of other alte r n a t i v e s or that environmental pressures d i f f e r . 2. The Major Considerations  Legal In the review of the American and Canadian legal systems several s i m i l a r i t i e s were noted. These s i m i l a r i t i e s included l e g a l structure, law as a r e f l e c t i o n of s o c i e t a l values and most s i g n i f i c a n t to t h i s study, the p o t e n t i a l f or h o s p i t a l l i a b i l i t y . Even though the public laws in each j u r i s d i c t i o n greatly inf l u e n -ced the application of the law, the le g a l concerns in r e l a t i o n to h o s p i t a l l i a b i l i t y were b a s i c a l l y the same. The courts' t r a n s l a -t i o n of corporate duties, vicarious l i a b i l i t y and corporate n e g l i -gence coupled with an unpredictable and seemingly aggressive society greatly enhanced the scope of hospital l i a b i l i t y . Alarmingly, some members of the Canadian l e g a l community were subtly suggesting in t h e i r writings that hospitals implement - 136 -mechanisms such as Risk Management or that they may be forced to do so. This type of posturing was not foreign to the hospital respondents, lawyer A or Insurer A. It seems that a threat, r e a l or perceived, was being f e l t . Aside from these general concerns, s p e c i f i c issues were brought forward. S i g n i f i c a n t among these was the c l a r i f i c a t i o n of the- hospital-doctor r e l a t i o n s h i p . In the United States there has been a tendency to find an employment r e l a t i o n s h i p between the h o s p i t a l and physician. The Canadian courts have been examining t h i s more in the context of corporate duties, regardless of whether the action i s performed through independent contractors or through the corporation's employees. At present, there does not appear to be clear d i r e c t i o n by the courts. However, the hospital administrators in the case study were c l e a r l y f e e l i n g the pressure to place more administrative controls on medical a c t i v i t i e s in the hospital s e t t i n g . The lawyers were equally concerned that i t was t h i s p a r t i -cular issue that had the potential to change the scope of hospital l i a b i l i t y dramatically. Two issues that were d i r e c t l y related to the hospital-doctor r e l a t i o n s h i p are informed consent and c o n f i d e n t i a l i t y of medical records. Once again, i t was the lawyers who were concerned about the urgency of coming to terms with them. In the United States, c o n t r o l l i n g hospital l i a b i l i t y i s a s i g n i f i c a n t problem and one that hospital administrators and other key figures have had to confront. Although there has been some - 137 -tension between the lawyers and health professionals, cooperation of key personnel has been s i g n i f i c a n t in working together in the development of Risk Management programs. By contrast, c o n t r o l l i n g l i a b i l i t y does not appear to have the same degree of concern in Canada. Hospital administrators viewed i t as a r e s p o n s i b i l i t y , but in general, not a problem. It has been the l e g a l community which has expressed the concerns regarding the p o t e n t i a l for increasing the scope of hospital l i a b i l i t y . This was confirmed by the h o s p i t a l respondents and Insurer B who f e l t that h o s p i t a l s were doing a good job and that hospital l i a b i l i t y was not a prob-lem. The h o s p i t a l respondents did f e e l somewhat uneasy with the changing environmental climate ( i . e . public attitude and expecta-tions) , but e s s e n t i a l l y thought they were carrying out t h e i r duties. Both lawyers expressed a need and means to address t h e i r concerns regarding hospital l i a b i l i t y . Insurer A was equally concerned that hospitals were " i n a bubble about to burst" and that hospitals had better prepare themselves for the i n e v i t a b l e . F i n a n c i a l The American hospitals are expensive and v i s i b l e enter-prises that receive frequent c r i t i c i s m s regarding t h e i r ever increasing costs. Their methods of financing and r a i s i n g revenues has been dependent upon the type of h o s p i t a l . Increas-i n g l y , federal government programs have become involved in the financing which, then, have exposed the hospitals to more forms of controls and regulations. The American public has viewed the hospital industry as being capable of absorbing large costs. - 138 -Financing loss has always been a r e s p o n s i b i l i t y of the hospital administrator and accomplished through r i s k transfers or insurance management. This proved inadequate during the insurance/Malprac-t i c e c r i s i s of the 1970's. At present, Risk Management programs (within the hospital) are considered to be a condition of coverage for hospitals applying for insurance coverage. The Canadian s i t u -ation has several d i s t i n c t variances. A l l acute care hospital c a p i t a l and operational revenues have been "negotiated" through government financing. Philanthropic e f f o r t s have been lar g e l y i n s i g n i f i c a n t . Although the federal and p r o v i n c i a l governments have not enacted numerous controls/regulations, i t has been obvious that the p r o v i n c i a l governments "guard the purse s t r i n g s " . I n d i r e c t l y , and to varying degrees of success, govern-ment has controlled the number and type of services of each ho s p i t a l in a province. Canadian hospital administrators have also considered loss financing to be one of t h e i r r e s p o n s i b i l i -t i e s . However, in B r i t i s h Columbia, the case study respondents noted that loss financing and r i s k transfer were not a problem. Hospital administrators were able to purchase what they considered to be comprehensive coverage at a very reasonable rate and without any conditions for r i s k control programs. This was confirmed by Insurer B, the insurer for the majority of hospitals in the province. Insurer A was less o p t i m i s t i c about the s t a b i l i t y of insurance premiums and the present methods of r i s k c o n t r o l . His p o s i t i o n was that i f the hospital administrators were aware of the f i n a n c i a l security of t h e i r insurance c a r r i e r , they would not f e e l - 139 -so self-assured. Insurer A was also concerned that the current, t i g h t government controls on hospital costs provided a deterrent for hospitals to move toward Risk Management. He stressed the inadequacy of the present methods to deal with the complexities of the modern h o s p i t a l . Safety and Security American hospitals have for many years focused on estab-l i s h i n g a safe and secure environment for patients, employees and v i s i t o r s . The intent has been that a l l i n d i v i d u a l s who enter ther hospital environment should be aware of the actual and potential problems that could r e s u l t in personal injury, property damage or other forms of l o s s . This has included the concerns related to s p e c i f i c areas such as f i r e prevention, i n f e c t i o n control and disaster planning. In p r a c t i c e , there appears to have been prob-lems in achieving compliance in working toward these goals. The Canadian response to safety and security has been quite s i m i l a r . It i s believed that regulations and accreditation standards have s i g n i f i c a n t l y improved p r a c t i c e s . The respondents in the study expressed d i f f e r i n g opinions regarding the state of the a r t . Insurer B thought B r i t i s h Columbia hospitals were maintain-ing high standards. The hospital personnel (administrators and l i n e managers) thought they were generally doing a good job. Although each hospital managed safety and security in a d i f f e r e n t manner, both hospitals emphasized the need for s t a f f involvement. Their b e l i e f was that safety should be every person's business. They concurred that consistency in practice and enforcement was an - 140 -ongoing problem. By contrast, Insurer A and the lawyers thought the hospitals could do more both in the areas of organization and p r a c t i c e . Organizational An American hospital corporation can be described as a semibureaucratic organization with a splintered authority struc-ture. Similar to other industries or corporations i t has numerous demanding pressures placed upon i t that have often originated from a l e g a l or f i n a n c i a l base. Primary among these pressures has been a c a l l for accountability of safe and secure practices at reason-able cost. The " t r o i k a " had to respond to the growing environ-mental pressures. C o l l e c t i v e l y , and sometimes, i n d i v i d u a l l y , the response i n i t i a t e d by many hospitals was a control process in the form of Risk Management. The Canadian hospitals share a s i m i l a r structure and a s i m i l a r problems regarding increasing pressures for a c c o u n t a b i l i t y . A condition that may continue to complicate the r e s o l u t i o n of t h i s hospital a c c o u n t a b i l i t y issue has been the undefined role and accountability of government in hospital a f f a i r s . In t h i s respect, a difference in ideology was noted ... the American's preference for free enterprise v i s a v i s the Canadian's acceptance of state c o n t r o l . Unquestionably, the hospital respondents in the case study perceived an increased demand for accountability in a l l hospital operations. Both hos p i t a l administrators thought there would be increasing adminis-t r a t i v e intrusion into medical a c t i v i t i e s . Professional and union a c t i v i t i e s were a concern to them primarily because of t h e i r - 141 -f i n a n c i a l impact. However one of the hospital administrators pondered whether professional standards were losing out to union demands. Concurrently, one lawyer expressed concern regarding decreased standards of care. The greatest number of variances i n the responses was brought forward by the question regarding a need for a control process in the hospital s e t t i n g . Hospital B respon-dents had a q u a l i f i e d "yes" in that some form of monitoring was required some of the time in some places and sometimes by c e r t a i n groups, but Hospital B had developed strong decentralized p o l i c i e s generally (e.g. budgeting). A l l of Hospital A's respondents thought some form of control process or monitoring was necessary. Insurer B thought that i f a control process would help to maintain or increase quality of care, i t should be implemented. Lawyer A and Insurer A both regarded a cent r a l i z e d control process as a necessity for the modern h o s p i t a l . 