Public Risk February 2017

PUBLISHED BY THE PUBLIC RISK MANAGEMENT ASSOCIATION FEBRUARY 2017

WAYS COULD IMPACT YOUR WORKERS’ COMP CLAIMS PAGE 6

ALSO IN THIS ISSUE

YOU AIN’T SEEN ANYTHING YET

Emerging Risks for the Public Risk Manager PAGE 11

STRIVING FOR EXCELLENCE:

Five Steps for Strengthening Collaboration Between Risk Management and Safety PAGE 15

LEARN IN YOUR OWN TIME WITH

PRIMA PODCASTS! PRIMA’s Podcasts are a quick and convenient way to learn on-demand and on your own time!

Meant to provide you with information on specific topics important to the public risk management sector and hot topics, PRIMA Podcasts are the perfect way to fit in education and training into your busy schedule.

Check www.primacentral.org for new Podcasts!

CURRENT PODCAST TOPICS INCLUDE: School Risk Management Workers' Comp Best Practices

AND MORE!

FEBRUARY 2017 | Volume 33, No. 2 | www.primacentral.org

CONTENTS

The Public Risk Management Association promotes effective risk management in the public interest as an essential component of public administration.

PRESIDENT Terri L. Evans Risk Manager City of Kingsport Kingsport, TN PAST PRESIDENT Dean R. Coughenour, ARM Risk Manager City of Flagstaff Flagstaff, AZ PRESIDENT-ELECT Amy J. Larson, Esq. Risk and Litigation Manager City of Bloomington Bloomington, MN DIRECTORS Brenda Cogdell, AIS, AIC, SPHR Risk Manager, Human Resources City of Manassas Manassas, VA

6

Five Ways Superbugs Could Impact Your Workers’ Comp Claims

BY Kevin Glennon, RN, BSN, CDMS, CWCP, QRP

Scott J. Kramer, MBA, ARM City/County Director of Risk Mgmt Montgomery County Commission Montgomery, AL Jani J. Jennings, ARM Insurance & Safety Coordinator City of Bellevue Bellevue, NE Scott Moss, MPA, CPCU, ARM, ARM-E, ALCM P/C Director Oregon Public Entity Excess Pool Salem, OR Lori J. Gray Risk Manager County of Prince William Woodbridge, VA Donna Capria, CRM, CIC, AINS Risk & Insurance Coordinator WaterOne of Johnson County Lenexa, KS NON-VOTING DIRECTOR Marshall Davies, PhD Executive Director Public Risk Management Association Alexandria, VA EDITOR Jennifer Ackerman, CAE Deputy Executive Director 703.253.1267 • jackerman@primacentral.org

11

You Ain’t Seen Anything Yet EMERGING RISKS FOR THE PUBLIC RISK MANAGER

By Lance Ewing

15

Striving for Excellence:

FIVE STEPS FOR STRENGTHENING COLLABORATION BETWEEN RISK MANAGEMENT AND SAFETY

By Jason Franks

IN EVERY ISSUE

| 4 NEWS BRIEFS | 19 ADVERTISER INDEX

ADVERTISING Jennifer Ackerman, CAE 703.253.1267 • jackerman@primacentral.org

Public Risk is published 10 times per year by the Public Risk Management Association, 700 S. Washington St., #218, Alexandria, VA 22314 tel: 703.528.7701 • fax: 703.739.0200 email: info@primacentral.org • Web site: www.primacentral.org Opinions and ideas expressed are not necessarily representative of the policies of PRIMA. Subscription rate: $140 per year.

Back issue copies for members available for $7 each ($13 each for non-PRIMA members). All back issues are subject to availability. Apply to the editor for permission to reprint any part of the magazine.

POSTMASTER: Send address changes to PRIMA, 700 S. Washington St., #218, Alexandria, VA 22314.

Copyright 2017 Public Risk Management Association

FEBRUARY 2017 | PUBLIC RISK

1

PRIMA’S 2017 ANNUAL CONFERENCE JUNE 4–7, 2017 // PHOENIX, AZ

REGISTRATION NOW OPEN! Managing risk in our cities, counties, schools, states

and tribal nations presents unique challenges and PRIMA’s Annual Conference is the only conference dedicated to YOU: public sector risk management professionals.

Join more than 1,000 of your public risk management colleagues, leaders and experts for an exceptional learning and networking opportunity in Phoenix.

MESSAGE FROM PRIMA PRESIDENT TERRI L . EVANS

I

Why Risk Managers Should Care About—and Potentially Oversee— Health Insurance

t’s been all over the news—health insurance is one of the most expensive benefits for all employers, and balancing an appropriate benefits structure for our employees at a cost the taxpayers can afford is an ongoing struggle. We know that historically, government employees received relatively rich benefits packages in lieu of salaries commensurate with the private sector. However, recent years have seen budget-driven changes in defined benefit retirement packages and the premium contributions made to health insurance.

As the cost of providing health care has increased, all employers are looking at ways to reduce expenditures and limit health insurance budgets. Many have found that self-funding their health benefit program allows flexibility in plan design and saves the inherent mark up of premiums to cover insurance company profit margins. As costs continue to rise, premiums, deductibles, co-pays and co-insurance have increased, offsetting more of the health care cost to the employee. In theory, if the employee has more “skin in the game,” they will be more judicious with the health care they receive, ostensibly looking for the best outcomes at the lowest prices in the marketplace. The potential fallacy here is that the average employee has no idea how to go about doing this, even with the aid of a Third-Party Administrator/Administrative Service Organization or apps designed to help.

Additionally, there is often not time to research a quality provider in the heat of an injury or emotionally charged diagnosis such as cancer.

As high deductible health plans have emerged, a potentially unexpected consequence has occurred.

Not only does a HDHP impact the health insurance budget but appears to be impacting workers’ compensation and liability claims as well.

Understanding the needs of your organization, as well as the employees’ position, gives risk management

the unique opportunity to act as a catalyst for positive change, helping our employees as well as our entities.

