Upload
nevin
View
47
Download
2
Tags:
Embed Size (px)
DESCRIPTION
“PROMISED LAND” ENTERPRISE RISK MANAGEMENT. Willis HRH Health Care Practice 13 th Annual Forum. July 14, 2009. ENTERPRISE RISK MANAGEMENT. Moderator: Ken Felton, RN, MS, CPHRM, FASHRM Willis National Health Care Practice Panelists: - PowerPoint PPT Presentation
Citation preview
“PROMISED LAND” ENTERPRISE RISK MANAGEMENT Willis HRH Health Care Practice
13th Annual Forum
July 14, 2009
2
ENTERPRISE RISK MANAGEMENTModerator:
Ken Felton, RN, MS, CPHRM, FASHRMWillis National Health Care Practice
Panelists:
Shulamith KleinSenior Director of Risk and Insurance ServicesEmory University & Emory Healthcare
Sheila Hagg-RickertSystem Director of Risk ManagementCHRISTUS Health
3
HOSPITAL FINANCIAL AND ORGANIZATIONAL RISK INCREASING Financial risk growing in healthcare Complexity of risks are changing The Noblis – Center for Health Innovation research
Losses in investment income Difficulty accessing capital
Risk Managers will face increased challenges
4
AMERICAN COLLEGE OF HEALTH CARE EXECUTIVESResearch concluded:Quality and patient safety a top three concern for CEOs Creating Implementing Monitoring
5
RESEARCH OF U.S. HOSPITALSThe Agency for Healthcare Research and Quality
“A study of U.S. Hospitals found that while most collect information on adverse events, far fewer make effective use of the data”1
The Senate Health, Education, Labor and Pensions Committee Concluded: No consistent progress in improving quality United States ranked last out of 19 countries on mortality
1Health Care Daily, Patient Safety Most Hospitals Collect Adverse Data But Systems Need Improvement, Volume 13, Number 236, Tuesday, December 9, 2008., pg. 1.
6
CRISIS IS FAILURE OF RISK MANAGEMENT Enterprise Risk Management (ERM) is attracting more attention Corporate cases have motivated organizations to embrace ERM External pressures encouraging enterprise-wide risk Organizations have begun to develop, support and commit to
ERM
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
Enterprise Risk Management,is it the “Promised Land”?
Willis HRH Health Care Willis HRH Health Care PracticePractice
Annual ForumAnnual Forum
Nashville, TNNashville, TN
July 14, 2009July 14, 2009
Shulamith KleinShulamith Klein
Senior DirectorSenior Director
Office of Risk & Office of Risk &
Insurance ServicesInsurance Services
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
Emory at a glanceEmory at a glanceEmory at a glanceEmory at a glance
• Teaching, research, academic Teaching, research, academic healthcarehealthcare
• 23,500 employees23,500 employees• 12,500 students12,500 students• $ 3.0 billion operating budget$ 3.0 billion operating budget
2
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
Emory HealthcareEmory HealthcareFacts & FiguresFacts & Figures
Emory HealthcareEmory HealthcareFacts & FiguresFacts & Figures
• Largest healthcare system in Largest healthcare system in GeorgiaGeorgia
• Tertiary, geriatric, orthopaedic Tertiary, geriatric, orthopaedic hospitalshospitals
• Multi-specialty & pediatric Multi-specialty & pediatric outpatient outpatient
• Long term care & independent Long term care & independent living living
3
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
Emory HealthcareEmory HealthcareFacts & FiguresFacts & Figures
Emory HealthcareEmory HealthcareFacts & FiguresFacts & Figures
• 1,241 occupied hospital beds1,241 occupied hospital beds• 11,100 employees11,100 employees• 533 fte employed physicians533 fte employed physicians• $ 1.6 billion net revenue$ 1.6 billion net revenue• $ 64 million charity care$ 64 million charity care
4
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
Emory’s philosophy Emory’s philosophy regarding riskregarding risk
Emory’s philosophy Emory’s philosophy regarding riskregarding risk
““ Risk, in one form or another, is present Risk, in one form or another, is present in virtually all worthwhile endeavors. in virtually all worthwhile endeavors. We recognize that not all risk is bad We recognize that not all risk is bad and our goal is not to eliminate all and our goal is not to eliminate all risk, for by doing so we would cease risk, for by doing so we would cease all productive activity. Rather, our all productive activity. Rather, our goal is to assume risk judiciously, goal is to assume risk judiciously, mitigate it when possible, and prepare mitigate it when possible, and prepare ourselves to respond effectively and ourselves to respond effectively and efficiently when necessary.”efficiently when necessary.”
5
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
Why ERM?Why ERM?Why ERM?Why ERM?
