Improving Outcomes and Reducing Total Cost of Risk for Healthcare Organizations through the Great Resignation

By: Bill Bower

October 25, 2022 — Retaining top talent has always been a priority, but the disruptive arrival of the COVID-19 pandemic combined with the Great Resignation has created unprecedented and ongoing challenges for the healthcare industry.

From adapting to remote working, complying with evolving public health mandates, and managing complex mental health issues, leaders have had to redefine what it means to "come to work." Skilled employees are vital to maintaining quality of care in a healthcare setting, and it is evident that only healthcare organizations that evolve in the way they attract, engage, and retain their talented workforce will continue to thrive in the future.

The dynamic labor market has placed the power in the hands of workers to take advantage of new employment opportunities for better-paying jobs with more opportunity for upward mobility within an organization. Factors such as burnout can take a severe mental and emotional toll on professionals in the highly charged healthcare industry.

In every industry, employee turnover means more time spent on rehiring, retraining, and reinvesting in new talent. For the healthcare industry, however, staffing shortages combined with the additional costs of recruitment, onboarding, and training have become increasingly daunting. Attracting and retaining talent has become expensive and near impossible as temporary staffing agencies provide financially attractive alternatives that healthcare systems find difficulty matching as more workers, from clinical to administrative, search for alternatives.

Further, staffing shortages, burnout, and decreased staff-to-patient ratios can all have a detrimental impact on service delivery and patient care. This comes at a time when more and more organizations are facing a hardening insurance market, causing them to rethink risk transfer and assume additional risk in an effort to reduce premium costs — a perfect storm for service degradation and increased liability.

As the healthcare industry attempts to weather the storm, it looks for methods to avoid dilution of quality-of-service delivery and better manage, if not reduce, total cost of risk. For many, partnering with a qualified risk management consultant and/or third-party administrator can assist in reducing costs while maintaining quality of care and more efficiently managing risk issues and clinical incidents when they do arise.

Clinical Risk Management Analysis

What are the risk drivers that are affecting patient care and increasing liability exposure? Is your organization properly capturing incidents that do, or could, negatively impact patient care? Have staffing levels or other factors negatively impacted work flow, communication, and overall care delivery? Does the organization have the resources and bandwidth to explore the root causes of these events and properly deploy methods of improvement?

A qualified risk management consultant can help. By deploying a fresh set of eyes, organizations can better identify and understand risk drivers that are affecting patient care. Through such consultation, an organization can develop best practices for incident review, process improvement, and action planning to dramatically reduce flawed processes that are, or could, affect patient safety, satisfaction, and outcomes.

Third-Party Administration of Claims

Through loss of administrative staff, changes to infrastructure or simply the need to find methods to achieve operational savings, more and more organizations are finding that outsourcing can be an effective means of cost reduction without sacrificing quality or efficiency. For some healthcare systems, the need to retain more risk has changed financing models. For others, competition in the market, altered payer mix, or changes in reimbursement models have caused the need to further explore methods of savings to redirect more capital to the clinical enterprise.

While, fundamentally, there are a number of ways to approach and achieve a reduction in total cost of risk, use of third-party administration to manage claims can be ideal. For the mature organization that has historically self-administered claims, third-party administration can significantly reduce spend on operational claim costs by removing overhead, avoiding the annual upkeep and cost of a Risk Management Information System (RMIS), and transferring the risk of errors and omissions to a third party.

For others that find themselves on the cusp of deciding whether to self-administer claims, outsourcing can provide a seamless transition. Establishing an infrastructure, hiring and training staff, and purchasing and maintaining a RMIS can prove daunting and costly. Further, the regulatory and compliance requirements at both the state and federal level can be complex. With fines and penalties looming for the failure to properly report, third-party administration can be the perfect method of shifting that risk.

The impact of the Great Resignation has proven particularly difficult in the healthcare setting. The possible negative effect on patient care can potentially increase an organization's risk portfolio. At the same time, systems are looking to reduce administrative and operational expense in order to afford to maintain staffing at adequate levels and provide more funding to patient care. Engagement of a clinical risk management consultant can help identify health systems' issues that are affecting patient care, including staffing and resource. Similarly, retention of a qualified third-party administrator can allow any healthcare system or organization to appreciably reduce operational costs and minimize regulatory reporting risks while maintaining an efficient, effective, and professional process of claims and litigation.