Whether the HDHP is accompanied by HSA/ HRA programs or not, it still means employees face a large chunk of first-dollar expenditure when an injury/illness arises. Providers are having more difficulty collecting monies due from individuals.

Therefore, many providers will encourage patients to file claims against third parties if there is an indication payment might be available. The benefit to health care providers is two-fold; they are often paid the fully billed amount (no negotiated pricing discounts) and they are much less likely to incur collection expenses. For us, that means if a citizen falls on our sidewalk, or a child is injured at our school, whether or not there is any liability on the part of the entity, the medical provider encourages the patient to file a liability claim.

Increased employee expenditure for benefits can also lead to a loss of loyalty on the part of employees.

As they see more and more of their paychecks go to health care, retirement and other insurance products, the overall employee morale can suffer. And that often leads to increased workers compensation claims.

Newer plan design options include individualized local pricing negotiations based on Medicare rates, with employees having co-pays only. The benefit to the providers is the guarantee of payment on a reasonable scale coupled with reduced collection costs seen with HDHPs; the benefit to the employee is a set co-pay with no deductible; and the benefit to employers is the

potential negotiated pricing discount. It remains to be seen if this is a long term solution to cost increases, and it would be difficult to implement in areas without a large number of providers.

Risk Managers need to be aware of these and other pitfalls of traditional human resource functions as they relate to traditional risk functions. Depending on the structure of your organization, it may be prudent for risk to handle benefits. Risk managers are trained to evaluate all aspects of the problem (human, financial, reputational, and administrative) to come to an effective solution. Knowing what is happening with benefits in your entity can help you prepare for future difficulties. Understanding that the benefits marketplace can have a direct impact on risk operations is a must. Risk managers hear a lot from employees regarding morale issues.

Understanding the needs of your organization, as well as the employees’ position, gives risk management the unique opportunity to act as a catalyst for positive change, helping our employees as well as our entities.

Terri L. Evans 2016–2017 PRIMA President Risk Manager City of Kingsport, Tenn.

FEBRUARY 2017 | PUBLIC RISK

3

NEWS BRIEFS

NEWS Briefs

LEADING THE NATION IN OPIOID DEATHS, OHIO FIGHTS BACK Gov. John Kasich recently signed another bill targeting Ohio’s opiate and heroin epidemic, reports the Tribune News Service.

In 2015, Ohio led the nation in opioid overdose deaths.

Senate Bill 319, sponsored by Sen. John Eklund (R., Chardon), expands access to the anti-overdose drug naloxone to entities such as homeless shelters, halfway houses, schools, and treatment centers that deal with populations at high risk of heroin overdose. It also offers civil immunity to law enforcement officers who carry and use naloxone.

He made the argument that the real answer is in talking to youths on ball fields and schools about drugs and to stop prescribing so many prescription painkillers in the first place.

The new law closes an exemption in current law that allows sole proprietors in private practice— doctors, veterinarians, dentist, and other health care professionals—to directly distribute medications to patients without oversight from the Ohio Board of Pharmacy. Such professionals distributed 6.5 million doses, including 3 million doses of opiates, in 2015.

The bill also ends Ohio’s status as one of eight states that do not require pharmacy technicians, who have been blamed for roughly a third of all drug theft cases over the last three years, to

4

PUBLIC RISK | FEBRUARY 2017

register with the state pharmacy board. The move subjects them to uniform criminal background checks and competency requirements.

“Four out of five people who were addicted to heroin because they were first addicted to prescription narcotics...,” said Rep. Robert Sprague (R., Findlay), who sponsored a similar bill in the House. “The heroin addiction is really

“

just a continuation of that addiction that started with those pills.”

The number of prescriptions written and shopping by patients to find doctors willing to write those prescriptions are down. But the number of addiction-related deaths continues to climb.

The law will take effect in 90 days.

We have spent a billion dollars on this issue. A billion

dollars…Thank God we expanded Medicaid, because

“

“We have spent a billion dollars on this issue.

A billion dollars...,” Kasich said. “Thank God we expanded Medicaid, because that Medicaid money is helping to rehab people...There are going to be more tools to come, but we’re not going to defeat this just from the top down.”

that Medicaid money is helping to rehab people...

There are going to be more tools to come, but we’re not going to defeat this just from the top down.

John Kasich, Governor of Ohio

MEDICAID’S DATA GETS AN INTERNET-ERA MAKEOVER Jini Kim’s relationship with Medicaid is business and personal.

Her San Francisco start-up, Nuna, while working with the federal government, has built a cloud-computing database of the nation’s 74 million Medicaid patients and their treatment.

Medicaid, which provides health care to low-income people, is administered state by state. Extracting, cleaning and curating the information from so many disparate and dated computer systems was an extraordinary achievement, health and technology specialists say. This new collection of data could inform the coming debate on Medicaid spending.

Andrew M. Slavitt, acting director of the Centers for Medicare and Medicaid Services, described the cloud database as “near historic.” Largely because Medicaid information resides in so many state-level computing silos, Slavitt explained, “We’ve never had a systemwide view across the program.”

HOW NEW YORK’S GOVERNOR HOPES TO MAKE LOCAL GOVERNMENTS MORE EFFICIENT Gov. Andrew Cuomo proposed a localgovernment efficiency program that would require county executives to bring together local officials to develop a cost-savings plan that would be put to the voters on this November’s ballot, reports the Times Union.

The plan, presented during Cuomo’s third of six regional State of the State speeches, is aimed at applying pressure via the ballot box on local officials to find a way to decrease the local tax burden.

County officials must meet with local officials and submit a draft plan for shared services and efficiencies to county legislatures by Aug. 1, under the governor’s proposal. Legislatures would have 45 days to review the plan, and if they don’t act, it automatically would be placed on the ballot.

At Farmingdale State College, the governor proposed the creation of recovery high schools aimed at helping students recovering from addiction finish their education.

This is not the first time the state has weighed the creation of such high schools, which was discussed during the work of a task force the governor convened on addiction at the end of the last legislative session.

The schools are part of a six-point addiction plan Cuomo unveiled Tuesday afternoon. The governor wants to add fentanyl to the state’s controlled substances schedule and eliminate prior authorization requirements to make substance use disorder treatment available to all.

