The Society of Actuaries is an educational, research and professional organization dedicated to serving the public, its members and its candidates. The SOA’s mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal problems. The SOA’s vision is for actuaries to be the leading professionals in the measurement and management of risk.

Findings from a new study released by the SOA estimate that measurable medical errors cost the U.S. economy $19.5 billion in 2008.  The study shows how 1.5 million medical errors compromise quality of American healthcare and cause unnecessary waste in the system

Commissioned by the Society of Actuaries (SOA) and completed by consultants with Milliman, Inc., the report used claims data to provide an actuarially sound measurement of costs for avoidable medical injuries. Of the approximately $80 billion in costs associated with medical injuries, around 25 percent were the result of avoidable medical errors.

Jim Toole, managing director of MBA Actuaries, Inc., said  "Of the $19.5 billion in total costs, approximately $17 billion was the result of providing inpatient, outpatient and prescription drug services to individuals who were affected by medical errors. While this cost is staggering, it also highlights the need to reduce errors and improve quality and efficiency in American healthcare."

Medical errors are a significant source of lost healthcare funds every year. For example, the study found that $1.1 billion was from lost productivity due to related short-term disability claims, and $1.4 billion was lost from increased death rates among individuals who experienced medical errors. According to a recent SOA survey, which identified ways to bend the national healthcare cost curve, 87 percent of actuaries believe that reducing medical errors is an effective way to control healthcare cost trends for the commercial population, and 88 percent believe this to be true for the Medicare population.

"We used a conservative methodology and still found 1.5 million measureable medical errors occurred in 2008," says Jonathan Shreve, FSA, MAAA, consulting actuary for Milliman and co-author of the report. "This number includes only the errors that we could identify through claims data, so the total economic impact of medical errors is in fact greater than what we have reported."

Key findings from the study include:

There were 6.3 million measureable medical injuries in the U.S. in 2008; of the 6.3 million injuries, the SOA and Milliman estimate that 1.5 million were associated with a medical error.
The average total cost per error was approximately $13,000.  
In an inpatient setting, seven percent of admissions are estimated to result in some type of medical injury. The measurable medical errors resulted in more than 2,500 avoidable deaths and more than 10 million excess days missed from work due to short-term disability.

The study also identifies the 10 medical errors that are most costly to the U.S. economy each year. Approximately 55 percent of the total error costs were the result of five common errors:

Pressure ulcers
Postoperative infections
Mechanical complications of devices, implants, or grafts
Postlaminectomy syndrome
Hemorrhages complicating a procedure

The SOA and Milliman findings were based upon an analysis of an extensive claims database. Measureable costs of medical errors included increased medical costs, costs related to increased mortality rates, and costs related to lost productivity of an error.



The National Quality Forum has studied and evaluated medical errors.  They have created a limited number of "never events" meaning, of course, that they should never happen.   See article here.   Most of these mistakes happen while a patient is being cared for in a nursing home.

Here are some that you often see in nursing home litigation: 
-Patient death or serious disability associated with the use or function of a device in patient care in which the device is used or functions other than as intended 
-Patient death or serious disability associated with patient disappearance for more than four hours 
-Patient death or serious disability associated with a medication error 
-Patient death or serious disability associated with hypoglycemia, the onset of which occurs while the patient is being cared for in a healthcare facility 
-Stage 3 or 4 pressure ulcers acquired after admission to a healthcare facility 
-Patient death or serious disability associated with a burn incurred from any source while being cared for in a healthcare facility
-Patient death associated with a fall while being cared for in a healthcare facility
-Patient death or serious disability associated with the use of restraints or bedrails while being cared for in a healthcare facility 
-Any instance of care ordered by or provided by someone impersonating a physician, nurse, pharmacist, or other licensed healthcare provider 
-Sexual assault on a patient within or on the grounds of a healthcare facility
-Death or significant injury of a patient or staff member resulting from a physical assault (i.e., battery) that occurs within or on the grounds of a healthcare facility

To learn more about this list, and the criteria for including a medical error on this list, visit the Center for Medicaid and Medicare Services website.