3. The Need The need for a control process such as Risk Management in B r i t i s h Columbia hospitals w i l l be addressed from three (3) perspectives: the apparent differences between Risk Management and present practices, the need to change present practices and f i n a l l y , discussion of Risk Management as a reasonable a l t e r n a t i v e . The American hospital l i t e r a t u r e has outlined the various elements of i t s Risk Management programs. These elements vary according to the author and apparently, according to the needs of the i n d i v i d u a l h o s p i t a l . The Canadian hospital l i t e r a t u r e has - 142 -r e f l e c t e d minimal int e r e s t in the area of Risk Management. However, various elements (quality assurance, audits, education) are discussed from professional, administrative and organizational perspectives. Seemingly, the differences appear to be in acknow-ledging r i s k oriented programs, the degree of s o p h i s t i c a t i o n and the coordination of r i s k orientated a c t i v i t i e s . These types of differences were i d e n t i f i e d by the case study respondents who were most f a m i l i a r with the Risk Management concept. An additional perspective l i e in questioning whether Risk Management programs have had a difference on outcome. The degree of effectiveness i n the United States i s unknown. However, i t i s known that c o n t r o l l i n g l i a b i l i t y i s s t i l l a concern although apparently now to a lesser extent than during the malpractice c r i s i s . The degree to which Risk Management i s practiced in Canada i s unknown. Although in t e r e s t appears to have been increasing across Canada, there has been no evidence to suggest that hospitals have been implementing f u l l - s c a l e Risk Management programs. Aside from members of the legal community, there has been no v i s i b l e concern regarding hospital l i a b i l i t y . However, the majority of case study respondents seemed to agree that present practices could be better coordinated to ensure a more e f f e c t i v e outcome. The l a t t e r suggests that there may be a need for change. To examine the need for change, one must ascertain what incentives there may be to introduce change. The American hospi-t a l s had strong motivators in the form of increasing numbers of leg a l s u i t s and the i n a b i l i t y to purchase loss f i n a n c i n g / r i s k - 143 -t r a n s f e r programs. Risk Management became an administrative response and quickly became a condition for purchase of insur-ance. In Canada, there has been no discernable method of deter-mining whether hospital related s u i t s are on the r i s e . The l e g a l community has stated that the p o t e n t i a l i s there. Insurance premiums for Ontario hospitals rose dramatically during 1980-1981. In Ontario, there may be a f i n a n c i a l incentive to move toward Risk Management. However, from the majority of case study respondents, i t seems that there i s , at present, neither l e g a l or f i n a n c i a l incentives to more toward Risk Management in B r i t i s h Columbia. One respondent noted that there may be a moral incentive and as was previously noted, the hospital respondents were f e e l i n g some public pressure to increase t h e i r a c c o u n t a b i l i t y . It seems, therefore, that in describing a need for change, a cautious "maybe" might best be appropriate. C l e a r l y , there are arguments both for and against. There does, however, seem to be a climate for change. F i n a l l y , given that changes are l i k e l y to occur, i t w i l l be worthwhile to discuss Risk Management in terms of a reasonable a l t e r n a t i v e for B r i t i s h Columbia h o s p i t a l s . From the American l i t e r a t u r e , i t i s evident that Risk Management programs are used extensively. They are endorsed by the American Hospital Associa-t i o n , recommended by the Joint Commission on Accreditation of Hospitals and are an e s s e n t i a l condition to q u a l i f y for insurance coverage. Quantative data in terms of use, cost and effectiveness has not been available and may not have been evaluated. In the way of contrast, Canadian hospitals have not been obliged to - 144 -introduce Risk Management. The Canadian Hospital Association and the Association for Accreditation of Hospitals have not published formal positions either for or against Risk Management. Paul Brown, Assistant Executive Director of the Canadian Hospital Association (CHA) stated that t h i s did not mean Canadian hospitals should not be examining Risk Management. From the CHA perspec-t i v e , an i n v e s t i g a t i o n had not as yet been conducted as the basis for the issuing a policy statement. In addition, insurance cover-age can s t i l l be purchased without conditions for i n t e r n a l control procedures. However, the case study respondents recognized a need for some type of control process. One of the hospital administra-tors noted that Risk Management would provide an offensive strategy should the conditions in B r i t i s h Columbia change to demand a control process. One of the l i n e managers noted that, given the growing in t e r e s t in Risk Management, some factors must be present that have been contributing toward the need for i t . There are also the concerns expressed by the l e g a l community regarding the potential for increasing the scope of h o s p i t a l l i a b i l i t y . These factors and the emerging patterns established in Chapter II cannot be ignored. Risk Management may be a reasonable a l t e r n a t i v e . If and how B r i t i s h Columbia hospitals should move toward Risk Management w i l l be addressed i n the concluding chapter. - 145 -CHAPTER VII SUMMARY, CONCLUSIONS AND RECOMMENDATIONS FOR PLANNING The intent of t h i s study was to i d e n t i f y whether there was a need for B r i t i s h Columbia acute care hospitals to change from t h e i r present practices of c o n t r o l l i n g r i s k to a system of Risk Management. From the beginning, t h i s was considered to be a large undertaking that would cover many boundaries. For t h i s reason, i t was important to e s t a b l i s h a model that would r e f l e c t the parameters of the study. This was accomplished and the four "constants" were examined from the American, Canadian and B r i t i s h Columbia perspective. The outcome has been that only part of the o r i g i n a l question (need to change) can be answered with the findings of the l i t e r a t u r e review and the case study. Table Ten summarizes the major d i s t i n c t advantages/disadvantages of moving toward Risk Management. This table suggests that there i s s l i g h t l y more to gain from introducing Risk Management. However, t h i s could be deceiv-ing. C l e a r l y , there are many warning signals that are evident throughout the l i t e r a t u r e review and the responses of the case study p a r t i c i p a n t s . These signs are s u f f i c i e n t to state, with some degree of confidence, that a change from present practices i s i n e v i t a b l e and d e s i r a b l e . It can also be stated that Risk manage-ment may be a reasonable a l t e r n a t i v e to present practices. On t h i s matter, the investigator i s less clear because there are neither overt l e g a l nor f i n a n c i a l incentives to implement a program that has at i t s base c o n t r o l l i n g l i a b i l i t y . The - 146 -TABLE TEN MAJOR ADVANTAGES AND DISADVANTAGES FOR BRITISH COLUMBIA HOSPITALS TO INTRODUCE RISK MANAGEMENT ADVANTAGES DISADVANTAGES 1. S i m i l a r i t i e s to the United 1. Differences from United States: States: - increase in technology - national health insurance - increase in s p e c i a l i z a t i o n program and number of hospital - few lawyers s p e c i a l i z e d in personnel h o s p i t a l law - increase in communication - no jury duty breakdown - few cases with low awards - p o s s i b i l i t y of easier ac- - public s t i l l misinformed cess to courtroom about health care issues - unsophisticated r i s k - medical professionals well management methods organized with Canadian - patient's increased aware- Medical Protective Associa-ness of rights t i o n . - high consumer expectations - C e i l i n g f o r non-pecuniary - unstable economy awards. - i n t e r e s t by l e g a l community - expanded role of hospital 2. Lack of c l a r i t y in Law: 2. Legal incentives neither - corporate duties overt nor immediate urgency - standards of care to resolve. - v i c a r i o u s l i a b i l i t y doctor-patient r e l a t i o n s h i p - enshrined rights - informed consent - r o l e of government 3. Uncertainty whether hospital 3. F i n a n c i a l incentives not resources adequately pro- overt - i . e . hospital insur-tected. ance s t i l l purchased at reasonable cost without conditions for i n t e r n a l c o n t r o l . 4. Need expressed to j u s t i f y 4. New cost controls i n e v i t a b l e , q u a l i t y and quantity of lack of f i n a n c i a l maneuver-servi c e s . a b i l i t y without government support. 5. Concern that present hospital 5. Lack of data base to support systems inadequate to assure effectiveness of Risk safe environment and to main- Management. t a i n standards of care. 6. Proactive move to increase 6. D e f i n i t i o n and purpose of consistency and e f f i c i e n c y . Risk Management lack c l a r i t y . - W7 -benefits for Risk Management from a B r i t i s h Columbia perspective, are those related to quality of patient care and organizational e f f i c i e n c y . These are also goals of quality assurance programs. It i s not unusual for a study of t h i s nature to raise addi-t i o n a l questions for in v e s t i g a t i o n . This c e r t a i n l y applies to what has been described in the preceding chapters. Those questions that appeared to be p a r t i c u l a r l y s a l i e n t include: 1. Can Risk Management be better described? What are i t s d e f i n i t i v e purpose(s) and can the achievement of these be measured? 