Cuomo’s office said the plan would require legislation to implement.

Cuomo’s latest proposals also included linking existing multi-use trails that run along the Erie Canal and Hudson Valley and building out extensions to cover central tourism areas of the state with a path for biking, walking and other activities. The 750-mile Empire State Trail would run from Buffalo to Albany and from New York City to the Canadian border and would include 350 miles of new trail.

“I need you to call your senators and say, ‘You work for me; get this done otherwise you can pay my property taxes next time,’” Cuomo said later in the day in a speech on Long Island, the fourth of the tour.

The full cost for it is $200 million, and Cuomo plans to seek $53 million for the first of three phases of construction in the upcoming state budget with construction completed by 2020.

If the plan is not approved by a majority of voters this November, the county government would have to prepare a new plan for consideration in November 2018.

FEBRUARY 2017 | PUBLIC RISK

5

TITLE

WAYS

COULD IMPACT YOUR WORKERS’ COMP CLAIMS

BY KEVIN GLENNON, RN, BSN, CDMS, CWCP, QRP

6

PUBLIC RISK | FEBRUARY 2017

I

N THE NOV/DEC 2016 ISSUE OF PUBLIC RISK, we discussed how superbugs are fast becoming a worldwide health problem. Overuse of antibiotics—in the healthcare setting and agricultural industry—has led to various strains of bacteria becoming impervious to the very drugs that were once used to treat them.

In this follow-up story, we look at how superbugs could affect your workers’ compensation (WC) claims—as well as strategies to mitigate these risks.

 POST-SURGICAL SUPERBUG INFECTIONS Since superbugs are strains of bacteria that are resistant to multiple types and classes of antibiotics, treatment of superbug infections is extremely difficult. One potential outcome is that routine operations could become deadly.

This is because surgical sites are vulnerable to infections caused by bacteria—including superbugs—that get into a person’s body through the incisions made during surgery.

These infections threaten the lives of millions of

patients each year and contribute to spreading antibiotic resistance. In the United States alone, surgical-site infections contribute to patients spending more than 400,000 extra days in hospitals and costing an additional $900 million a year.1 Post-surgical infections have become such a problem that the World Health Organization (WHO) has issued a list of 29 recommendations developed by the world’s leading experts with reviews of the latest medical evidence. The recommendations were published in The Lancet

FEBRUARY 2017 | PUBLIC RISK

7

FIVE WAYS SUPERBUGS COULD IMPACT YOUR WORKERS’ COMP CL AIMS

Infectious Diseases in November 2016 and are designed to address the risks associated with post-surgical infections—particularly superbug infections. According to the Centers for Disease Dynamics, Economics & Policy, 39 to 51 percent of surgical site infections are caused by superbugs.2 Public risk managers must be cognizant that injured workers who undergo surgery may be at risk for post-surgical infections caused by superbugs. As such, their medical management programs should be aware of WHO’s guidelines, and consider adopting them, if such standards are not already in place. In addition, quality in-home nurses can help to monitor for and address potential post-surgical infections promptly before they become severe and require re-hospitalization.

 WOUND INFECTIONS

Similarly, any type of work-related injury that involves an open wound, cut or bed sore could become infected with a superbug. For example, MRSA (Methicillin-resistant Staphylococcus aureus) is a superbug that can be contracted in the general community or in healthcare facilities—and can infect such wounds.

MRSA can be transmitted from surfaces and objects to people, as well as from person to person. Someone could be exposed by sharing a razor, towel or athletic gear. Two in 100 people carry MRSA on their bodies, but usually will not get sick unless the superbug infects the body.3 Injured workers that have cuts and scrapes should be advised to keep these wounds clean and covered with a bandage until they heal. Some MRSA wound infections will simply need to be drained, cleaned and covered at the doctor’s office. Currently, there are a few oral antibiotics that are still available to treat MRSA, but because this superbug doesn’t respond to many antibiotics, doctors may need to prescribe more severe forms, referred to as antibiotics of last resort.

Significant complications can occur when a MRSA infection spreads from the initial wound into a person’s internal organs and body systems.

It has also been linked to difficult-to-treat pneumonia and bloodstream infections such as sepsis. Public risk managers should ensure that their WC programs utilize nurse specialists that engage in wound monitoring to minimize the risk of all types infections, but especially those from superbugs.

MRSA can be transmitted

from surfaces and objects

to people, as well as from person to person… Two

in 100 people carry MRSA

on their bodies, but usually

will not get sick unless the

superbug infects the body.3

Injured workers that have cuts and

scrapes should be advised to keep these wounds

clean and covered with a bandage until they heal.

8

PUBLIC RISK | FEBRUARY 2017

 MRSA EXPOSURE HIGHER FOR FIRST RESPONDERS

With regards to MRSA, community-based infections are on the rise. This has led to concerns that certain public agency employees—particularly first responders— would be at higher risk for exposure. First responders typically include law enforcement, firefighters, emergency medical personnel and other safety professionals.

Such concerns led to a study conducted by Marilyn Roberts, a University of Washington professor of environmental and occupational health sciences. Roberts, who is a microbiologist, assessed Northwest fire stations and fire personnel to determine the extent of MRSA contamination.

The study showed that firefighters are at higher risk for carrying MRSA than the average person: 1.5 percent of the general US population carry MRSA versus 22 percent of the firefighters studied.4 This is not surprising considering that fire personnel typically interact with hospitals and community populations as part of their jobs and have a high risk of being exposed to MRSA as part of their everyday work.

Public risk managers must be aware of these risks and consider the ramifications for their first-responder employees. In California, if firefighters or other members of active law enforcement develop blood-borne diseases, including MRSA infections, the condition is presumed to have been contracted in the course of their employment, and these employees receive compensation and disability benefits if they are incapacitated due to such an infection.

Public risk managers must stay abreast of best practices on MRSA decontamination, and prepared to implement such procedures. For example, Roberts’ study aimed to improve decontamination methods for fire stations and fire truck surfaces and to develop effective disinfection protocols.

