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CA Sitting on Millions in Hospital Fines

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   August 07, 2014

If I were running a hospital, I would want to know that this money was being put to good use to find out how and why preventable medical errors occur and to find ways to keep them from reoccurring.

California hospitals whose mistakes resulted in harm or death to patients through the most egregious type of lapse, the "immediate jeopardy," have to pay for their mistakes. And pay, and pay, they have.

More than a third of the state's acute care facilities have been penalized a total of 326 times to date, in amounts as high as $100,000 for hospitals with three or more penalties since 2007. One hospital, Southwestern Medical Center in Murrieta, holds the record, having been fined 11 times.

CA Fines 8 Hospitals for Medical Errors

And the Department of Public Health's coffers keep growing. As of late July, these fines have garnered about $12 million. Another $3 million in fines still awaits collection, including $1 million from 35 hospitals that have filed appeals.

If I were running a hospital, I would want to know that this money was put to good use to find out how and why these medical errors occur, and to find ways to keep them from reoccurring. After all, that is how the law that authorized these penalties in 2007 ordered the money to be spent.

But here's the rub.

Only about $1.2 million of the total amount collected—about $15 million in all— has been spent to date. Only $5 million of it has been allocated for four projects, and only one of those has been completed.

It's unclear when or whether the rest ever will be.

The three unfinished contracts were signed with the University of California at Davis years ago for specific improvement projects.

They include an $825,346 contract with Ken Kizer, MD, director of the UCD Institute for Population Heath, to "identify factors associated with preventable adverse surgical events," like forgotten surgical tools, fires or wrong site surgeries. That contract was announced in 2010, began in January, 2012 and expires this December, but Kizer is hoping for an extension.

Kizer, former director of the National Quality Forum and former director of the California Department of Health Services, says unanticipated roadblocks imposed by the state have prevented his surgical adverse event project from amassing enough data for completion.

First, it took several years to get the state to write and sign the contract and get the Legislature to approve the funds.

$9.25M in Fines for Medical Errors Goes Largely Unspent in CA

Then, after those funds were approved more than two years ago, some of the state's licensing and certification divisions were reluctant to share documents describing the details underlying "the many hundreds" of adverse surgical events that he's trying to quantify, Kizer says. That's the information he needs to get enough data to finish the job.

But these documents "have never been shared by the state. And after repeated efforts to get a data use agreement, we were not given access to some of the information we thought we would," he says.

Kizer says he needs details show underlying causes and trends. "Do you have the brand name of the device that was used to cauterize? In some of the records, there's nothing like that; it says 'during cautery, a fire happened.' That satisfies the regulatory requirement for reporting. But for quality improvement purposes, you want to know the brand, make, and manufacturer, and [whether there] was there oxygen in use in the room."

"We're analyzing the many hundreds of adverse events, trying to make sense of those, determining which are the most frequent, who do they involve, where do they happen, and whether they are more frequent in some areas than others," Kizer told me.

He says he's asked for a six-month contract extension, until mid-2015, to allow another year's worth of adverse event data to be folded in, to give the report more statistical power.

When complete, he says, "this will be the largest analysis of surgical adverse events that has been done anywhere in the country, substantially larger than what the Centers for Medicare & Medicaid Services gets, or at least what is made public."

Most of these incidents may not have risen to a state determination of immediate jeopardy, worthy of a financial penalty, but they were serious nevertheless and may have caused patient harm.

The other two projects are also taking a long time:

  • A $3.659 million contract to reduce medication events and provide infection prevention expertise by onsite visits to acute care hospitals to evaluate quality of data and patient care practices for the prevention of healthcare-associated infections.
  • A $149,780 contract to use a large state cost and utilization database, the Office of Statewide Health Planning and Development, to find adverse events that hospitals didn't report as required by law.

The project that has been completed is the creation of the
California Healthcare Event and Reporting Tool (CalHEART) Project – an information exchange portal for reporting adverse events, breaches, and healthcare Associated Infections by healthcare facilities. $911,347.

I requested an explanation for the lag in these three projects from state health officials, but they have not yet responded. One of the other contract recipients, Patrick Romano, MD, could not be reached for comment.

Nor did the state respond to my question about why it hasn't allocated the remaining $10 million it has collected or expects to receive from these immediate jeopardy penalties to date. The money must first be appropriated by the state Legislature, which apparently take its time.

Time marches on, and the state's coffers continue to grow. The minimum fine is now $75,000, up from $25,000, and as of April 1, the maximum fine rose from $100,000 to $125,000.

By my estimate, the fund will grow by at least $4 million a year.

Investigators are still processing dozens of additional adverse events that are backlogged. Half of the recent list of 10 penalties were for patients harmed in 2010 or 2011.

Lisa McGiffert, director of the Safe Patient Project for Consumers Union, says hospitals and patients should want this money to be used as the law specifies.

Involved in the earliest discussions of the law's implementation, McGiffert says "the money was supposed to make the system work better to monitor medical harm and implement better processes to prevent errors."

"That obviously isn't happening. California should be spending this money on improving patient safety instead of just letting it sit in the bank."

I agree. Kizer's project is such a worthy endeavor, the state should release the documents he needs to find answers. Think of the harm his report could prevent.


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