2. Can a data base be established to monitor hospital l i a b i l i t y a c t i v i t i e s in B r i t i s h Columbia? 3. What clear d i r e c t i o n can be drawn from the perceived need to change? S p e c i f i c a l l y , i f quality patient care i s the issue, would quality assurance s u f f i c e as an alternative? 4. What i s the role of government in r e l a t i o n to h o s p i t a l l i a b i l i t y ? Would the government support f i n a n c i a l l y an indepen-dent move by the hospitals to introduce Risk Management or would the support be accompanied by l e g i s l a t i v e authority? 5. Are the hospital resources adequately protected through the present insurance Management programs? 6. Why should the hospitals be proactive on t h i s issue when they have been reactive on other issues? In conclusion, the intent of t h i s study i s only p a r t i a l l y r e a l i z e d . Although the information brought forward through t h i s study w i l l serve as a basis for planning, the true u t i l i t y of Risk - 148 -Management for B r i t i s h Columbia Acute Care Hospitals w i l l remain undetermined u n t i l more information can be obtained. These data w i l l be more d i r e c t i v e and should provide hospital planners with the type of "cost-benefit" information that i s required for tough decision making in an increasingly turbulent environment. Therefore, given that changes from the present practices are i n e v i t a b l e , that there i s no pressure to introduce change and that there i s minimally a three (3) to f i v e (5) year time frame, the following recommendations for planning are put forward: 1. Define i f and what the problems are surrounding the need for change. - The "problem" i s not c l e a r l y defined. Goals and alter n a t i v e s cannot be established without c l a r i f y i n g what i t i s that should be improved or changed. 2. Define the purposes and processes of Risk Management and Quality Assurance. - There i s overlap between the two (2) concepts. Commentators and respondents appeared to view the purposes and processes as s i m i l a r . Whether t h e i r outcomes are any d i f f e r e n t should be c l a r i f i e d . 3. Establish a planning advisory group that includes the key actors. - No program w i l l be introduced successfully without the commitment and support of the key players. This includes h o s p i t a l , l e g a l and insurance representa-t i o n . In addition, the hospital representation - 149 -requires p a r t i c i p a t i o n from the medical and govern-ment communities. Collect and Analyze a data base. This includes the introduction of Risk Management ( i f i t i s seen to be the best a l t e r n a t i v e to the problem) into at least two hospitals of comparable size and service. Preferably, one hospital would have a history of numerous l i t i g a t i o n cases while the other would not. Structure, process and outcome evalua-tions would be conducted over at least a f i v e (5) year period. These r e s u l t s could be compared to hospitals which have not introduced Risk Management. 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Risk Management Program Proposal prepared for B r i t i s h Columbia Health Association. Vancouver: Harbord Company, 1981. Ha r t l e i b , C. "Medication Procedures in Hospitals." Canadian  Hospitals. (July, 1967), 44-46. International Hospital Federation. Proceedings of the International Seminar on Hospital L i a b i l i t y . Lyon, France, 1981. Kearns, P. " U t i l i z a t i o n Review Expanded into Quality Assurance Program." Hospitals. (September 1, 1980), 62-63. Keys, P. "Drug Use Review and Risk Management." American Journal  of Hospital Pharmacy. (October, 1981), 1533-1534. Korsak, A. "New Concept C a l l s for D e f i n i t i o n a l Refinement In Use of Term." Hospitals. (June 1, 1981), 48, 50. Kucera, Wm. and Ator, N. "Co n t r o l l i n g L i a b i l i t y , " Hospital  F i n a n c i a l Management. (January, 1979), 28-33. L a n g h i l l , G. "Incident Reporting Through Computers," Dimensions i n  Health Service. (June, 1977), 36, 38. La Vecchin, L. "Health Technological Standards." Dimensions i n  Health Service. (February, 1981). 28, 29. Le Bourdais, E. "A Canadian Survey: Accidents in Hospitals," Dimensions i n Health Service. (February, 1977), 25-28. Linden, A. "Changing Patterns of Hospital L i a b i l i t y i n Canada," Alberta Law Review (1966-1967), 212-225. - 158 -Loveday, Wm. "Every Hospital Must Stand Prepared," Canadian  Hos p i t a l . (September, 1980), 44, 102. McCarthy, Sr. C. and P a r t e l l , D. "Hospital Legal Audit." Information presented at the 12th Annual Meeting of the American Society of Hospital Attorneys, Innisbrook, F l o r i d a , 3une 10-13, 1979. McCollum, W. "Hospital System Works To Ensure Risk Management, Quality of Care," Hospitals. (October 1, 1978), 86-88. McCollum, W. " M u l t i f a c i l i t y Program Addresses Both QA and Risk Management," Hospitals. (Dune 1, 1981), 96-97. McLean, R. "Let's Not Have F i r e , Part I." Canadian Ho s p i t a l . ( A p r i l , 1951), 43-45. Madio, R. "Risk Management and Investigation of Incidents." Information presented at the 12th Annual Meeting of the American Society of Hospital Attorneys, Innis Brook, F l o r i d a , 3une 10-13, 1979. Magnet, 3. " L i a b i l i t y of a Hospital for the Negligent Act of Professionals." Canadian Cases on the Law of Torts. Vol. 3 (1978) 135. Magnet, 3. "Corporate Negligence As a Basis for Hospital L i a b i l i t y A comment on Ypremian v, Scarborough General Hospital," Canadian Cases on the Law of Torts, v o l . 6 (1978) 121-131. Hastings, 3. "Federal-Provincial Insurance for Hospital and Physician's Care in Canada." International 3ournal of Health  Services. Vol. 1, No. 4 (1971), 398-414. Hnatko, S. "Protection Protocol for Hepatitis B." Dimensions in  Health Service. (February, 1977) 36-38. Hollowell, E. " L i a b i l i t y of Hospital S t a f f Committees." Connecticut Medicine. (September, 1980), 577-578. Magnet, 3. "Preventing Medical Malpractice in Hospitals: Perspectives from Law and P o l i c y . " Legal Medical Quarterly. Vol. 3, No. 3, (1979), 197-203. Magnet, 3. "Vicarious L i a b i l i t y and the Professional Employee." Canadian Cases on the Law of Torts. Vol. 6 (1978), 208-226. Magnet, 3. "Corporate Negligence As a Basis For Hospital L i a b i l i t y - a Comment on Ypremian V. Scarborough General Hospital." Canadian Cases on the Law of Torts. Vol. 6 (1978), 121-131. - 159 -Magnet, 3. " L i a b i l i t y of a Hospital for the Negligent Acts of Professionals." Canadian Cases on the Law of Torts. V o l. 3 (1978), 135-150. Maquire, W and Van Wagoner, R. "Hearing Loss Among Hospital Employees." Dimensions in Health Service. (January, 1977), 16-17. Martin, H. "Hospital Risk Management: A Canadian Perspective." Health Management Forum. (Autumn, 1981), 23-34. Martin, H. "Reduce the Risk of L i a b i l i t y . " Health Care. (November, 1981), 16-18. Matlock, D. "Goals and Trends in the Union of Health Professionals." Hospital Progress. (February, 1972), 40-43. Miccio, B. "Rate setting Promotes Interdepartmental Cooperation i n QA." Hospitals. (June 1, 1981), 83-85. M i l l s , D. and Traynor, R. The N o t i f i c a t i o n System. Sacramento, C a l i f o r n i a Hospital Association, 1980. (Unpublished). M i t c h e l l , K. Risk Management Program. Vancouver, Health Services Centre, University of B r i t i s h Columbia, 1981. (Unpublished). Moeller, D. "What's So Di f f e r e n t About Quality Assurance in Small Rural Hospitals?" Hospitals. (June 1, 1981), 77-80. Monagle, J. "Risk Management Is Linked With Quality of Care." Hospitals. (September 1, 1980), 57-61. Morgan, J . and Wozniak, P. "Reducing Direct and Indirect Loss." Hospital Progress. (November, 1977), 88-89. Newman, G. "Basic Elements of Loss Control Programs." Hospital  Progress. (November, 1974), 46-49. 0'Connel, J . "Risk Management for Hospitals." Hospital  Progress. (November, 1974), 40-42. Oppman, C. "S t a f f t r a i n i n g V i t a l for Risk Management." Hospitals. (December 16, 1979), 95-98. O r l i k o f f , J . and Lanham, G. "Why Risk Management and Quality Assurance Should Be Integrated." Hospitals. (June 1, 1981), 54-56. Parker, S. "Risk Management: Many Solutions Proposed and Successes Noted." Hospitals. ( A p r i l 1, 1978), 156-158. - 160 -P h i l i p , C. and Faust, R. "Study of Malpractice Panels Notes Advantages, Problems, Gaps in Data." Hospitals. (October 1, 1978), 84-85. Picard, E. The L i a b i l i t y of Hospitals. Health Law Seminar, University of B r i t i s h Columbia, Spring, 1982. (Unpublished paper). Regan, W. "Patient Who F e l l Into Convex Wall Mirror Sued C l i n i c . " Hospital Progress. (March, 1978), 32, 37. Regan, W. "Safeguards at Construction S i t e Protect Hospital From L i a b i l i t y . " Hospital Progress. (July, 1979), 28, 30. Robertson, E. "The I n v i s i b l e F i r e Safety Feature - Attitude." Dimensions i n Health Service. ( A p r i l , 1981), 20-23. Rosenkratz, B. "Damaged Goods: Dilemmas of R e s p o n s i b i l i t y for Risk." Millbank Memorial Fund Quarterly/Health and Society. Vol. 57, No. 1, (1979), 1-37. Rozovsky, L. "Do Hospitals Deserve Special Protection?" Dimensions in Health Service. (June, 1974), 17-19. Rozovsky, L. "How to Avoid Law S u i t s , " Dimensions in Health  Service. (September, 1975), 12-13. Rozovsky, L. "The Hospital's R e s p o n s i b i l i t y for Quality of Care under English Common Law." Chitty's Law Journal. Vol. 24, No. 4, (1976), 132-136. Rozovsky, L. "The Hospital's R e s p o n s i b i l i t y To V i s i t o r s . " Dimensions in Health Service. (August, 1974), 10-12. Rozovsky, L. and Rozovsky, F. "Protecting the Hospital With Risk Management." Hospital Trustee. (July/August, 1980), 9-10. Salmon, S. "A Systems Approach Can Ensure High-Quality Care and Low Costs." Hospitals. (March 16, 1979), 53. Sehested, P. and