 SUPERBUG RISKS DURING HOSPITALIZATION

If injured workers are hospitalized, added risks of superbug exposure exist. Every year, an estimated 648,000 people in the United States develop infections during a hospital stay and about 75,000 die from them, according to the Centers for Disease Control and Prevention (CDC).5

Further your public sector risk management education without leaving the office!

This Webinar series features top presenters delivering risk knowledge to your desktop!

PRIMA’S 2016 RISK MANAGEMENT

WEBINAR SERIES PRIMA WEBINARS ARE FREE FOR MEMBERS! Visit www.primacentral.org today to register for individual Webinars or for the entire program!

F E B R UA RY 1 5 | 1 2 : 0 0 P M – 1 : 3 0 P M E ST COMMUNITY ENGAGEMENT AS AN EFFECTIVE RISK MANAGEMENT TOOL SPEAKERS: Michael G. Fann, ARM-P, MBA, Director of Loss Control, TML Risk Management Pool, Brentwood, Tennessee George D. Dalton, ARM-P, MCM, Assistant Director of Loss Control, TML Risk Management Pool, Brentwood, Tennessee DESCRIPTION: Some organizations engage in “customer service” training while others may call it “demeanor” or “interpersonal skills” training. We simply title it “community engagement” and risk managers can play a significant role in addressing these critical exposures that place our people, the public and our property at risk. Most members of the general public appreciate the services that government entities provide, however, practically every encounter has the potential to be adversarial or negative. Given that, public servants must engage the public with respect and civility. Our approach as public servants must be to build emotional capital with our community daily, which adds credits to our balance sheet because we know that eventually the debits are coming.

AT T E N D E E TA K E AWAYS :  Risk management can play a critical role in facilitating preemptive approaches before a critical “Ferguson-like” catastrophe occurs.  All public entity services have a potential negative or adversarial outcome. It is vital that the staff adds credits to the entity’s “community trust account” knowing eventually the catastrophic debits are coming.  Manage each interpersonal transaction by resolving to interact with the general public with respect as far as it is in our power to do so.  Each public entity needs to commit to an internal and external engagement plan.

For more information, or to register, visit primacentral.org/webinars.

FIVE WAYS SUPERBUGS COULD IMPACT YOUR WORKERS’ COMP CL AIMS

There are many reasons hospital patients are vulnerable. One superbug known as Carbapenem-resistant Enterobacteriaceae (CRE) is difficult to remove from hospital medical tools placed into the body. CRE can also be passed from person to person on the hands of healthcare workers. People in hospitals are in a weakened state, so they’re more susceptible to infection and, once in the body, a superbug like CRE can cause life-threatening blood infections. These bacteria kill up to 50% of patients once they are infected.6 For this reason, the CDC believes CRE is one of the country’s most urgent superbug threats.

With limited options to treat these infections, prevention is crucial. Public risk professionals should review the hospitals in their WC provider networks and get a sense of how these facilities may have performed in a recent review

by Consumer Reports.7 This study looked at 3,100 hospitals and assessed how well they prevented and controlled superbug infections.

Many hospitals received poor scores, including teaching hospitals.

 OVERUSE OF ANTIBIOTICS RESULTS IN CLOSTRIDIUM DIFFICILE INFECTIONS

Overuse of antibiotics has made Americans more vulnerable to Clostridium difficile (C. diff), a strain of bacteria that causes nearly half a million infections and contributes to at least 29,000 deaths a year,8 according to a study by the CDC. The findings, published in the New England Journal of Medicine, highlighted how over-prescription of antibiotics has led to a high rate of C. diff infection (CDI).

C. diff is a spore-forming, toxin-producing bacterium that typically exists in the large intestine. It’s normally harmless. However, when people take antibiotics for extended periods, the “good” bacteria in their digestive tract get wiped out. C. diff then grows out of control, and its toxins attack the lining of the intestines. The resulting CDI can cause mild diarrhea or more serious symptoms like abdominal pain and fever. At its most progressive stage, CDI can result in severe inflammation of the intestines and even death for 9% of the patients hospitalized with this condition.9 According to the CDC, the rate

10

PUBLIC RISK | FEBRUARY 2017

of hospitalization for CDI doubled from 2000 to 2010.9 Patients with CDI often stay in the hospital for at least a week, resulting in $24,400 in hospital costs on average.9 Public risk managers must ensure that their WC programs have procedures in place to monitor antibiotic use. For example, nurse clinical specialists work on complex injury cases, providing oversight to ensure safe antibiotic use.

They may work with the prescribing physicians to facilitate an infusion therapy program, when appropriate. On such cases, they have protocols in place to limit the length of use of broad-spectrum antibiotics, switching to a targeted antibiotic once culture results are received. In addition, these clinical specialists closely monitor injured workers who have been on antibiotics for extended periods. If diarrhea develops, it could be a sign of CDI, so they would send claimants to the hospital immediately for assessment and treatment. Under these conditions, WC programs may need to cover procedures and treatment to help restore healthy fauna back into the patient’s intestines.

BIG-PICTURE REPERCUSSIONS

When a superbug infection occurs, the more common types of antibiotics, including those available as generics, will not be effective.

Instead, more expensive forms of antibiotics may be required to treat the patient, including those known as antibiotics of last resort, depending on the strain and drug resistance of the bacteria.

A patient facing a superbug infection could expect medical bills between $18,588 and $26,069, totaling $20 billion in healthcare costs a year in the United States, according to estimates from the Alliance for the Prudent Use of Antibiotics at Tufts University.10 There is no doubt that superbugs are a costly problem, but such infections also pose a serious threat to the health and well-being of injured workers. Repercussions include prolonged time away from work, extended hospital stays, treatment with costly and severe antibiotics, additional costly procedures, and in some cases, death. When injured workers are discharged from hospitals to home, quality home care providers can ensure a seamless transition and help to catch complications, such as infections.

They can immediately alert the treating physician to collaborate on next steps for care.

