By: Thomas J. Petrone

Healthcare facilities using medical radiation equipment must comply with regulations designed to protect human health and safety; noncompliance could put that health and safety in danger. The price of that endangerment, however, extends well beyond the immediate costs of regulatory penalties or legal fees tallied in the wake of a compliance breach or, in some cases, actual injury.

This column acknowledges those immediate costs but also explores less obvious costs such as those associated with restoring public reputation and professional standing when a facility is found to be out of compliance. While the time and effort to be in compliance may seem outsized compared to the likelihood of actually harming a patient, the gravity of such a catastrophe means that facilities must act as if that likelihood were high. Understanding the hidden costs of noncompliance helps reinforce the wisdom of that risk calculus.

Direct costs: Loss of accreditation status
In healthcare, the ability to be paid for services performed depends largely on accreditation status. Without earning accreditation from the Joint Commission, the Centers for Medicare and Medicaid Services (CMS), and even the American College of Radiology, healthcare facilities stand to lose the bulk of their revenue. And while the chance is low that a CMS audit will jeopardize those payments, it still exists — and there are recent headlines to prove it.

Losing the ability to perform services, or to be paid for them, is a massive, direct, and easily quantifiable loss associated with noncompliance: just calculate what you made from CMS last year and subtract it from this year on a week-to-week basis until the sanction is lifted. The other direct costs would be those quantified retrospectively, after a lack of compliance leads to the injury of a patient or member of the staff. In that case, costs would include any immediate legal liability as well as the resulting increase to insurance costs.

Hidden cost 1: Loss of patient volume
For hospitals and others offering diagnostic and therapeutic services, the costs of noncompliance extend well beyond clear categories like penalties and liability in the event that a patient is injured or a set of violations goes public. A far more likely cost is the palpable but hard-to-quantify damage to an institution’s reputation. This ramifies most direly in terms of a loss of patient volume.

Patients come to the hospital via a number of paths, all of which are likely to be negatively affected by incidences of non-compliance. First, physicians could hear about a facility’s breach and choose to refer patients elsewhere; after all, referrals put their reputations on the line, too. Second, patients could refuse to be referred to a place they had read about as violating safety regulations. Third, patients are increasingly seeking out facilities on their own, and a negative headline or notice could push them on to the next listing in their Google or Yelp search. Noncompliance creates this type of potential, where a publicized injury to staff or patients would likely multiply the negative response.

Hidden cost 2: Loss of talent
Reputation is paramount in healthcare, but not just for patients.

Competition for the best talent in healthcare is fierce today, and the most sought-after potential employees are likely motivated by altruism and idealism as well as compensation. Noncompliance threatens the case healthcare organizations can make to potential hires. With a black mark on their record, how can they claim to put patients first, to protect patient and staff safety, and to be a place where anybody would be proud to work?

(In many jurisdictions, hospitals are also ordered to post when they have committed a violation—a public acknowledgement that might also affect employee pride, morale, and even retention.)

Hidden cost 3: Overcompensation
Most of this column has discussed noncompliance in general terms. But there is a special fear around radiation safety and its breaches. From the recent Fukushima Daiichi catastrophe to the popularity of the HBO series “Chernobyl,” the public is on high alert for stories and realities of radiation-related devastation. This fear — not least due to the association of radiation exposure with cancer — may translate into overcompensation when a facility is found to be out of compliance in matters of radiation safety.

This overcompensation may manifest in extra scrutiny from external agencies; internal overcompensation in the form of new hires, redundant meetings, and expensive administrative input; and even in impractical or questionably effective legislation.

The perfect storm of overcompensation might look like this: a hospital miscalibrates or inputs a bad protocol on a CT machine and ends up harming patients, which in turn leads to rightful sanctions from CMS and the Joint Commission as well as press coverage of the suffering caused. Instead of treating this as a single incident, state regulatory agencies tighten the guidelines that would have actually protected those patients had they been followed. Other agencies learn of the violation and question whether they had missed something in their earlier assessments; they increase their scrutiny and launch additional investigations of the same hospital. Meanwhile, the hospital conducts a series of fact-finding and problem-solving meetings — that include many of the facility’s top-paid administrators as well as the technologists, directors, and others on the professional and administrative staff. Those meetings (hidden costs of noncompliance, all) result in the hospital hiring a consulting group or adding full-time employees to augment their quality assurance team so that they can, in essence, overcomply. The state is happy to receive the reassurance of the extra documentation and reports. But no matter whether the hospital is 100% in compliance or 150%, as it were, the reputational damage remains—and so the losses to patient volume and talent attraction remain as well.

This “perfect storm” scenario has in fact happened in real life, and it did lead to all of the described reactions. What’s more, these reactions occurred across state lines, prompting a cascading effect not just within the institution or the region, but nationally. This level of regulation and scrutiny — echoing from that earlier instance of noncompliance — is still heard today.

About the author: Thomas J. Petrone, Ph.D., DABR is chief medical physicist and CEO of Petrone Associates