News4Jax had an article about a nursing home Administrator indicted for embezzlement, money laundering, credit card fraud and identity theft, accused of stealing hundreds of thousands of dollars from Riverview Nursing and Rehabilitation Center.  Mary Burroughs stole the money over a one-year period from the center, a nonprofit organization that received millions of dollars in federal funding.

"The U.S. Attorney’s Office is committed to investigating and prosecuting financial fraud and regaining what victims of these crimes have lost," U.S. attorney Edward Tarver said in a news release.

According to the indictment, between May 1, 2009, and April 30, Burroughs used her position as administrator to cause Riverview to issue multiple checks from its Wachovia money market account to cash, which she then used to purchase cashier’s checks made payable to Burrough’s Heating & Air and others.  Burroughs embezzled more than $235,000 from the Riverview money market account.  In addition, the indictment says that Burroughs used a Riverview credit card in the name of an employee she had terminated to make thousands of dollars of unauthorized and personal charges.

The indictment also says that Burroughs, without permission or authority, had others rip out copper piping and other metal objects from a Riverview building to be sold as scrap metal.

The indictment charges Burroughs with five counts of stealing from a program receiving federal funds and one count of credit card fraud.  Finally, the indictment charges Burroughs with one count of aggravated identity theft, which requires a two-year consecutive prison sentence to any other sentence imposed.

Nursing home partners in the ownership and operation of hundreds of nursing homes are fighting and suing each other for the fraud they have perpetuated for the last decade.   New York real estate investor and nursing home owner/operator Rubin Schron is suing his partners (in fraud) Troutman Sanders, Leonard Grunstein, and Murray Forman.  See Complaint here.

Schron accuses Troutman, Grunstein, and Murray Forman of breaching their fiduciary duties to benefit themselves at Schron’s expense, according to this report by Bloomberg.  The Am Law Daily reported on federal charges against Schron, Grunstein, and Forman over their involvement in a $50 million kickback scheme with nursing homes and pharmaceutical providers. In February all three reached a $14 million civil settlement with federal prosecutors in Boston. 

"This case is about the systemic exploitation by self-interested attorneys and bankers of clients who entrusted them to devise and implement the terms of complex business deals that these defendants arranged and advocated for their clients," states Schron in his 97-page complaint.  Grunstein served as principal outside legal adviser to the real estate investor and his companies from the 1980s until late last year. The suit accuses Grunstein of causing "hundreds of millions in dollars of damages" to Schron.  Also named as defendants are Grunstein’s brother and business associate, Harry Grunstein, and Troutman M&A and project finance partner Lawrence Levinson. 

"Grunstein facilitated his tortious conduct by his association with these firms," states Schron’s complaint. "Grunstein frequently used their letterhead for his schemes, and he was assisted by the active complicity of several partners, including defendant Levinson. In reward for facilitating Grunstein’s misdeeds, these law firms received tens of millions of dollars in legal fees from Schron and the Schron Entities."

The complaint further claims that Grunstein and Forman brought investment opportunities to Schron that they themselves took stakes in without contributing cash or assuming risk. Schron claims that he alone bore the risk from these transactions, with Grunstein and Forman later becoming involved in a series of deals in the nursing home business that drew the attention of federal prosecutors.

The trio have been caught up in a tangle of litigation. Grunstein and Forman filed suit against Schron in March, claiming he misappropriated funds from entities created by the two business partners and failed to keep and maintain audited financial statements.  "Underlying all of the claims in this action is Schron’s pattern of betraying the trust placed in him," state Grunstein and Forman in their 38-page complaint,. Grunstein and Forman are seeking $100 million in damages from Schron, several of his relatives, and their affiliated holding companies. 


The Business Journal reported an incredible story about Sunrise Senior Living giving bonuses to executives who have lost $16 million in the last year.  This is what is wrong with Corporate America.  Sunrise takes taxpayer money through Medicaid and Medicare; provides poor care while stuffing their pockets, and then before declaring bankruptcy siphon the rest of the money by paying themselves bonuses for poor performance.. 

