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4 min read

The Cost Effectiveness of Risk Avoidance


Risk avoidance in healthcare is comprised of the clinical and administrative systems and processes used to detect, analyze, and prevent the occurrence of harmful risks in organizations. (1). Unsafe care is a serious patient safety risk to patient health, which results in over 3 million deaths each year worldwide. (2)

Common safety events occurring in healthcare facilities include (2):

  • Patient falls
  • Medication errors
  • Healthcare associated infections
  • Unsafe transfusion practices
  • Employee back injuries
  • Diagnostic errors

By the year 2022, these commonly occurring patient safety issues are forecasted to cost the global economy $383.7 billion. (3)

As preventable costs rise and patient outcomes decline, it’s increasingly important for healthcare teams to prioritize proactive risk avoidance.

Measuring Cost Savings through Risk Avoidance

A study published in the Journal of Patient Safety surveyed 21,007 inpatients in a large multistate health system. The study found that more than 25 percent of the patients experienced temporary or permanent harm that contributed to high costs, lower contribution margin, and a longer length of stay. (4)

It was estimated that harm reduction within the health system would result in $108 million in total cost savings, an $18 million increase of contribution margin, and 60,000 fewer inpatient care days. (4)

Additionally, facilities with higher-than-average rates of adverse incidents are more likely to have higher Medicare costs for treatment of certain conditions. For example, a recent study found that every 1 percent increase in hospitals’ adverse events are associated with an average cost increase of (5):

  • $103 for heart attack per discharge
  • $100 for heart failure per discharge
  • $152 for pneumonia per discharge

Additionally, healthcare acquired conditions (HAC) cost billions of dollars in added expenses to the healthcare system each year. (6) With the healthcare industry’s movement towards value-based care, healthcare organizations are taking a closer look at their infection rates to identify opportunities for prevention. As detailed below, HAC prevention can yield substantial cost savings:

These high costs may affect the quality of patient care that is delivered. Value-Based Purchasing (VBP) programs offer incentive payments for the quality of care provided in healthcare settings. (7) Therefore, investing in a solution to reduce adverse events can result not only in substantial cost savings for an organization, but can also provide tools to support healthcare teams in providing safer, higher-quality care.

One way to reduce patient safety events is to implement an electronic incident reporting system. Paper-based reporting systems may result in compromised PHI or cause delays in tracking incident follow-up. A technology solution with real time dashboards and analytics allows teams to quickly determine underlying causes that contribute to patient safety incidents and track trends over time to proactively reduce risk. Utilizing an electronic incident reporting solution also creates an open line of communication that brings together data from different departments and shows how errors are related from a systemic perspective. Having this data readily available is also beneficial for making a case towards budget approval for new safety initiatives.

Reducing harm is not only the right thing to do for the patient but is also significant for the financial and operational success of an organization.

Performance Health Partner’s Solutions

Implementing an incident reporting system is an integral part of an effective patient safety program. With Performance Health Partner’s Solutions, healthcare organizations can easily report safety events and track trends over time to deliver safe and high-quality care at the lowest cost. To learn more, visit or request a demo here.

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