Severin-Neilson, T. " F a l l s by Hospitalized E l d e r l y Patients: Causes, Preventions." G e r i a t r i c s . ( A p r i l , 1977), 101-108. Shepherd, I. "Hospitals Aren't Safe Enough." Hospital Progress (November, 1977), 85-87. Shaffer, K., Lindens ten, J . and Jennings, T. "Successful Q/A Program Integrates new JCAH Standards." Hospitals. (August 16, 1978), 117-120. Sharpe, G. "Hospital R e s p o n s i b i l i t y for Acts of Patients." Chitty's Law Journal. Vol. 24, No. 4, (1976), 140-144. - 161 -Shaw, R. "Creating Back Awareness." Dimensions in Health  Service. (February, 1981), 32-33. S i l v e r s i d e s , F. "Evacuation Peacetime." Canadian Hospital. (October, 1950), 35, 80. Simpson, V. "Safety and Security: Annual Administrative Review." Hospitals. ( A p r i l 1, 1974), 97-101. Smith, R. "Those People Aren't People Anymore." Hospital  Topics. (November/December, 1979), 14-15. Stewart, K. "Risk Management: No Task for the Timid." Trustee. ( A p r i l , 1979), 10-13. . "Study Says Hospitals Neglect Their Employees Health, Safety." Hospitals. (August 16, 1975), 114-115. T i l s o n , 3. "The Hospital Trustee and Quality Assurance." Connecticut Medicine. Vol. 4, No. 4. ( A p r i l , 1981), 245. Thompson, C. "Eliminate F i r e Hazards." Canadian H o s p i t a l . (December, 1951), 35, 84. Troyer, G. and Salmon, S. "Committees Can Help Oversee Hospital's QA A c t i v i t i e s . " Hospitals. (June 1, 1981), 87-91. Turner, J . "Hospital Standards." Canadian Ho s p i t a l. (March, 1962), 36-38. United States Department of Health, Education and Welfare. Trends  Af f e c t i n g the U.S. Health Care System, (Cambridge Research In s t i t u t e . ) Germantown: Aspen Systems Corporation, October, 1975. Van Loon, J . "From Shared Cost to Block Funding and Beyond: The P o l i t i c s of Health Insurance in Canada." Journal of Health  P o l i t i c s , P o l i c y and Law. (Winter, 1978), 454-478. Van Sluyter, C. and Hays, P. " I n t e r d i s c i p l i n e r y Task Force Designs Risk Management Program." Hospitals. (August, 1978), 87-89. Waite, R. "Hospital Safety Needed." Journal of Environmental  Health. (November/December, 1969), 124. Warner, M. "Governments and Health Care In Canada: The Sharing of Costs and Control." Journal of Contemporary Business. Vol. 9. No. 4., 111-125. - 162 -Yanish, D. "Aggressive Incident Reporting Saves Hospital M i l l i o n s of D o l l a r s . " Modern Health Care. (December, 1979), 64. Legal Cases Aynsley v. Toronto General Hospital (1972) S.C.R. 435 (S.C.C.). Blanton, v. U.S., 428 F Supp. 360 (D.C., 1977). Darling v. Charleston Community Memorial Hospital, 211 N.E. 2nd 253 (111. 1965). Foley v. Bishop Clarkson Memorial Hospital, 173 N.W. 2d 881 (Nebr. 1970). Gadsden General Hospital v. Hamilton, 103 So. 553 (1925). Greater Washington, D.C. Area Council of Senior Citazens v. D i s t r i c t of Columbia, 406 F. Supp. 768 (1975). Holmes v. London Hospital Trustee Board (1977), 5 CCLT 1 (Ont. H.C.). Hospital Notre Dame de l'Esperance v. Laurent (1978) 3 CCLT. 109 (SCO . Inderbitzen v. Lane Hospital, 12 p. 2d 744 (1932). Laidlaw v. Lions' Gate Hospital (1969) 70 W.W.R. 727 (B.C.S.C.). Meyer v. Gordon (1981), 17 CCLT 1 (B.C.S.C.). M i l l e r v. Unity Union Hospital (1975) 55 D.L.R. (3d) 475 (Sask. C.A.). Murphy v. St. Catherine's General Hospital (1963) 41 D.L.R. (2d) 697 (Ont. H.C). Parker v. Port Huron Hospital, 105 N.W. 2d, (Mich. 1960). South Highlands Infirmary v. Camp, 180 So. 2d 904 (Ala. 1965). Worth v. Royal Jubilee Hospital (1980), 4 LMG 59 (B.C.C.A.). Yepremian v. Scarborough General Hospital, (1980) 13 C.C.L.T. 105 (Ont. C.A.). - 163 -Statutes and Regulations B r i t i s h Columbia, Hospital Act, 1979. revised, ch. 176. B r i t i s h Columbia, Hospital Act Regulations, 1979. revised. B r i t i s h Columbia, Hospital D i s t r i c t Finance Act, 1979. revised, ch. 179. B r i t i s h Columbia, Hospital Insurance Act, 1979. revised, ch. 180. B r i t i s h Columbia, Limitation Act, 1979. revised, ch. 236. B r i t i s h Columbia, Medical P r a c t i t i o n e r s ' Act, 1979. revised, 254. B r i t i s h Columbia, Society Act, 1979, revised, ch. 390. - 164 -APPENDIX A AMERICAN LEGAL ASPECTS SUPPLEMENT Types of Legal Action "Breach of Contract" i s alleged when a service has been agreed upon and the service i s performed without reasonable care and s k i l l , or a d i f f e r e n t service i s performed, or a s p e c i f i c outcome i s promised and t h i s does not occur.^ Most l i a b i l i t y actions against hospitals f a l l under t o r t law. A t o r t i s defined as "a c i v i l wrong, other than breach of contract, for which the court w i l l award damages."^ Thus, i f an in d i v i d u a l s u f f e r s a loss because of the f a i l u r e of the hospital to perform i t s l e g a l duties, the injured party i s e n t i t l e d to a l e g a l remedy in the form of action for damages.^ There are both i n t e n t i o n a l and unintentional t o r t s . An in t e n t i o n a l t o r t i s committed when an in t e n t i o n a l act i s done with the objective of accomplishing a given result which causes injury to another.^ Unintentional t o r t s r e s u l t when the wrongdoer f a i l s to exercise due care and the outcome i s injury to another party. Intentional Torts Assau l t i s a deliberate attempt or o f f e r , with force and violence, directed toward the person of another, to do corporal i n j u r y . No physical contact need take place. Battery i s an unpermitted, unprivileged contact with another person.^ Every battery includes assault, although not every assault involves a b a t t e r y . 7 Many consent related cases - 165 -r e s u l t in assault/battery a l l e g a t i o n s . An example of t h i s i s the case of Inderbitzen V. Lane Hospital whereby a patient alleged that medical students examined her without her consent. The h o s p i t a l , as the employer of the medical students, was l i a b l e for o nonconsensual touching of the patient. Mental Distress - A hospital may be held l i a b l e i f an i n t e n t i o n a l act produces severe mental or emotional d i s t r e s s . In the case of Blanton V. U.S., damages were awarded for emotional injury when an experimental drug was given to the patient, even Q though she had refused to p a r t i c i p a t e in the study. Defamation i s the i n j u r i n g of another's reputation without good reason or j u s t i f i c a t i o n . It can take the form of l i b e l (written defamation) or slander (oral defamation). Defamation s u i t s are most often seen i n r e l a t i o n to release of c o n f i d e n t i a l information from medical records without consent. However, in prac t i c e defamation cases are rarely sucessful for the p l a i n t i f f because they must prove that actual damage was done from the communication and, in addition, most States have a clause of immunity for the defendant i f the communication was t r u e . 1 0 False Imprisonment occurs when one person's freedom of movement i s i n t e n t i o n a l l y restrained by another without l e g a l j u s t i f i c a t i o n . 1 1 For example, in Gadsden General Hospital V. Hamilton, the court held that a patient detained against her w i l l because she was unable to pay her b i l l could recover damages for 12 f a l s e imprisonment. - 166 -Unintentional Torts The most common type of int e n t i o n a l t o r t i s negligence. This was given considerable discussion i n Chapter III and does not require further explanation. P r i n c i p l e s of Hospital L i a b i l i t y The more common types of class action s u i t s that have been brought against hospitals were discussed in the previous section and i n Chapter I I I . In general, a hospital can be held l i a b l e f o r any i n j u r i e s suffered by patients, v i s i t o r s to the ho s p i t a l , or employees. The reasons for l i t i g a t i o n can be categorized into f i v e broad areas: 1. standard of care 2. respondeat superior 3. corporation/organization duties k. resipsa loquitor Two of these, respondeat superior and corporate duties have already been discussed i n Chapter I I I . The remaining two w i l l be reviewed here. Standard of Care The rule under which the hospital's standard of care p r e v a i l s i s the one which provides that the hospital owes i t s patients that degree of care, s k i l l and diligence exercised by hospitals generally i n s i m i l i a r l o c a l i t i e s or communities. The "standard" may vary from state-to-state; however, knowledge of - 167 -what constitutes good practice i s more accessible today through the Joint Commission on Accreditation of Hospitals, Medicare regulations, p e r i o d i c a l s and proceedings or national meetings at 13 which methods of good practice are discussed and shared. Res Ipsa Loquitur Res ipsa loquitur ("the things speaks for i t s e l f " ) i s a l e g a l doctrine sometimes considered even though no s p e c i f i c acts of negligence have been alleged or proven. It i s used when the p l a i n t i f f can prove: 1. that the event i s such that i t would not o r d i n a r i l y occur in the absence of negligence, 2. that the agency or instrument-ability causing t h i s event was in the exclusive control of the defendant, and 3. that the event was not due to any conduct in the part of the p l a i n t i f f . Courts have been reluctant to use res ipsa l o q u i t u r because of i t s harsh e f f e c t s on defendents, and because i t i s often d i f f i c u l t to determine the cause of a patient's i n j u r i e s when he/she i s undergoing complex care and treatments. Exceptions, Constraints and Defences The very nature and purpose of a hospital places i t in a vulnerable p o s i t i o n . However, j u s t i c e allows for protective considerations that apply as well to hospitals as to any - 168 -corporation. Points of Privilege Privilege is used to indicate the circumstances under which liability is avoided for intentional acts that otherwise would have involved liability. The objective of privilege is to grant a person freedom to act in a manner that best serves the public good. Ultimately, it is a question of whose interests should have greater protection, the interferer or interferee. The considerations given attention in determining privilege include: Mistakes - privilege can be granted when the actor believes he/she must move quickly in order to protect a right. Consent - an individual is privileged to infer consent when an action or custom could be interpreted by the reasonable man as assent. Protective Acts - an individual is privileged to use all the reasonable force causing to prevent intentional or negligent interference with his or another person, especially when the other 15 person is able to defend himself. Modifications of Negligence Even though all elements of a negligent act are proven to be present, the defendent can be relieved of equal responsibility if one of the following apply: Contributing Negligence - if the conduct of the injured party contributed to the loss or injury, the defendant may not be liable. There are exceptions for use of this defence such as - 169 -p h y s i c a l and mental age of the i n j u r e d . Assumption of Risk - i f the p l a i n t i f f has consented expressly or by i m p l i c a t i o n to r e l i e v e the defendant of h i s duty to protect ( i . e . a contract i s e s t a b l i s h e d ) , the defendant may not be held l i a b l e p roviding the contract i s not against p u b l i c p o l i c y . 