Risk Insider: Heather Moore

Health Care Took a Risk on OB Hospitalist Programs; What They Learned Benefits Risk Managers Everywhere

By: | July 31, 2018 • 5 min read
Heather Moore is Vice President of Risk Management, Quality & Compliance for Ob Hospitalist Group, the nation’s largest OB/GYN hospitalist organization, directing national risk strategy and operations as well as leading organization’s national perinatal initiatives and areas of focus. Heather can be reached at [email protected]

Risk professionals play a high-stakes role in their organization. From risk finance, to loss control, to proactive enterprise management solutions, risk managers are constantly looking to raise the bar in a fast-paced landscape. However, the stakes are highest when a risk assessment role takes place in a highly unpredictable industry or discipline.

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It’s hard to find a more high-energy work environment than a hospital Labor & Delivery department. For pregnant women and their families, there is the imminent joy in giving birth, tempered by the intensity and pain of delivery.

For obstetricians, there is this need to be on-call and ideally available 24/7, the moral and professional duty to respond to gynecological emergencies and improve outcomes in women’s health, the profound sense of responsibility that two vulnerable lives are literally in one’s hands, and the delight at bringing a beautiful new baby into the world.

There is also the potential for processes to break down and rapid response times to lengthen as, by its very nature, the unanticipated and unexpected can occur in this setting. And with that high risk and unexpected scenario comes the constant shadow of a potential malpractice lawsuit.

There is always risk.

An OB Hospitalist Program

Hospital OB departments must be at the forefront of proactively addressing quality improvement and risk management for their patients, including in obstetrics. There are almost four million childbirths in the U.S. annually, almost all occurring within the hospital setting. In the last decade, a growing number of hospitals are considering new approaches to traditional risk management. Their approaches go beyond reactive risk management and loss control (changes to management processes) to encompass large-scale shifts in care delivery based on intentional strategic imperative — even when that means disruption and re-invention of the existing model.

An adoption of enterprise risk management in which risk professionals play a meaningful decision-making role in the strategic initiatives and business plans within their health care setting is critical to creating a holistic approach to health care that will balance quality improvement and risk control with scalability and efficiency of the care delivery model.

In obstetrics, for example, most hospitals have relied on community OB/GYNs to drop what they were doing and get to the hospital for their patients’ deliveries. Care had the potential to be fragmented and rushed; patient safety, while always top-of-mind, played second fiddle to ensuring that the patient was delivered by their own OB/GYN. Despite the high numbers of adverse incidents, especially those related to delays in care, that’s the model still often found in many Labor & Delivery departments.

An adoption of enterprise risk management in which risk professionals play a meaningful decision-making role in the strategic initiatives and business plans within their health care setting is critical to creating a holistic approach to health care that will balance quality improvement and risk control with scalability and efficiency of the care delivery model.

The advent of hospitalists changed all of that, as hospitals began to consider whether another staffing model might work better. In an OB-hospitalist model, hospitals are staffed with board-certified OBs 24/7 who provide care to women at all stages of labor and delivery. When the community OB arrives, the OB hospitalist either turns over patient care or assists the community OB as needed to ensure a successful co-management of the patient.

It makes sense from a patient care point of view, and risk management professionals have been critical to supporting this initiative within their hospital systems, where they are active decision makers alongside other health care administrators, to consider emerging best practice solutions within OB care.

One study in the Journal of Patient Safety examined adverse incidents at a hospital before and after the implementation of an OB hospitalist program. Under the traditional model from July 2012 to September 2014, 11 safety events occurred on the labor and delivery floor. A full-time OB hospitalist program was implemented in October 2014. In the 25 months that followed, there was only one safety event associated with labor and delivery.

Other research validates the risk benefit. In 2016, OBHG and one of our system partners undertook a study to analyze the key risk mitigation strategies that resulted in favorable loss trends/claim reduction for the system in recent years. The study found that a 31 percent reduction in perinatal serious-harm events at hospitals was attributable to one factor: implementation of an OB hospitalist program at those facilities.

Based on our experience, here are three ways that companies can strategically minimize, rather than manage, risk:

1) Include social media and reputation in the risk calculations. Social media and the consumer voice heighten reputational and public relations risk across every industry, and hospitals are no different. Even if a hospital can support huge liability line items for OB liability risk, there is no protection from reputational risk in an economic environment where every patient counts.

Customer-review platforms like Yelp and Amazon amplify small voices to large viral movements. The public relations liability from any bad outcome and claim could cost more in a fiscal year than any litigation.

2) Smart companies invest in both proactive and reactive PR, responding quickly to own responsibility, apologize for errors, contain the fallout and move on. The media cycle is swift, but when companies shy away from the former, they’ll pay the price when they can’t get to the latter.

3) Being risk adverse does not translate to successful risk management. Not every initiative to improve quality and manage risk, both financial and legal, is successful. That doesn’t mean they shouldn’t happen.

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When Alan Mulally took over as CEO of Ford Motor Company, he launched a series of controversial management moves and turned down government bailout funds. It was a calculated risk. Ford was the only one of the Big Three auto manufacturers to do so; Mulally was eviscerated in the business media. But ultimately, the gambit won out: Mulally led one of the great comebacks in American business.

Not all stories end the same way, but changing course strategically keeps a company nimble and in a mode of constant self-evaluation. That’s key to developing and understanding your organization’s risk tolerance and best practices for managing risk. This can’t be effectively accomplished unless risk leaders are active decisions makers within their leadership teams.

Take a Risk

Be bold. When the first hospital launched an OB hospitalist program, the health care industry was shocked. Most pundits felt that changing up the traditional staffing model would lead to more risk, not less. In reality, the opposite is true. Disruption can rattle nerves, but industries eventually stabilize and are the better for it.

Just as having a baby requires a leap of faith. So goes risk management. When companies and industries take a risk and try something new, the outcome might very well be the risk reduction they sought to achieve.

More from Risk & Insurance

More from Risk & Insurance

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: THE HEAT IS ON

Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”

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Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.

PART TWO: STRICKEN FAMILIES

“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.

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“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.

PART THREE: AN INSURANCE TANGLE

Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.

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But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.

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Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]