• Break through operational silosBreak through operational silos• Identify key exposuresIdentify key exposures• Gauge vulnerability pointsGauge vulnerability points• Assess appetite for riskAssess appetite for risk• Identify best practicesIdentify best practices• Plan proactivelyPlan proactively• Prioritize resources Prioritize resources • Reinforce accountability Reinforce accountability
NO SURPRISES!NO SURPRISES!
6
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
It starts at the top It starts at the top It starts at the top It starts at the top
Audit Committee of the BoardAudit Committee of the Board
Chief Internal Audit OfficerChief Internal Audit Officer
Exec VP Finance and Exec VP Finance and AdministrationAdministration
The President is on boardThe President is on board
7
14
Emory Enterprise-wide Risk Management (ERM)ERM Executive Sponsors/Risk Chairs and Framework
ERM Executive Sponsors Committee(Reputational & Strategic Risks)
• President (Committee Chair)
• Provost and Executive VP for Academic Affairs
• Executive VP for Finance and Administration
• Executive VP for Health Affairs
• President and CEO, Emory Healthcare
• Senior Director, Office of Risk and Insurance Service (Co-Chair)
• Vice President, Finance
• Vice President of Investments, Chief Investment Officer
• Senior Vice Provost, Academic Planning & Faculty Development
• Special Assistant to Sr. VP & Dean, Campus Life
• Vice President, Human Resources
• Vice President, Information Technology & CIO
• Senior VP and General Counsel
• Senior VP and Dean, Campus Life
• Vice President and Secretary of the University
• Vice President for Communications & Marketing
ERM Steering Committee
• Chief Audit Officer (Co-Chair)
• Deputy General Counsel
• Vice President, Health Affairs Research
• Vice President for Research Administration
• Vice President, Campus Services
• Chief of Staff to Vice President, Campus Services
• Executive Director, Critical Event Preparedness and Response
June 26, 2009
Finance and Investment
InformationTechnology
Campus Safetyand Physical
Plant
Governanceand Corporate
Affairs
Academicand Student
Affairs
HumanResources
ResearchHealthcare
and ResearchHealthcare
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
Emory UniversityEmory UniversityEnterprise Risk ManagementEnterprise Risk Management
Guiding PrinciplesGuiding Principles
Emory UniversityEmory UniversityEnterprise Risk ManagementEnterprise Risk Management
Guiding PrinciplesGuiding Principles• Emory upholds an early-warning system for identification of adverse occurrences;Emory upholds an early-warning system for identification of adverse occurrences;
• All individuals are empowered to report problems and concerns early on, without All individuals are empowered to report problems and concerns early on, without fear of retribution;fear of retribution;
• Reports of adverse occurrences are responded to promptly and thoroughly;Reports of adverse occurrences are responded to promptly and thoroughly;
• Investigations of adverse occurrences, complaints, and concerns are conducted Investigations of adverse occurrences, complaints, and concerns are conducted with integrity and continue until the fact-finding process is concluded;with integrity and continue until the fact-finding process is concluded;
• Reliable and useful information is shared promptly with leadership and other key Reliable and useful information is shared promptly with leadership and other key constituencies;constituencies;
• Communication with the Emory community and the public at large is pro-active, Communication with the Emory community and the public at large is pro-active, honest, and respectful of individual privacy;honest, and respectful of individual privacy;
• Emory maintains a framework for regularly assessing the effectiveness of risk Emory maintains a framework for regularly assessing the effectiveness of risk management practices and a culture that fosters process improvement when management practices and a culture that fosters process improvement when indicated.indicated.
These are the principles to which we hold ourselves, and those with whom we These are the principles to which we hold ourselves, and those with whom we partner.partner.
9
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
It’s a process…It’s a process…phase 1…phase 1…
It’s a process…It’s a process…phase 1…phase 1…
• Sub-committees identified 555 Sub-committees identified 555 “risks”“risks”
• Ranked by severity and frequencyRanked by severity and frequency• Steering Comte edited down to Steering Comte edited down to
141 141 • Rankings re-assessed Rankings re-assessed • 57 “key” risks based on final risk 57 “key” risks based on final risk
factorsfactors
10
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
……phase 2…phase 2………phase 2…phase 2…
• Primary Operational Leader (“POL”) Primary Operational Leader (“POL”) - - primary responsibility over functional primary responsibility over functional area where risk has greatest potential area where risk has greatest potential impact, (e.g., CEO, COO, Dean, EVP, impact, (e.g., CEO, COO, Dean, EVP, Provost)Provost)
• Risk Mgt Process Owner (“RMPO”) Risk Mgt Process Owner (“RMPO”) - - sufficiently familiar with risk to prepare sufficiently familiar with risk to prepare comprehensive Risk Management Plan, comprehensive Risk Management Plan, (e.g., Directors, Quality Officers, VP)(e.g., Directors, Quality Officers, VP)
11
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
……phase 3…phase 3………phase 3…phase 3…
• President charged RMPOs with President charged RMPOs with Risk Management Plans Risk Management Plans
Steps being taken to manage Steps being taken to manage risk at acceptable levelrisk at acceptable level
Operational and communication Operational and communication responses to adverse responses to adverse occurrencesoccurrences
2 pages in 90 days2 pages in 90 days
12
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
……phase 4…phase 4………phase 4…phase 4…
• Steering Committee reviewed 57 Steering Committee reviewed 57 plansplans
AccountabilityAccountabilityExisting interventions or wish Existing interventions or wish list?list?