Public risk managers must ensure that their WC programs are utilizing healthcare facilities that are following the latest guidelines and best practices to reduce the risk of superbug infections. They should also monitor superbug activity in their regions, as well as outbreaks at local healthcare facilities, to get a sense if the superbugs risks are rising in their respective areas.

Kevin Glennon (RN, BSN, CDMS, CWCP, and QRP) is vice president of clinical programs at One Call Care Management.

FOOTNOTES 1 WHO Recommends 29 ways to stop surgical infections and avoid superbugs, World Health Organization – News Release, November 3, 2016.

2 Aude Teillant, MS (Oct. 15, 2015). Potential burden of antibiotic resistance on surgery and cancer chemotherapy antibiotic prophylaxis in the USA: a literature review and modeling study, The Lancet Infection Diseases, Vol. 15, No. 12, p1429-1437.

3 General Information About MRSA in the Community, Centers for Disease Control and Prevention, www.cdc.gov/mrsa/community 4 MRSA Exposure for Firefighters, Medics Greater than General Public: UW Study, University of Washington, School of Public Health, Department of Environmental & Occupational Health Services, News Release, February 26, 2016, http://deohs. washington.edu/news/mrsa-exposure-firefighters-medics-greater-general-public-uw-study.

5 How Your Hospital Can Make You Sick, Consumer Reports, http://www.consumerreports.org/cro/ health/hospital-acquired-infections.

6 Kelli Miller (April 17, 2015). Superbugs: What They Are and How You Get Them, WebMD, http://www.webmd.com/news/20150417/ superbugs-what-they-are 7 How Your Hospital Can Make You Sick, Consumer Reports, http://www.consumerreports.org/cro/ health/hospital-acquired-infections.

8 Daniel A. Leffler, M.D., and J. Thomas Lamont, M.D. (April 16, 2015), Clostridium difficile Infection, The New England Journal of Medicine, 372:1539-1548 9 Kelly R. Reveles (Nov. 7, 2014). Overuse of Antibiotics Tied to Increase in Clostridium Difficile Infection, Science 2.0.

10 Rebecca R. Roberts (October 15, 2009). Hospital and Societal Costs of Antimicrobial-Resistant Infections in a Chicago Teaching Hospital: implications for Antibiotic Stewardship, Clinical Infectious Diseases, Vol. 49, Issue 8, pp. 1175-1184.

YOU AIN’T SEEN

ANYTHING YET Emerging Risks for the Public Risk Manager

R

BY LANCE EWING ARELY, IF EVER, WILL YOU HEAR A PUBLIC RISK MANAGER UTTER THE WORDS, “I have seen it all.” The reason is that seasoned risk professionals know that there is always some new exposure, a unique, never seen before claim, an unusual event request or an innovative statute or law that puts the cliché of “seeing it all” in the distant rearview mirror. But risk exposures are constantly changing and emerging trends

continue in the public sector. As public risk managers are asked to do more with less, being cognizant of emerging trends that affect their, states, cities, airports, schools and other public sectors is a key tool in the risk management tool box.

FEBRUARY 2017 | PUBLIC RISK

11

YOU AIN’T SEEN ANY THING YET: EMERGING RISKS FOR THE PUBLIC RISK MANAGER

Public risk and insurance management leaders have to identify which emerging risks are going to affect their entities and explore the potential insurance or claims elements, which might not be evident.

This creates a need for public entity policies related to these emerging risks to be developed and will be vital for employees and the public.

When looking for emerging trends, many governmental entities that have well-recognized risk management policy norms, processes, procedures and practices across all of their agencies, including internal risk assessments, risk audits and risk central teams (RCT), are already ahead of the game. This is because their robust risk management program (usually fought for in the budget trenches) provides the platform for knowing an emerging risk as it has become an intrinsic part of the organizational risk culture. Having internal departments, other than risk management, identifying exposure trends and bringing them to the attention of risk management is the “right risk thinking” for a public entity. However, that is not always the case. Many times public risk managers are viewed as the “risk identifying” department and the burden falls to them to provide insight and solutions to these emerging risks that no-one else has had the foresight or courage to bring the issue forward. So what are emerging trends and emerging risks?

The North American CRO Council, a group of chief risk officers, states that, “an emerging risk is a new or evolving risk where the extent and nature of any potential losses are particularly uncertain due to the insufficiency of information or time to have fully analyzed the emerging situation.” A major European reinsurance company describes an emerging risk as “… newly developing or changing risks which are difficult to quantify and which may have a major impact on an organisation [sic].” Lloyd’s of London defines an emerging risk as “an issue

12

PUBLIC RISK | FEBRUARY 2017

that is perceived to be potentially significant but which may not be fully understood or allowed for in insurance terms and conditions, pricing, reserving or capital setting.” In straightforward terms, an emerging risk is an exposure, an event, or a trend that has the real or even perceived potential to have an impact on public entities’ reputation, fiscal strength, public confidence and/or systemic operations.

Whatever the definition used, public risk managers and all departments or divisions should be trained on the characteristics and elements that delineate an emerging risk. These include but are not limited to: • Challenging to measure, evaluate, classify and mostly, how to predict frequency (how often) and severity (how much) • Will fall under human, economic, technological, or natural risks and can be a mixture • Limited or non-existent governmental or quasi-governmental response • Lack of a proven crisis response plan, business continuity plan (BCP) • Non-existent predictive analytics or a claims prognosis • Concentrated exposure with the upside potential for growth on a regional and then larger scale • Great uncertainty and understanding of the risk and the potential reputational harm • Previously known risk that has re-emerged or has gained strength and momentum All of the above features of emerging risks have potential social, economic, legal and political

effects that need to be considered by the risk manager, as well as those in leadership positions.