1 1 S t a t u t e s of L i m i t a t i o n s Statutes of L i m i t a t i o n s set f o r t h the period w i t h i n which a c t i o n s can be brought. The times vary from s t a t e to s t a t e and can also vary w i t h i n a s t a t e according to the type of a c t i o n . I f the a c t i o n i s not s t a r t e d w i t h i n a c e r t a i n time frame, the 18 p l a i n t i f f cannot recover damages. Some st a t e s have extended the "time of reasonable discovery" or point i n time when the s t a t u t e of l i m i t a t i o n s begins to r u n . 1 9 Use of Expert Witnesses Two changes have occurred that e f f e c t the s e l e c t i o n of an expert witness, p a r t i c u l a r l y , i n medical malpractice cases. F i r s t , experts need not be s p e c i a l i s t s i n the f i e l d i n which they give o p i n i o n . The courts determine the q u a l i f i c a t i o n s of experts and t h e i r a d m i s s a b i l i t y of evidence. Secondly, an expert witness need not be a r e s i d e n t i n the community i n which he t e s t i f i e s . Both of these changes were d i r e c t e d at overcoming the "conspiracy of s i l e n c e , " or the w i l l i n g n e s s of one colleague to t e s t i f y against a n o t h e r . 2 0 - 170 -FOOTNOTES TO APPENDIX A iA. Southwick, The Law of Hospital and Health Care  Administration (University of Michigan: Health Administration Press, 1978), Chapter IV. Wm. Proser, Handbook of the Law of Torts, 4th ed. (St. Paul, Minn. West Publishing Co., 1971) p. 2. 3 R. Mehr and B. Hedges, Risk Management: Concepts and  Applications (Homeworth, I l l i n i o s : Richard D. Irwin Inc., 1974), Chapter 9. ''ibid. 5 E . Hoyt, L. Hoyt and A. Groeschel, Law of Hospital,  Physician and Patient, 3rd ed. (Berwyn, I l l i n o i s : Physicians Record Company, 1972), Chapter 2. 6Mehr and Hedges, Risk Management: Concepts and  Applications. ^Hoyt et a l , Law of Hospital, Physician and Patient. 8Inderbitzen v. Lane Hospital, 12 P. 2d 744 (1932). 9Blanton v. U.S. 428 F. Supp. 360 (D.C., 1977). 1 0Southwick, The Law of Hospital and Health Care  Administration, Chapter XI. 1 1Mehr and Hedges, Risk Management: Concepts and  Applications. 1 2Gadsden General Hospital v. Hamilton, 103 So. 553 (1925). D. Warren, Problems in Hospital Law (Germantown, Maryland: Aspen Systems Corporation, 1978), Chapter 7. 1 1 + I b i d . 1 5Mehr and Hedges, Risk Management: Concepts and  Applications. 1 6 I b i d . 1 7 I b i d . 18 Southwick, The Law of Hospitals and Health Care  Administration, Chapter XII. - 171 -1 9R. Goodman and L. Goldsmith, Modern Hospital  L i a b i l i t y - L a w and Tac t i c s (New York: P r a c t i s i n g law I n s t i t u t e , 1972), pp. 407-414. 2 0 I b i d , pp. 560-561. - 172 -APPENDIX B CANADIAN LEGAL ASPECTS SUPPLEMENT P r i n c i p l e s of L i a b i l i t y . Standard of Care The duty of care and subsequent standards of care are at the crux of c o n t r o l l i n g hospital l i a b i l i t y . Similar to the United States, the Canadian courts look toward the "reasonable man" p r i n c i p l e in determining what i s an acceptable standard of care. In addition, they w i l l examine l e g i s l a t i o n , regulations, hospital-bylaws and ask for evidence from accreditation and professional bodies. For example in MEYER V. GORDON, the courts looked for acceptable standards for hospitals and acceptable standards of care by nurses. In t h i s case an expectant mother, the p l a i n t i f f , went to hospital when the b i r t h of her c h i l d was imminent. She had a history of rapid b i r t h s , but was l e f t unattended by the nursing s t a f f . The hospital was held negligent due to actions by the s t a f f which resulted in a breach of duty to provide a standard of care that would provide for determination of f e t a l d i s t r e s s . 1 In an e a r l i e r case, WORTH V. ROYAL 3UBILEE HOSPITAL, the action against the hospital was dismissed because the courts determined that the hospital had conformed to the required 2 standard of care. RES IPSA LOQUITOR RES IPSA LOQUITOR has been applied i n the Canadian courts - 173 -with some caution. One of the d i f f i c u l t i e s i n using t h i s doctrine i s the determination or d i f f e r e n t i a t i o n between the non-negligent accident and the negligent action(s) that could i n f l i c t i n j u r y . Although RES IPSA LOQUITOR implies negligence, the cause or incidents leading up to the injury can not be c l e a r l y ascertained. 3 The case of HOLMES V . LONDON HOSPITAL TRUSTEES' BOARD demonstrates the complexity of t h i s doctrine. A patient was admitted to hospital for what was considered a minor diagnostic t e s t , laryngoscopy. The anesthetist did not place the tracheal cannula c o r r e c t l y and the patient sustained t i s s u e emphysema in the area of her neck and chest. The patient was admitted to ICU and over the next few days developed f u l l p a r a l y s i s which could not be related to the emphysema condition. However, the attending and consultant physician did not read the x-rays expeditiously. This action may have made a s i g n i f i c a n t difference in the patient's outcome. The anesthetist, attending and consultative physicians were negligent by res ipsa l o q u i t o r . The hospital was not l i a b l e since the negligent actions of the physicians were considered to be outside the control of the h o s p i t a l . 4 Exceptions, Constraints and Defences As with the American l e g a l system, defences are available, p a r t i c u l a r l y in negligence actions. F i r s t of a l l , i f the p l a i n t i f f f a i l s to e s t a b l i s h a duty, breach in standard of care, injury or causation, the defendant can f i l e for "non-suit" and - 174 -have the charges dropped. Secondly, the defendant can attempt to d i s c r e d i t the p l a i n t i f f ' s a llegations through introduction of new evidence and cross-examination. The more common defences include an attempt to prove that standards of practice were being followed, the caused action was an error in judgement or an accident, the patient was a contributory party to his/her injury or, when applicable, the use of the Limitations A c t . 5 In B r i t i s h Columbia, statutory regulations l i m i t contract or t o r t actions to within two years, while other actions not covered witin the Act must be i n i t i a t e d within six years. This i s e s p e c i a l l y true for hosp i t a l s unless i t can be proven that unusual circumstances needfully postponed or extended the expiration date. The Use of Expert Witness Obtaining witnesses can be d i f f i c u l t for Canadian courts, as well. Studies and empirical evidence have demonstrated that physicians and health care professionals are reluctant to t e s t i f y . However, Canadian courts never were exposed to the q u a l i f i c a t i o n s or locale r u l i n g . More recently, steps have been undertaken to bring Canadian health professionals and lawyers together for the benefit of t h e i r patients and c l i e n t s . ' - 175 -HOSPITAL ACT R.S.B.C. (176) This i s probably the most important statute as i t defines what a hospital i s under the laws of B r i t i s h Columbia. Part 1 of the Act r e f l e c t s operational considerations. For example, the hospital's board of management i s to have f u l l control of expendi-tures and revenues. The Lieutenant-Governor in council may appoint person(s) to the hospital board for a period of two (2) consecutive years. Part 2 states the provisions for private hospitals, licensure and revocation of the l i c e n s e . Conditions for revocation can include unsanitary conditions, lack of f i r e protection and poor management. This section also deals with advertising r e s t r i c t i o n s , requirements for a superintendent, hospital inspections and unauthorized use of licensed h o s p i t a l s . In Part 3, provisions are stated for the convalescent/rehabilita-tion h o s p i t a l . The l a s t section, Part 4, probably best r e f l e c t s the powers of the Minister of Health or Lieutenant-Governor in Council in the operations of a h o s p i t a l . These powers include appointment of inspectors, ordering r e v i s i o n of by-laws, enacting regulations, withholding payment to hospitals, e s t a b l i s h i n g condi-tions for f i n a n c i a l assistance, establishing a medical appeals board, designating a Community Care F a c i l i t y as a hospital and appointing an examining board or public administrator for a h o s p i t a l . This section also makes note that members of medical s t a f f committees cannot be held l i a b l e i f they have carried out t h e i r obligations in good f a i t h . - 176 -HOSPITAL ACT REGULATIONS (amended Duly 19, 1979) These regulations are meant to supplement the Hospital Act, and p a r t i c u l a r l y a f f e c t the operations of a h o s p i t a l . There are twenty-nine (29) regulations in a l l , with statements covering the admission, medical treatment and discharge of patients, establishment