Sunrise Senior Living, Inc., is paying 2010 bonus payments to its executive officers, equal to one-third of their respective target annual bonus amounts, according to a filing with the Securities and Exchange Commission. The compensation committee of the company’s board will pay CEO Mark Ordan $325,000, while CFO Julie Pangelinan and CIO Gregory Neeb will receive $133,333 each.


As stated in the SEC filing, the "compensation committee" awarded the bonuses to these executive for their “extraordinary work” during the recession. Sunrise reported a net loss of $16 million during the first quarter of 2010. The company is also in default on $241 million of debt.


All three executives remain eligible to receive the remainder of their 2010 bonuses at the discretion of the compensation committee.


Milwaukee-Wisconsin Journal Sentinel had an article about the horrible care and fraudulent documentation at Mount Carmel Health and Rehabilitation including 35 violations of regulations for minimum care.  "Records also show, however, that the 35 citations issued so far this year to Mount Carmel are close to the 40 citations issued in all of 2009 and more than the 25 issued in 2008, according to the state Department of Health Services."

Staff at the state’s largest nursing home recorded on charts that a 41-year-old brain-damaged resident was in his bed watching TV when he was sitting in jail. The man spent five days in custody,  Staff had continued to mark on charts that he was at the facility through the night and into the morning of May 17. 

The man wandered away from Mount Carmel and was arrested for "prowling" more than four miles away.  The nursing home was aware that he was a wandering risk and were ordered by phyisicians to check on him every 15 minutes. The other violations cited this year include failing to communicate with a recent amputee and failing to provide for five residents at risk of falling, including one who was hospitalized for a broken jaw after falling out of his wheelchair.

Licensed for 473 beds, Mount Carmel is the largest of the 397 nursing homes in Wisconsin, according to the Department of Health Services. In January 2009, Kindred Health Care, a Louisville, Ky., for-profit company resumed operation of Mount Carmel. After operating with a probationary license for one year, Kindred was given a full license in January of this year.

The citations issued this year include two identifying "actual harm" to residents and five for violations that constitute a "direct threat to health, safety and welfare," state records show.

Other citations
Among other things, Mount Carmel was accused of:

• Failing to provide appropriate supervision and assistive devices to five out of 10 residents identified by Mount Carmel as being at risk for falls.

Three of the five had fallen since last December, including one who suffered a broken jaw and an eye socket "blowout." A hospital that treated the woman reported the incident to the state but Mount Carmel, which was required to report the incident, did not.

• Failing to assess and treat pain, depression and other problems experienced by a 51-year-old woman.

• Sixteen of 32 residents reviewed were not treated "in a manner that maintained their dignity."

Two were kept in a small alcove near an exit; at least six were kept in an old nursing station or in a hallway for extended periods; and an incontinent resident said staff turned off his call light four times after he sounded it and had a bowel movement before any staff took him to the toilet.

The September inspection also found that after a resident complained of hip pain, Mount Carmel did not notify a physician for two hours and 15 minutes. The doctor ordered an X-ray, but the order was not relayed by a nurse for 2 1/2 hours. The X-ray revealed a broken hip.

The article had a Summary of violations Mount Carmel Health and Rehabilitation Center in Greenfield was cited for 35 state and federal violations so far this year. Among them:

March 2010: A 51-year-old resident who had her right leg amputated below the knee in December 2009 did not have staples removed as of March and no adequate assessment or treatment of the resident’s "phantom pain" in the leg had been done.

Mount Carmel also was cited for failing to communicate with the resident, who did not speak English, in Spanish. Among other things, staff was not aware that the resident experienced phantom pain and that she had been dropped by staff. A registered nurse told an investigator she didn’t need a Spanish interpreter because relied on documents and the resident’s gestures and facial expressions.

Also in March, an investigator found that 16 of 32 residents reviewed were not treated "in a manner that maintained their dignity." Two had been transported in shower chairs with bare legs or buttocks exposed; two were kept in a small alcove near an exit; at least six were kept in an old nursing station or in a hallway for extended periods; an incontinent resident said staff turned off his call light four times after he sounded it and had a bowel movement before any staff took him to the toilet.