One of the starting points in identifying emerging risks within a public entity is to garner the risk awareness of all facets in the organization. If the public risk manager is given the opportunity to meet with the governor, mayor, county commissioners or the top leaders, he or she should ask the question, “What are the top two emerging risks facing our entity?” The question will spark the needed risk awareness and the answers will develop the risk tolerance level to find solutions. The risk manager should then go to each department or division leader (roads, sanitation, chief of police, fire chief, school superintendent, etc.) and pose the same question. While there may be different answers from the top to the next level, the similarities will show the way for collaboration amongst departments and the varying answers will spur more awareness of how inter-departmentally woven emerging risks can become. Finally the public risk manager should ask the same question to those who are out doing the job of serving the public. Those may include DMV employees, public librarians, parking enforcement officers, sanitation workers or others. The answers to what these public employees view as emerging risks may not reach the ears of those at the top level, where many times it truly needs to be heard. The public risk manager can be the conduit for the emerging risk awareness.

Public risk and insurance management leaders have to identify which emerging risks are going to affect their entities and explore the potential insurance or claims elements, which might not be evident. This creates a need for public entity policies related to these emerging risks to be developed and will be vital for employees and the public. Below are just three examples of emerging risks:

TERRORISM

Terrorism has been a long standing and still emerging risk. The psychological effect of a terrorist act in a public area is not always related to the number of victims but the terrorist desire to seek fear via public horror. Creativity as to the potential manners in which terrorism is carried out can be daunting for a public organization.

Exposures, specifically ‘softer targets’ include water and drinking systems, public swimming

pools, smaller municipal airports, public-owned convention centers, zoos, parks and recreation, public transportation, government-operated hospitals and nursing facilities. In addition to the physical public soft targets, there is the issue of having to lock down or close an area under governmental authority. The police lock down occurring in late 2015 after the Paris terrorist attacks caused $54 million USD to Air France (partially owned by the French government) as passengers declined to travel to Paris. If a terrorist act does no physical damage, is there insurance coverage? Characteristically, property terrorism coverage business interruption only responds with physical and actual damage to the public entities property. Coverage may also potentially be established in loss of attraction coverage or endorsement with the intent to cover business interruption caused by the destruction of an attraction but with no physical damage to the public entity property. The insurance carrier and the public risk manager would need to determine what the attractions are defined as leading to this coverage.

WATER

According to the U.S. Government Accounting Office (GAO), 40 of the 50 states will have at least one region in their state that will face a water shortage in the next 10 years. As an example, by 2030, Arizona and Nevada populations will have doubled (since 2010) yet neither state receives enough rainfall or melting snowpack to sustain the water needed for the projected growth. In addition, water is used for energy, farming, food production and general industry. Lack of water affects not only these industries but the governments and communities that rely upon them to remain successful and productive.

Scarcity of water is an emerging risk issue but so is clean and safe water. The Environmental Protection Agency (EPA) in 2016 reported that only nine U.S. states are reporting consistent safe levels of lead in their water supply. These include Alabama, Arkansas, Hawaii, Kentucky,

Mississippi, Nevada, North Dakota, South Dakota and Tennessee. That is not to say the other 41 states do not have safe water. It is that those states have reported higher than acceptable levels of lead in drinking water in the past. Water infrastructure is a growing concern that should be on the public risk managers and their entity leader’s radar screen as an emerging risk.

These examples are only the tip of the spear for emerging risks facing public entities. There are myriad other existing and growing exposures, as well as many more risks that are location and community specific. Prioritizing and creating emerging risk “thought leadership” is the first step in preparing for seeing what is coming next.

Lance Ewing is EVP, global risk management and client services for Cotton Holdings, Inc.

WEARABLE TECHNOLOGY

Electronics that can be worn on the body are becoming common place for public workers and U.S. consumers. Twenty-one percent of U.S. citizens have a wearable technology device.

The integrated technology is worn either as an accessory or as part of material used in the clothing. One of the major features of wearable technology is its ability to connect to the Internet, enabling data to be exchanged between the public entity’s network and the wearer’s device. Wearables offer invaluable situational awareness, especially for first responders, hands-free information gathering, health and safety monitoring and can routinely transmit information to supervisory personnel for immediate response and resources. But with this technology can come not-yet-understood or vetted risks. The amount of radiation from the device, privacy information related to the health of the public worker that is being recorded, hacking of the devices, who owns the data that is stored, what information is discoverable and what is protected, notification (verbal or written) related to wearable technology and the data recorded are just some of the risk-related questions that the public risk manager should ask about wearable technology.

NOW

YOU

HOLD THE KEY TO

SUCCESS Experts in coverage solutions for single entities, group and public entities, our integrated approach gives self-insureds greater stability and control over their self-funded plan. Unparalleled underwriting expertise, innovative risk management and in-house claims management, work in sync and in perfect balance to ensure success.

Since 1990

publicentity@midman.com midlandsmgt.com 800.800.4007

FEBRUARY 2017 | PUBLIC RISK

13

Everyone else is doing it.

Why aren’t you?

Join PRIMA’s 2017 Enterprise Risk Management training and learn how to add value to your risk management program by implementing an enterprise-wide approach to risk.

PRIMA developed this training program to teach attendees how to apply the framework of the ISO/ANSI/ASSE 31000 Standard. Participants will learn the basics of the standard as well as how to fully integrate the framework in their organization’s risk management program.

Visit primacentral.org/ermtraining for 2017 training locations and dates.

STRIVING FOR

EXCELLENCE

FIVE STEPS for Strengthening Collaboration Between RISK MANAGEMENT and SAFETY

BY JASON FRANKS

FEBRUARY 2017 | PUBLIC RISK

15

STRIVING FOR EXCELLENCE

N THEIR EFFORTS TO REDUCE THE FREQUENCY AND SEVERITY OF WORKPLACE INJURIES AND ILLNESSES, a growing number of public sector risk managers are recognizing the value of collaborating with safety professionals within their organizations.

By working together, the two disciplines can drive better outcomes, accelerate improvements in accident reduction and worker safety, facilitate the development and implementation of a safety culture and elevate worker morale, performance and job satisfaction.

Although these benefits align with the overall objectives of both disciplines, arriving at true teamwork may require breaking through longstanding barriers that have separated the two functions, including different reporting structures, data requirements, and time horizons for achieving objectives, as well as the lack of internal structure to facilitate collaboration.