of a medical s t a f f committee with written bylaws and obligations, designation of an administrator as a representative of the Board, i n s t a l l i n g a system of accounting that i s s a t i s f a c t o r y to the minister, the procedure for a patient not requiring further care, whose discharge i s delayed or prevented, provisions for the private h o s p i t a l , the i n i t i a t i o n , storage and destruction of medical records, the granting of medical p r i v i l e g e s and the establishment and procedure for a Medical Review Board. HOSPITAL DISTRICT FINANCE ACT R . S . B . C . (179) This act i s administered by the Ministry of Finance and provides for financing of hospital projects, medical and health f a c i l i t i e s , community human resources and health centres and other community f a c i l i t i e s for the s o c i a l and welfare benefit of the community. It focuses on the terms for borrowing of monies. HOSPITAL INSURANCE ACT R . S . B . C . (180) This Act covers those conditions related to the implementation of those services agreed to with Canada under the Hospital Insurance and Diagnostic Services Act. This includes a description of who the b e n e f i c i a r i e s are and the benefits provided to them, the services a hospital must provide to the b e n e f i c i a r i e s - 177 -and, the status of non b e n i f i c i a r i e s . It also outlines the terms of payment to the hospitals - as determined by the Minister. Other sections address r e s p o n s i b i l i t y for payment other than public ward coverage, the Hospital Insurance Fund, requirements f o r accounting, audits and reports, agreements with Canada and other provinces, coordination with the Worker's Compensation Board, sp e c i a l services and managing disputes over services. Another important section includes the power of Cabinet to implement Regulations which have far-reaching e f f e c t s over the hospital's operations. This section allows the Lieutenant-Governor in Council to determine such conditions as the type and number of services, the u t i l i z a t i o n and length of stay by patients, treatment of patients and orders regarding the inspection, c o n t r o l , government, management and conduct of h o s p i t a l s . LIMITATION ACT R . S . B . C . (236) This Act i s administered by the Ministry of the Attorney General and addresses the time period(s) within which le g a l actions may take place in B r i t i s h Columbia. The expiration date for most actions based on contract, t o r t or statutory duty i s between two (2) and ten (10) years depending on the circumstances. Section seven (7) addresses the ultimate l i m i t a t i o n period for an action against the h o s p i t a l , h o s p i t a l employee or medical p r a c t i t i o n e r as expiring six (6) years from the date from which the right to do so arose. This i s subject to a just cause for postponing the running time or i f the p l a i n t i f f i s under a l i a b i l i t y . - 178 -MEDICAL PRACTITIONERS ACT R . S . B . C . (254) Chapter 254 addresses those conditions related to the practice of medicine in B r i t i s h Columbia. This includes the organization of the medical members, conditions and requirements for r e g i s t e r , obligations for s e l f - r e g u l a t i o n , procedures for suspension and appeal, a description that encompasses the practice of medicine and the persons to whom t h i s Act does not apply. Section f i f t y - f i v e does state the conditions under which a hospital administrator must inform the r e g i s t r a r of an admission of a physician. More importantly, i t l i m i t s the practice of medicine to a person and does not include an organizational e n t i t y . SOCIETIES ACT R . S . B . C . (390) In addition to l e g i s l a t e d corporations, the Society Act allows for the hospital to become a l e g a l organizational e n t i t y . In t h i s respect i s outlines conditions for membership, conduct and proceedings of meetings, the establishment and proceedings of the Directors, duties of o f f i c e r s and such factors related to auditors, borrowing, motives to members and bylaws. Hospital bylaws and t h e i r amendments must be approved by the Minister of Health. - 179 -FOOTNOTES TO APPENDIX B ^ e y e r V. Gordon (1981) 17 CCLT 1 (BCSC) 2Worth V., Royal Jubilee Hospital (1980) 4 LMG 59 (BCCA) 3 Picard, E., L i a b i l i t y of Doctors and Hospitals in Canada (Toronto: The Carswell Company, 1978), pp. 204-219. Holmes V., London Hospital Trustee Board (1977) 5 CCLT 1 (Ont. H.C). 5 P i c a r d , E., L i a b i l i t y of Doctors and Hospitals in Canada pp. 169-194. l i m i t a t i o n Act, RSBC, 1979, c. 236. ^Picard, E., L i a b i l i t y of Doctors and Hospitals in Canada pp. 216-217. - 181 -BACKGROUND AND PURPOSE OF THE STUDY During the past 5 to 10 years, the American l i t e r a t u r e on hospitals has i l l u s t r a t e d the development of the concept of Risk Management for ho s p i t a l s . Risk management, as an administrative control mechanism, i s well established in many United States h o s p i t a l s . The controls may be related to safety and security standards, cost containment, and hospital l i a b i l i t y . Risk Management focuses on i d e n t i f y i n g , monitoring and taking c o r r e c t i v e action on actual or potential problems (risks) that may r e s u l t in unwarranted and unplanned personal i n j u r y , property damage or other form of l o s s . Ultimately, r i s k management i s concerned with the o v e r a l l hospital's objectives of providing safe patient care while using the available resources e f f i c i e n t l y . The expression Risk Management has not been used with any r e g u l a r i t y or consistency ( in d e f i n i t i o n ) with respect to B r i t i s h Columbia (B.C.) Acute Care Hospitals. A protective concept has been around for many years and hospital administrators have established mechanisms to provide a safe and secure hospital environment for patients, employees and v i s i t o r s . What may be new for the administrators i s an anticipated need to assume a more defensive position as "the h o s p i t a l " increases in complexity and in the services i t o f f e r s . The question to be studied in the paper i s whether there i s any need for B.C. hospital administrators to change the management of t h e i r " r i s k " s i t u a t i o n s . In addition, the - 182 -V advantages/disadvantages of moving toward r i s k management v i s j i vis/present practices w i l l be addressed. - 183 -COMMON DEFINITIONS/DESCRIPTIONS OF RISK MANAGEMENT FOR HOSPITALS "...a program that provides p o s i t i v e avoidance of negative r e s u l t s . . . .Its purpose i s to eliminate problems that may res u l t i n harm to the organization, i t s s t a f f , and, most important, i t s public." (B. Brown, Risk Management for Hospitals: A P r a c t i c a l  Approach, Germantown, Maryland: Aspen Systems Corp., 1979, p. 1) "...Risk Management represents a functional planning approach to r i s k problems, p a r t i c u l a r l y those of professional l i a b i l i t y to h o s p i t a l s . The process includes three steps: r i s k i d e n t i f i c a t i o n , r i s k control, and r i s k financing." (M. T h i s t l y , "A Look at the Causes and Possible Solutions," Risk Management, 3uly, 1977, p. 10) "...Risk Management may be defined as a detection system designed to predict when the next 'person f a i l u r e ' w i l l occur and to prevent i t from happening." (Wm. F i f e r , "Risk Management: The act of preventing people f a i l u r e , " Trustee, September, 1977, p. 52.) "...Risk Management...encompasses prediction of patient injury, avoidance of exposure to predicted and other r i s k s , and minimization of malpractice claims l o s s . " (3. O r l i k o f f , Wm. F i f e r , H. Greely, Malpractice Prevention and L i a b i l i t y Control f o r Hospitals, Chicago: American Hospital Association, 1981, p. 29.) -184 -APPENDIX D Hospital Administrator 1. Do you ever think in terms of " r i s k management" for your hospital? a. If so, what does t h i s mean to you? - For purposes of my study, I am defining R.M. as a management function that includes surveillance of a l l hospital operations in order to i d e n t i f y , monitor, evaluate and take c o r r e c t i v e actions for unplanned, unwarranted or unexpected s i t u a t i o n s (the r i s k s , or problems) that may lead to an i n d i v i d u a l ' s i n j u r y , property damage or other form of l o s s . - I t could be viewed as a formalized control process with the hospital organization. YES b. What i s the h i s t o r i c a l background of R.M. in your hospital? i e . How did i t come to be implemented? c. How are you using R.M. in your organization? d. Are the primary r e s p o n s i b i l i t i e s for R.M. delegated to someone? If yes, to whom? OR NO e. I have described " r i s k s " as a problem or potential problem that i s unplanned, etc. and that may r e s u l t in damage to person, property or other. Can you share with me how these s i t u a t i o n s are handled/managed in your hospital? The American l i t e r a t u r e seems to i d e n t i f y four areas in which Risk Management i s most obviously involved: s a f e t y / s e c u r i t y , l e g a l and f i n a n c i a l , and or g a n i z a t i o n a l . I would l i k e to focus most of the remaining questions in r e l a t i o n to these areas. 2. Previously you mentioned that hospital procedures, p o l i c i e s and standards were in e f f e c t that assisted both in the prevention of a problem/risk or in d i r e c t i n g the s i t u a t i o n i f a problem/risk occurred. a. Do these procedures, p o l i c i e s , etc. have a safety focus? Explain. Who has the r e s p o n s i b i l i t y for development? b. In your opinion, how e f f e c t i v e have these p o l i c i e s , etc. been? Or, in what areas have they been e f f e c t i v e ? Not e f f e c t i v e ? - 185 -c. Can you share with me some examples of how problem/potential problem (risks) s i t u a t i o n s are i d e n t i f i e d ? d. The professional and technologist groups have been a c t i v e l y developing quality assurance programs. Have these been developed here? In which departments? What has been the impact? e. How i s quality c o n t r o l l e d , monitored in the nonprofessional departments? 