January 2010: A federal investigator finds that, going back to December, five out of 10 residents identified by Mount Carmel as being at risk for falls did not receive appropriate supervision and assistive devices, and that three of them fell. A 92-year-old resident who needed supervision was dropped off at a medical appointment by herself. .

Dec. 3, 2009: A resident who lacks the ability to move in bed, is found on the floor next to her bed. She suffers a broken jaw and an eye socket "blowout," according to a federal investigator. The hospital reported the injuries to the state Office of Caregiver Quality, but Mount Carmel, which is required to make a report, did not. When the investigator asked a Mount Carmel administrator on Jan. 11, five weeks after the incident, whether Mount Carmel had reported the incident to the state, the administrator said no report had been made because Mount Carmel "felt they knew how the incident occurred."

Nov. 5, 2009: Resident suffers laceration to left palm requiring sutures in a hospital emergency room. Hospital reports the injury to the state, but Mount Carmel did not. Mount Carmel could not determine how the incident occurred.


Happy Father’s Day! 

A friend recently sent me an insightful article written by Anna Mae Halgrim Seaver in 1994 called My World Now (Life in a nursing home, from the inside).  Her son found these notes in her room after her death.
Ms. Seaver does an incredible job of explaining her life and the life of too many residents in nursing homes.  What is also amazing is that things have not improved much since 1994.


Business Week had an article about National Healthcare Corp. (NHC).   Nursing home and assisted-living center operator National Healthcare Corp. said Tuesday that its fourth-quarter profit rose 80 percent on a boost in patient revenue.

The company earned $5 million, or 37 cents per share, compared with profit of $2.8 million, or 21 cents per share, in the same quarter a year before. Revenue rose 4 percent to $168.5 million from $161.8 million. For the full year, the company earned $31.4 million, or $2.31 per share, up from $27.7 million, or $2.11 per share, in 2008. Revenue rose to $668.2 million from $633.2 million.

National Healthcare and its affiliates operate 76 long-term health care centers, along with 33 home care programs, 7 independent living centers and 15 assisted living communities. Other services include Alzheimer’s units, long-term care pharmacies, hospice, a rehabilitation services company, and management and accounting services to third parties.

National Healthcare shares rose 19 cents to $37.64 in morning trading.  See NHC’s press release here.


Mary Fridley at Gero-Resources wrote the following for The Capital. 

DEAR MARY: I just lost my dear husband of 65 years to Alzheimer’s disease. Mary, you would hardly believe the many times I thought about you during his stay in the hospital and nursing home. I am so glad we had the experiences of the wealth of knowledge you shared through the many workshops and seminars we attended together.

During this difficult period there were many times I thought how much the staff would benefit from your depth and detail of knowledge of dementia care. I was horrified by how they handled him; like he was a piece of meat. One time two aides were moving him up in the bed and slammed his head into the headboard. No one talked to him like he had any sense at all. Even the doctor dismissed him as if he should just die.

He was capable of following directions if they took the time to tell him what to do. Instead, they just did things without warning, which frightened him. I think they could learn a lot by being in bed for a day and having someone tend to all their needs. They would discover how humiliating and degrading an experience it is.

My husband was a person and the love of my life, and I would do anything to have him with me today – even in his Alzheimer’s state. He was a gentle, loving soul who would never hurt anyone. I am heartbroken over this experience.

DEAR READER: Please accept my sincere condolences on the loss of your husband. And I am sorry your final days together were so dreadful. No matter how often I hear this story (and I’ve heard it many times), it never fails to outrage me. The staff broke the most basic rule of care: to see the person, not just the disease.

It should be required that people take a sensitivity course before they work with the elderly. They should be put through the rigors of daily care, such as you suggested, experiencing first hand what it’s like to be on the receiving end. I hope your letter sparks discussion among staff to do better.

I know you are grieving, but I encourage you to write a letter to the administrators of the offending facilities. They need to know about your experience. Peace be with you.


I like that.  See the person, not just the disease.  Nursing home employees especially unqualified CNAs do not get enough training on how to take care of demented residents.  It is a shame and a disgrace.