Risk managers can lead efforts to overcome these barriers and drive success across their organizations. Here are five best practices for kick-starting or enhancing collaboration with your safety department.

 RECOGNIZE THAT EFFECTIVE SAFETY INITIATIVES START AT THE TOP. Given the demands of their day-to-day responsibilities, risk management and safety departments might not have the bandwidth to collaborate or the structure to facilitate the sharing of information and responsibilities. However, a mandate from the top can change that and motivate operational departments across the organization to contribute to a culture of safety.

“Safety has to come from the top down,” said Britney Gallagher, workers’ compensation manager for the Port of Seattle. “If leaders throughout the organization are not committed to creating a safe work environment, it limits our ability to incentivize change and take on safety initiatives.”

Getting buy-in from the top isn’t necessarily, easy, though. Gallagher said while the port’s CEO—who hails from the manufacturing industry—is focused on safety by his own accord, not all organizations are that lucky, and some leaders might need to be convinced.

She said executives, directors and departmental managers need to be shown the significant achievements that can be made when you fully integrate safety, workers’ compensation, risk management, human resources, legal and labor.

“Safety should be driven by a desire to keep your customers and employees safe, but without

16

PUBLIC RISK | FEBRUARY 2017

a doubt, safety can be dollar-driven, too,” Gallagher said. “It absolutely has an impact on the bottom line...and that fact often gets leadership listening more closely.”

 FORMALIZE SAFETY PROCESSES TO FOSTER COLLABORATION.

While initiating an organization-wide safety culture must start at the top, formal processes are also needed to ensure that otherwise disparate departments collaborate, take action and are held accountable.

However, putting formal processes in place can be a challenge, too. At the Port of Seattle, even though the risk and safety departments are inherently collaborative, they still struggled to overcome procedural barriers that were inhibiting information sharing and follow-through.

“Our directors have a long history of working together. We come from a place of collaboration,” Gallagher said. “But without a proper structure to share and respond to information about safety hazards or incidents, our collaborative nature still wasn’t driving optimal performance.”

Gallagher said the port’s web-based risk management information system (RMIS) has been a force in bringing the two groups together. Both the safety and risk departments use a singular system that opens the lines of communication between the groups; automates processes; and triggers next

steps so everyone is apprised of any hazards or incidents, and their related responsibilities.

 DON’T OVERLOOK THE NEED TO MEET FREQUENTLY.

While technology can bring groups together, it can’t replace the importance of regular meetings.

Be sure risk management and safety departments have a framework to meet on a scheduled basis to review trends and become actively engaged with organizational changes that have implications for safety and risk management.

Gallagher said the safety and risk management teams at the Port of Seattle meet quarterly to discuss what’s on both sides of the house. The two teams also collaborate on numerous activities where responsibilities overlap, including claims, risk and safety training, labor negotiations, data integration with internal and external partners, employee benefits, disability management, Family Care Act and the Family Medical Leave Act. They also have a formal structure in place to team up on certain investigations like motor vehicle accidents, equipment incidents, facility maintenance issues, or new facility construction projects. She said the formalized meeting and collaborative investigation structure protects against the teams getting stuck in silos as they try to accomplish their day-to-day work that is often independent of one another.

While good old-fashioned meetings can’t be replaced by technology, they certainly can be enhanced by the data outputs and information sharing that stems from technology. In fact, the information captured, documented and shared via technology can set the agenda for those face-to-face collaborative opportunities.

For the City of Albuquerque, ramping up information sharing was conducted in a two-stage process. According to Brett Frauenglass, Albuquerque’s assistant risk manager, the first stage encompassed increased “collaboration and setting the intention with an expanded loss prevention staff and sharing our cost-of-risk calculation with department heads.”

Next came the capture and distribution of data from the city’s risk management information system to provide what Frauenglass describes as “a more fine-grained picture, which has really increased our profile, status and acceptance of our ideas, helping us maintain a downward trend in accidents and reduction of related costs.”

Similar to the Port of Seattle, the City of Albuquerque’s risk and safety teams—along with other departments—use the same web-based risk management information system to collaborate and set priorities, said Frauenglass. He explained that their technology’s claims data visualization capabilities help highlight problem areas to loss prevention and safety compliance specialists. And in turn, they have more information to give individual departments.

customize workflow and interface with other systems to minimize manual data entry and avoid duplicate work.

“It’s actually been quite amazing,” he said, “because when you start to bring colorful charts and graphs that show dollar amounts, people really begin to listen, recognize the importance of it and come up with ideas.”

“Software can really be a solution—especially if it has the ability to reach across some of the silos so they can collaboratively set priorities and be more proactive about what needs to be addressed,” Frauenglass said.

Because different functions don’t have identical data capture and reporting needs, risk management should partner with safety to identify and evaluate the entity’s data and statistical analysis requirements and capabilities. Accident, injury and other reports may be customized to accommodate the program needs of both safety and risk management. At the same time, collaborate on articulating what’s needed to

“

With the overall success of both risk management and safety dependent upon the capabilities of the information technology used for claim administration, they should work together (and consider involving other departments as well) in identifying risks to be analyzed at the RFP stage for selecting a RMIS provider.

 FACILITATE RATHER THAN DICTATE.

Creating an effective safety culture requires the engagement of departmental and operational professionals at all levels. According to Frauenglass, risk management and safety professionals should seek to serve as facilitators so solutions are generated, embraced and implemented at the operational level.

Safety should be driven by a desire to keep your customers and employees safe, but without a doubt, safety can be dollardriven, too… It absolutely has an impact on

“

 SHARE INFORMATION AND PROMOTE TRANSPARENCY.

the bottom line...and that fact often gets leadership listening more closely.

Britney Gallagher, workers’ compensation manager for the Port of Seattle

FEBRUARY 2017 | PUBLIC RISK

17

STRIVING FOR EXCELLENCE

“We’re primarily facilitators when it comes to safety and loss prevention,” he said. “The department has to run the show, but we can deliver value. When we bring information to them that indicates how much better they’re doing than last year, they get bragging rights. That’s the big reward at the end of all this.”