3. With respect to managing " r i s k s " , a. What would you consider to be the major l e g a l concerns for the hospital? b. Are there s p e c i f i c considerations, (eg. accountability and r e s p o n s i b i l i t y ) you could give me for the following areas: i . patient care: medical s t a f f actions employee r e s p o n s i b i l i t i e s i i . employees and students i i i . v i s i t o r s c. One l e g a l author has summarized the hospital's d i r e c t duties to a patient as: i . to select competent and q u a l i f i e d employees; i i . to i n s t r u c t and supervise them; i i i . to provide proper f a c i l i t i e s and equipment; i v . to e s t a b l i s h systems necessary to the safe operation of the h o s p i t a l . Is there anything you would add or delete from that statement? d. How would you describe your ongoing r e l a t i o n s h i p with the hospital attorney? 4. a. How would you describe your r e l a t i o n s h i p with the hopital's insurance company in the development of the o v e r a l l insurance program? b. How c l o s e l y do you think the hospital's premium i s related to the p r o b a b i l i t y of r i s k s (such as we have talked about) occurring? Do you think there might be other factors involved? Explain. c. Are there any f i n a n c i a l or other incentives for you to move toward a Risk Management program? Explain. d. Are there any disincentives? Explain. - 186 -e. I f you opted for a Risk Management program, what costs (to the hospital) do you perceive? Explain. f. Are there any changes you would l i k e to see with p o l i c y coverage, options, other? One more aspect needs to be addressed - r i s k management in the context of the hospital organization. 5. a. E a r l i e r , I described R.M. as a control process. Do you think hospital care/services require t h i s type of monitoring? Explain. b. Has the accountability of a. the board, b. administration changed during the past 10 years? Explain. c. Has the r e l a t i o n s h i p between administration-medical s t a f f changed during the past 10 years? Explain. d. Have a. the professionals, b. the unions had any impact s t r u c t u r a l l y and operationally on the hospital organization? Explain. 6. a. How would you describe your l e v e l of s a t i s f a c t i o n with present practices in the management of r i s k situations? Explain. b. Would you recommend or make any changes? Explain. 7. In the past hour we have discussed American Risk Management concepts and compared them to the present practices in the B.C. h o s p i t a l s e t t i n g . a. In your opinion, what is/are the major differences between Risk Management and present practices? b. Would you consider the Risk Management approach as a s h i f t in strategy? Explain. c. How would you rate the necessity for moving to t h i s type of approach in B r i t i s h Columbia? 8. Additional Comments: - 187 -HOSPITAL DEPARTMENT PROFILE General Information 1. Have you read about or discussed Risk Management for Hospitals? If so, in what context? For purposes of my study, I am defining R.M. as a management function that includes surveillance of a l l hospital operations in order to i d e n t i f y , monitor, evaluate and take c o r r e c t i v e action for unplanned, and unexpected s i t u a t i o n s (the r i s k s or problems) that may lead to an i n d i v i d u a l ' s injury, property damage or other form of l o s s . - i t could be viewed as a formalized control process within the hospital s e t t i n g . The issues surrounding R.M. may be designated into four areas: safety and security, organizational, f i n a n c i a l and l e g a l . My questions for you w i l l be related to these four areas. a. As a Department Head, what do you consider your r e s p o n s i b i l i t i e s f o r : 1. they way in which the unit i s operated; i . e . practices, procedures, standards, etc.; 2. Employee a c t i v i t i e s , ie performance b. What are the hospital's r e s p o n s i b i l i t i e s in these areas? How would you describe your s t r u c t u r a l r e l a t i o n s h i p . . . a. with other departments? (including senior execs.)... b. when a problem (risk) arises or i f you are concerned about a potential problem? 4. Reflecting over the past year, can you share with me what have been the major problems you have had to deal with? 5. How was the problem i d e n t i f i e d ? 6. How was the problem managed? 7. In retrospect, or at the time the problem occurred, did you (or s t a f f members) think of ways or means that the problem could have been prevented or averted? Explain 2. 3. 8. If yes, was i t possible to incorporate the preventative measure into the department's d a i l y a c t i v i t i e s . Explain. - 188 -9. How do you incorporate into your da i l y department a c t i v i t i e s ways and means to i d e n t i f y and monitor potential problems ( r i s k s ) ? Explain. The remaining questions are more s p e c i f i c to your department. - 189 -Nursing 1. Does the (hospital) orientation program include the hospital's expectations of general safety practices? S p e c i f i c practices related to nursing? 2. For each item l i s t e d , i d e n t i f y whether your department has an established and written procedure, standard, p o l i c y , etc. What H/P Who ^ ^ % How How Corrective o O (S3 General: Respon. f ^ ? Other Enforced Action Taken a. reporting unsafe conditions b. working with hazardous materials, eg. 02 c. dress code e. t r a n s f e r r i n g and l i f t i n g patients f . handling "sharps" - glass, needles, etc. g. securing stretchers, wheelchairs, examining tables h. using e l e c t r i c a l equipment i . using side r a i l s , r e s t r a i n t s S p e c i f i c : a. wet mopped areas b. foreign materials on f l o o r c. defective or inoperative equipment d. f l o o r t r a f f i c patterns e. arrangement of patient room furnishings f . s o i l e d l i n e n g. patient food trays h. use of acid, chemicals i . r e s p o n s i b i l i t y of nursing s t a f f for ensuring compliance of f i r e rules j . controls for p a t i e n t s / v i s i t o r s who smoke k. carrying out doctors' orders 1. assessment of nursing needs m. assignment of care n. administration of medications o. i n f e c t i o n control p. recording and reporting q. introduction and evaluation of new equipment - 190 -What H/P Who ^ ^ £ How How C o r r e c t i v e O O P3 General: Respon. f T ? Other Enforced A c t i o n Taken r . introduction and evaluation of new forms of therapy, including drugs s. delegation of medical functions to nursing committees t . other: unusual occurrence employee recruitment recognition evaluation 5. Do you see that there i s any overlap between Risk Management and Management and Quality Assurance? Explain. i e . Both have a common goal of safe, quality patient care -process and r a t i o n a l e may d i f f e r . 4. Does your department implement a q u a l i t y assurance program? Explain. Who i s responsible, How i s the data used, what i s the impact? 6. Are any of the s t a f f development programs related to managing " r i s k " factors? How i s t h i s achieved? 7. Who i s responsible for keeping the nursing s t a f f aware of l e g a l issues r e l a t i n g to nursing care, hospital employment? 8. The standards, quality assurance, audits, s t a f f development programs, etc. are a l l part of the American concept of Risk Management. a. What type of costs could you i d e n t i f y i f you were to operationalize such a program? b. Would there be any costs associated with not implementing t h i s type of program? 9. a. How would you describe the effectiveness of the present practices (standards, p o l i c i e s , procedures)? Explain. b. If you could make any changes, in what area(s) would they be? - 191 -10. In the past hour we have discussed American Risk Management concepts and compared them to the present practices in the B.C. hospital s e t t i n g . a. In your opinion, what is/are the major difference(s) between Risk management and present practices? b. Would you consider the Risk Management approach as a s h i f t in strategy i n managing r i s k s i n the hospital setting? Explain. c. How would you rate the necessity for moving to t h i s type of approach in B r i t i s h Columbia? 11. Additional comments: - How much, and what type of professional d i s c r e t i o n i s allowed in the management of risk-type s i t u a t i o n s ? Is the " d i s c r e t i o n " applicable to a l l s t a f f members? - Can you see any e f f e c t s on the management of r i s k s from the c o l l e c t i v e bargaining process? - 192 -Pharmacy 1. Does the orientation program include the hospital's expectations of general safety practices? S p e c i f i c practices related to pharmaceutical services? 2. Does your department have an established and written procedure, standard, etc. for the following? For each item i d e n t i f y : What H/P Who ^ tTj rt How How Corrective General: Respon. .n T ? Other Enforced Action Taken a) reporting unsafe conditions b) working with hazardous materials; eg. acids c) f i r e protection d) handling materials: glass equip., needles, instruments e) using e l e c t r i c a l equipment S p e c i f i c : a) est a b l i s h i n g s p e c i f i c a t i o n s for procurement of a l l approved drugs, chemicals, b i o l o g i c a l s b) compounding drugs; eg. admixture c) storage of drugs - in pharmacy - other hospital departments s p e c i f i c a l l y : - d i s i n f e c t a n t s , drugs for external use - i n t e r n a l & injectables - drugs requiring s p e c i f i c con-d i t i o n s , eg. r e f r i g . - checking for outdatedness, discontinued stock - emergency drugs - controlled drugs d) use of apothecary & metric systems for weight & measure e) dispensing drugs in pharmacy - f i l l i n g & l a b e l l i n g drug con-tainers issued to depts. - 193 -What H/P Who ^ m How How C o r r e c t i v e o o so Respon. ? ? Other Enforced A c t i o n Taken - control drugs f) references: pharmacopias, text-books, p e r i o d i c a l s g) messenger and delivery service h) controls and records for the r e q u i s i t i o n i n g & dispensing of supplies to other units i ) pharm. orientation & i n s t r u c t i o n of hospital s t a f f j) drug r e c a l l procedure k) administration of drugs -e.g. licensed personnel only 1) stop order procedure: narcotics, a n t i b i o t i c s , hypnotics, sedatives m) recording administration of drugs n) recording drug errors/reactions o) storage of patient's own drugs p) use of i n v e s t i g a t i o n a l drugs q) r e l a t i o n s h i p , p a r t i c i p a t i o n in pharmacy <& therapeutics committee r) maintaining and keeping available approved stock of antidote and other emergency drugs s) association with Regional Poison Control Information Centre t) other: employee recruitment employee recognition employee evaluation in-house security measures 3. a) Does your department implement quality assurance? Explain. Who i s responsible, how i s data used, what i s the impact? b) Do you see that there i s a r e l a t i o n s h i p between R.M. and Q.A.? - Both have goals for safe, quality patient care -process and r a t i o n a l e d i f f e r . 