• RMPOs revised plans RMPOs revised plans • 57 plans delivered to Executive 57 plans delivered to Executive
CommitteeCommittee
13
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
……and phase 5and phase 5……and phase 5and phase 5
5 risk hearings/yearly, 3-hour sessions5 risk hearings/yearly, 3-hour sessionsMaximum 2 operational areas/sessionMaximum 2 operational areas/session5 min presentation, 5 min q&a5 min presentation, 5 min q&a
• Bridge gap between exposure and Bridge gap between exposure and response plan?response plan?
• Incorporate “best practices”Incorporate “best practices”• Balancing mitigation costs with Balancing mitigation costs with
strategic goalsstrategic goals• Are we at an acceptable risk level?Are we at an acceptable risk level?
14
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
18 months to 18 months to kickoffkickoff
18 months to 18 months to kickoffkickoff
15
Pres
rolls
out C
omte
Fra
mew
ork
Exec
Comte
char
ges S
teer
ing
Comte
with
risk
iden
tific
atio
n
“Key
Ris
ks”,
POLs, G
uidin
g
Princi
ples
Pres
char
ges R
MPOs
Initi
al P
lans
due
Plan re
view
Plans
to E
xec
Comte
1st r
isk
hearin
g
Mar/Apr
2006
August
2006
Nov
2006
April
2007
May
2007
June
2007
August
2007
Sept
2007
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
Lessons learnedLessons learnedLessons learnedLessons learned
• Process itself reveals trends and Process itself reveals trends and opportunities for risk mitigationopportunities for risk mitigation
• Need to stay focused on critical Need to stay focused on critical risks risks
• Priorities change over time due to Priorities change over time due to internal and external factorsinternal and external factors
• Set reasonable expectations Set reasonable expectations
16
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
New in FY09New in FY09New in FY09New in FY09
#1 Adjustments to “key” risks -#1 Adjustments to “key” risks -Conflict of commitmentConflict of commitmentLiquidity riskLiquidity risk
17
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
New in FY09New in FY09New in FY09New in FY09
#2 Mapping -#2 Mapping -Share key risks with Board Share key risks with Board Committee responsible for specific Committee responsible for specific operational areaoperational area
Governing body needs to be aware Governing body needs to be aware of risk management processes in of risk management processes in place place
Audit Committee maintains Audit Committee maintains responsibility for overseeing ERM responsibility for overseeing ERM processprocess
18
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
PerspectivePerspectivePerspectivePerspective
• Bubble charts, COSO cubes, and Bubble charts, COSO cubes, and influence diagrams aren’t for influence diagrams aren’t for everyoneeveryone
• It’s easy to over-engineer the process It’s easy to over-engineer the process
• Privilege and confidentiality matter Privilege and confidentiality matter and can be managedand can be managed
• Staff make decisions involving risk Staff make decisions involving risk every day without calling it Enterprise every day without calling it Enterprise Risk Management Risk Management
19
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
……And I believe in a And I believe in a promised land…promised land…
……And I believe in a And I believe in a promised land…promised land…
Broad-based management Broad-based management ownership ownership
++Principled actionPrincipled action
++Common senseCommon sense
==SuccessSuccess
20
EEMORY MORY HHEALTHCAREEALTHCAREEEMORY MORY HHEALTHCAREEALTHCARE
Frequency & Frequency & severity severity
Frequency & Frequency & severity severity
Likelihood of occurring (frequency)Likelihood of occurring (frequency)1-low: <10% chance of occurring in 2 years1-low: <10% chance of occurring in 2 years2-medium: <25% chance of occurring in 2 years2-medium: <25% chance of occurring in 2 years3-high: <50% chance of occurring in 2 years3-high: <50% chance of occurring in 2 years4-very high: >50% chance of occurring in 2 years or already 4-very high: >50% chance of occurring in 2 years or already
occurringoccurring
Potential Impact (severity)Potential Impact (severity)1-minor: unlikely to have permanent or significant effect on 1-minor: unlikely to have permanent or significant effect on
institution’s reputation or achievement of its strategic institution’s reputation or achievement of its strategic objectivesobjectives
2-moderate: will have significant impact on institution but 2-moderate: will have significant impact on institution but can be managed without major impactcan be managed without major impact
3-serious: will have significant effect on institution and 3-serious: will have significant effect on institution and require major effort to manage and resolve occurrence, as require major effort to manage and resolve occurrence, as well as its ramificationswell as its ramifications
4-very serious: will threaten existence of institution if not 4-very serious: will threaten existence of institution if not resolvedresolved
Risk factor = [(.50) x (frequency)] + (severity)Risk factor = [(.50) x (frequency)] + (severity)21
Promised Land: Enterprise Risk Management
Sheila Hagg-Rickert, MHA, MBA, JD, CPCU, DFASHRM,
CPHRMCHRISTUS Health
Houston, TX
July 14, 2009
CHRISTUS Health and Emerald Assurance Cayman, Ltd: A Brief History
CHRISTUS Health:Founded in 1868 in Galveston, TXSystem one of the 10 largest Catholic healthcare systems in U.S.40+ hospitals and other facilities in TX, LA, UT, MO, AR, GA and NM+ Mexico
Assets>$ 5 billion and FY 09 revenues > $4 billionEmerald Assurance Cayman, Ltd.
