What Is the Business Case for Patient Safety? Costs and Potential Costs Savings

1. What Is the Business Case for Patient Safety?Costs and Potential Costs Savings James Mortimer President, Midwest Business Group on Health Chicago, IL

2. Estimated Cost of Poor Quality Health Care The Annual Cost of Poor Quality Care Per Covered Employee - 2002 $1,350 Direct Health Care Expense $ 350 Indirect Cost $1,700 Total Cost of Poor Quality “Those costs that would disappear if every task were always performed without deficiency” - Juran

3. Health Care Quality Problems • Overuse • Underuse • Misuse • Administrative waste and delays

4. Misuse • Preventable hospital-acquired infections: • An estimated two million individuals suffer from hospital-acquired infections each year, leading to nearly 90,000 deaths. Between one quarter and three quarters of these infections could have been prevented.Source: CDC, clinical reports • Estimated Cost of Poor Quality - $6.2 to $18.6 billion per year

5. Major Findings • Public and private purchasers bear responsibility by paying for poor care • Public and private purchasers can take four specific steps to improve quality and reduce costs

6. Responsible Purchasing ACTION CYCLE Action Set #1: Identify High Priority Problems Action Set #2: Measure & Improve Performance Action Set #4: Reward High Quality Providers Action Set #3: Educate and Inform Consumers

7. A CEO’s Perspective • "Of course we are terribly dependent upon our employees for the operation of our business. But more than that, I personally believe we also have a moral obligation to our loyal workers to provide a safe workplace and safe health care.” – Dean Olson, president of Aircraft Gear, a precision parts manufacturing firm in Rockford, IL.