4. Are s t a f f development programs related to managing " r i s k " factors? Explain. 5. Who i s responsible for keeping the pharmacy s t a f f aware of l e g a l issues r e l a t i n g to hospital pharmaceutical services? How i s i t done? 194 -6. The standards, q u a l i t y assurance, audits, s t a f f development programs, etc. are a l l part of the American concept of Risk Management. a) What type of costs could you i d e n t i f y , i f you were to operationalize such a program? b) Would there be any costs associated with not implementing t h i s type of program? 7. a) How would you describe the effectiveness of the present practices (standards, p o l i c i e s , procedures)? Explain, b) If you could make any changes, in what area(s) would they be? 8. In the past hour we have discussed American Risk Management concepts and compared them to the present practices in the B.C. hospital s e t t i n g . a) In your opinion, what is/ a r e the major di f f e r e n c ( s ) between Risk Management and present practices? b) Would you consider the Risk Management approach to be a s h i f t in strategy in managing r i s k s i n the hospital setting? Explain. c) How would you rate the necessity for moving to t h i s type of approach in B r i t i s h Columbia? 9. Additional comments: - How much professional d i s c r e t i o n i s allowed in the management of r i s k s ? Is t h i s applicable to a l l s t a f f members? - Has there been any impact from the c o l l e c t i v e bargaining process on the management of r i s k s ? 195 -Housekeeping 1. Does the (hospital) orientation program include the hospital's expectations for general safety practices? s p e c i f i c practices related to housekeeping? 2. Does your department have a written procedure, standard, e t c . for each of the following? How How C o r r e c t i v e Enforced A c t i o n Taken a. reporting unsafe conditons b. working with hazardous materials c) f i r e protection d) handling "sharps" materials e) using e l e c t r i c a l equipment properly grounded cords, plugs in good repair storages f) dress code, use of protective clothing g) t r a n s f e r r i n g / l i f t i n g heavy a r t i c l e s h) securing moveables (tables, t r o l l e y , etc. S p e c i f i c : a) using materials & equipment appropriately wood handle tools free from s l i v e r s buckets in good repair b) wet f l o o r , waxing procedures c) use of elevated platforms d) awareness of s p e c i a l hazard areas x-ray, surgery, i s o l a t i o n e) clearance of materials, equip-ment from a i s l e s , passageways and stairways f) storage of brooms, buckets, etc. g) storage of flammable l i q u i d s h) storage, d i s p o s i t i o n of cleaning rags & waste *-» l . What H/P m CO H hj rt O O &> O 3 Who Respons. ' ' * Other - 196 -What H/P Who ^ ^ >? How How Corrective o o P> O I - 1 0 General* Respon. .° . P Other Enforced Action Taken i ) storage, d i s p o s i t i o n of ash-tray waste j) standards for "good" house-keeping k) other; committee p a r t i c i p . employee recruitment recognition evaluation 3. a) How i s quality monitored in your department? b) Do you think that q u a l i t y control would be an important part of Risk Management? Explain. 4. Are s t a f f development and t r a i n i n g programs related to management of " r i s k " factors? Explain. 5. Are there any l e g a l considerations that you present to the s t a f f (housekeeping)? Explain. 6. The standards, safety and t r a i n i n g programs are a l l part of the American concept of Risk Management. a) What type of costs could you i d e n t i f y i f you were to operationalize such a program? b) Would there be costs associated with not implementing t h i s type of program? 7. a) How would you describe the effectiveness of the present practices (standards, procedures)? Explain, b) If you could make any changes, in what area(s) would they be? 8. In the past hour, we have discussed American Risk Management concepts and compared them to the present practices in the B.C. hospital s e t t i n g . a) In your opinion, what is/ a r e the major differences(s) between Risk Management and present practices? b) Would you consider the Risk Management approach to be a s h i f t in strategy in managing r i s k s in the hospital setting? Explain. c) How could you rate the necessity for moving to t h i s type of approach in B r i t i s h Columbia? 9. Additional comments. - 197 -Insurer a) How do you describe Risk Management? b) What do you think i s the l e v e l of knowledge and practice of the Risk Management concept amongst B.C. hospital administrators? c) Does your company have a r e s p o n s i b i l i t y for educating c l i e n t s (hospitals) in c o n t r o l l i n g l i a b i l i t y or changing strategies in c o n t r o l l i n g l i a b i l i t y ? a) As an insuring agency, approximately what number or proportion of B.C. acute care hospitals do you provide coverage for? b) Your basic package includes coverage for property, l i a b i l i t y , crime, b o i l e r and machinery, t r a v e l and volunteer workers. What type(s) of option(s) do you provide? What i s your company's position on Risk Management for hospitals? Explain. What factors contribute to the amount of the premium? How i s i t adjusted? During 1980-81 insurance premiums for Ontario hospitals increased dramatically, and for the f i r s t time insurance companies were experiencing investment income f a l l i n g below underwriting losses. Do you foresee a s i m i l a r trend occuring in B.C.? Explain. a) Risk Management i s a well established practice in the U.S. h o s p i t a l . Are there any incentives to move in t h i s d i r e c t i o n for B.C. hospitals? b) What advantages do you perceive i f the hospitals choose t h i s option? For the insurer... For the h o s p i t a l . . . Do you think that over the past 5-10 years Canadian/B.C. hospitals have become less immune to l i a b i l i t y ? Explain. a) What i s the insurer's view of decisions such as Yepremian (Ontario) and Osburn (N.B.)? Do you foresee any changes ( i n coverage, premiums, etc.) because of these decisions? b) How would you describe your r e l a t i o n s h i p with l e g a l counsel in matters r e l a t i n g to hospital l i a b i l i t y ? - 198 -9. a) What would you consider to be the high r i s k areas/situations in a hospital? b) How do you see hospital personnel managing these situations? c) Do you think the union influence i n B.C. has had any impact on how hospitals manage r i s k situations? Explain. d) How would you describe the difference between present hospital practices and Risk Management in dealing with these situations? 10. If you offered a Risk Management package, and a hos p i t a l chose that option, would the premium be lower? Explain. 11. Would you be w i l l i n g to share any of your company's s t a t i s t i c s with me i f hospital anonimity i s maintained? l e . number of claims cost of premiums amount of awards 12. Additional comments: - 199 -Lawyer 1. Are you f a m i l i a r with Risk Management... for hospitals? What does t h i s mean to you? - For purposes of my study, I am defining Risk Management as a management function that includes surveillance of a l l hospital operations in order to i d e n t i f y , monitor, evaluate and take cor r e c t i v e action for unplanned, unwarranted or unexpected situa t i o n s ( r i s k s or problems) that may lead to an in d i v i d u a l ' s injury, property damage or other form of loss. It can be viewed as a formalized control process within the hosp i t a l organization. 2. In your opinion what are the major l e g a l problems facing Canadian/B.C. hospitals today? Explain. 3. Hospital l i a b i l i t y has reached i n c r e d i b l e proportions i n the United States. Do you think B.C. hospitals could ever be in a comparable position? Explain. 4. a) What would you consider to be the high r i s k areas/situations i n a hospital? b) How do you see hospital s t a f f organizing for prevention of these situations? c) Do you think that unions have had any impact on how hospitals manage r i s k s ituations? Explain. 5. I f you were the chief l e g a l advisor for a hos p i t a l in B.C. ... a) What advice would you give re: c o n t r o l l i n g l i a b i l i t y ? b) What would be your role in educating administration, and the board regarding c o n t r o l l i n g l i a b i l i t y ? c) What type of rel a t i o n s h i p should the lawyer maintain between hospital and the insurer? 6. a) Do you think that Risk Management can help a hospital protect i t s e l f from l i a b i l i t y ? Explain. b) How do you think Risk Management d i f f e r s from present "protective" practices? Explain. c) Do you think a change in managing r i s k s i t u a t i o n s i s necessary for B.C. hospitals? Explain. - 200 -7. In Ontario, hospital l i a b i l i t y insurance premiums are increasing. The Ypremian (Ont.) and Osbourne (N.B.) cases have l e f t lawyers, insurers and hospital adminstrators questioning the parameters of hospital l i a b i l i t y . What implications do you see from these cases? Explain. 8. Additional comments: 

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