Formed in 2003Single-parent structureAssets> $150 millionRetained risk, excess and reinsurance coverage- U.S., Bermuda and London
The CHRISTUS ERM Process to Date
Formally initiated mid-2008Initial educationDevelopment of a corporate frameworkRisk identificationRisk assessmentFY 09 pilot projects
ERM Pilot Projects
ERM Oversight CommitteeSenior Leader Process OwnersTask Forces
Specific Deliverable (Matrix, Algorithm, Database) to identify gaps in processes, develop priorities, apply controls and assign responsibilities
Quarterly MetricsERM Scorecard
Round I Projects:Plant and Equipment Infrastructure: Repair, Maintenance and ReplacementRevenue Cycle and CollectionsStrategic and Business Planning
Semiannual Reporting Through Audit Committee of the BoardRound II Projects:
Physician AlignmentResource AvailabilityEmergency Preparedness
Emerald Assurance’s Support of ERM
Broadening of insurance coverages provided through the captive:
Employer’s LiabilityWorker’s Compensation (as a reinsurer)D&O/ Employment Practices Liability deductible buyback
Security Guard Liability (as a reinsurer)25% of first $100 million Property layer on a quota share basis
Reinsurer for Employed PhysiciansExpenses Related to Miscellaneous Business LitigationEvaluating extending coverage to indemnity
Emerald Assurance’s Support of ERM
Funding of System-Wide Loss Prevention Initiatives:Associate Back Injury PreventionElectronic Fetal Monitoring Certification
Education and trainingPurchase of lift equipment
Performance-Based Development System (PBDS)Assessment of clinical competency, judgment and decision-
making and inter-personal communication skillsMentoring and re-testingTermination Premium discounts
Building Hardening in Gulf Coast LocationsSimulated Learning Labs
Emerald Assurance’s Support of ERM
Emerald Innovations Grant Program:Applications submitted by local facilities Must include measurable goals, timelines, resource requirements, metrics, budget, cost/benefit analysis, etc.
Multi-disciplinary screening and selection committees
Focus on start-up and demonstration projects$9.6 million distributed to date
Emerald Assurance’s Support of ERM
Other Emerald-Funded Initiatives:Risk Management ScorecardICARE (Issue, Cause, Analysis, Resolution, Education) Docket
Risk Management and Occupational Health and Safety Councils
AICE Infection Control Tracking SoftwareRASMAS Product Recall Tracking SoftwareLegal Solutions Suite SoftwareEmergency Department Education and Loss Prevention Algorithms
Emerald Assurance’s Support of ERM:
Covering expenses related to uninsured litigation through the captive
Provides rationale for RM to handle all litigationProposal to expand to indemnity coverage with specified facility retention and coverage limits
CHRISTUS energy management initiative
How a Captive Can Help Foster ERM
Providing additional or broader insurance coveragesFunding loss prevention initiatives
Limitations to Utilizing Your Captive as an ERM Vehicle
Risks typically must fit within definition of insurable risks to be coveredLack of “follow form” excess coverageRegulator unfamiliarity with ERM processDifficulties in making actuarial projectionsTendency of organization to view captive as a source of free money to fund virtually anything
The Future of Emerald Assurance as an ERM Vehicle
Expand Emerald Innovations grant process to include:
ERM risksInitiatives proposed by other system departments
Fund ERM education Review specific ERM risk mitigation and risk financing strategies as they are developed to determine feasibility of Emerald’s providing assistance
40
ERM READINESS ASSESSMENT SURVEY RESULTS
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
Poor
Fair
Satisfactory
Good
Excellent
41
ERM READINESS ASSESSMENT SURVEY RESULTS
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Poor Fair Satisfactory Good Excellent
Poor
Fair
Satisfactory
Good
Excellent