As risk management and safety team up and collaborate with operational departments, they can track success as well as identify opportunities for improvements. For instance, productivity and accident reduction gains achieved in one area may be applicable to others.

By listening to internal customers, risk management and safety can help facilitate further improvements in safety performance. Some of this might call for wider information capture and reporting, which may require further customization of the entity’s risk management information system.

For example, the Port of Seattle made sure its risk management information system made it easy for field workers to report incidents—and even near misses—and then automated task assignments to ensure there was follow up on all reports.

“Our employees feel like we value their contributions,” Gallagher said. “With (our technology), they know when a near miss or hazard is

18

PUBLIC RISK | FEBRUARY 2017

reported, it won’t fall through the cracks because of communication breakdowns or procedural barriers. As a result, they report more, and we can prevent injuries. This has had a positive impact on employee morale, which can often influence their commitment to workplace safety.”

PROOF COLLABORATION WORKS

At the Port of Seattle, the collaborative nature has certainly prompted measurable results, said Gallagher. In the nine-month period after the risk and safety departments worked together to formalize safety processes and improve access to more robust safety analytics, the port experienced a 19 percent reduction in the OIR, 15 percent reduction in LWICR, and 37 percent reduction in cost.

“Analytics give us pertinent information we need to intervene before a hazard causes an injury,” Gallagher said. “We’re able to focus our efforts on preventing incidents, instead of reacting to them. Being proactive and collaborating with our front line supervisors, tenants and employees has created a new culture committed to having our employee’s go home safely. We have seen a great reduction in the overall number of claims filed, severity of claims filed and an overall reduction in claims costs.”

Collaboration among departments at the City of Albuquerque has also produced measurable results: In less than five years, the city has reduced its number of workers comp claims by almost one-third—from more than 1,000 annually to around than 700, according to Frauenglass.

“As soon as we set the intention, increased our presence, and began showing people what their losses were, everyone brightened up and said: ‘Let’s get to work and fix that!’ Now, we are at the stage where people are looking for more fine grained improvements. They’ve got benchmarks in place. It’s really been transformational for certain departments in the city.”

For both the City of Albuquerque and the Port of Seattle, information technology has been a vital element in promoting collaboration and driving their success.

Gallagher said: “It’s impossible to know everything and remember everything. You need a wide amount of information and knowledge available to you to have an impact on safety. And you can’t do that with a paper file system.”

Jason Franks is a senior client executive for Origami Risk.

ADVERTISER INDEX

ADVERTISER INDEX Genesis Management and Insurance Services Corporation. . . . . . . . . . . . . . . . . . . . . . . Back Cover Midlands Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . page 13 Timekeeping Systems.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Back Cover

HAS YOUR ENTITY LAUNCHED A SUCCESSFUL PROGRAM? An innovative solution to a common problem? A money-saving idea that kept a program under-budget? Each month, Public Risk features articles from practitioners like you. Share your successes with your colleagues by writing for Public Risk magazine! For more information, or to submit an article, contact Jennifer Ackerman at jackerman@primacentral.org or 703.253.1267.

CALENDAR OF EVENTS PRIMA’s calendar of events is current at time of publication. For the most up-todate schedule, visit www.primacentral.org.

WEBINARS 2017

FIND US ON FACEBOOK!

• February 15 – Community Engagement as an Effective Risk Management Tool • March 22 – Prohibited Sexual Harassment • April 19 – Body Cam 2 - Technology and Usage Issues are Growing • May 17 – Loss Control Self-Audits for Public Entities • June 21 – Successful Methods for Reducing Slips, Trips, and Falls • July 19 – How Organizational Culture Affects Risk Management • August 16 – Current Trends in Law Enforcement Liability Claims • September 27 – TBD • October 18 – Cyber Risks, Cyber Coverage, Tech E&O Risks and Coverage • November 15 – Risk Analysis, Assessing Your Key Risk Indicators: Are You Lagging Behind, or Leading the Pack?

• December 20 – Mission Critical: ERM and Decision Making

PRIMA ANNUAL CONFERENCES June 4–7, 2017 PRIMA 2017 Annual Conference Phoenix, AZ Phoenix Convention Center June 3–6, 2018 PRIMA 2018 Annual Conference Indianapolis, IN Indiana Convention Center

Keep up with what’s happening at PRIMA and connect with your risk management peers!

Visit us at www.facebook.com/primacentral.

June 9–12, 2019 PRIMA 2019 Annual Conference Orlando, FL Gaylord Palms June 14–17, 2020 PRIMA 2020 Annual Conference Nashville, TN Gaylord Opryland

FEBRUARY 2017 | PUBLIC RISK

19

PRIMA Community Collaborate.

Communicate.

Network.

PRIMA Community, a social media and content website dedicated to the needs of PRIMA members. This platform provides a virtual meeting place to get the latest developments in public sector risk management, share your knowledge and increase your connections.

PRIMA Community lets you: • Connect with your peers and share information on risk management • Participate in discussion groups/communities • Post questions or respond to others’ questions • Obtain access to an exclusive member directory • Access documents from digital libraries • Create private and public groups to network online with your peers • View member blogs or create your own JOIN YOUR PEERS TODAY! community.primacentral.org

MAKING IT RIGHT...

CAN TAKE A LONG TIME

Children studying hard and doing their best to impress their teachers.

Visit our website at www.GenesisInsurance.com

Every safety precaution has been taken, but sometimes a tragic failure with serious consequences occurs. Sexual misconduct is a constant threat that schools must protect against, and it can take years for justice to be served.

Public entities, from schools to municipalities and special districts, count on Genesis to protect their interests.

Genesis is a member of the Berkshire Hathaway family of companies, which has unsurpassed security and financial strength. Genesis can be trusted to always be there to help their insureds make things right...no matter how long it takes.

Genesis Insurance Company is licensed in the District of Columbia, Puerto Rico and all states. Genesis Insurance Company has its principal business in Stamford, CT and operates under NAIC Number 0031-38962

A.M. Best A++ XV

S&P AA+

A Berkshire Hathaway Company