Risk Management and Pre-employment Screening for Hospitals and Health Care Organizations—A Critical Responsibility

A Special Report By Hire Safe Health Care, a division of
Employment Screening Resources (www.ESRcheck.com)

1. Risk Management for Hospitals and Health Care Providers

Financial liability for acts and misconduct of its employees is becoming one of the most significant areas of exposure for health care organizations. The exposure occurs because a hospital can be held liable for injuries resulting for it’s failure to adequately screen the employees that it hires.

According to one study conducted in 1993, health care providers paid out over one hundred million dollars ($100,000,000) in damages resulting from claims of injury from a hospital or health facility for hiring someone with a criminal record. The average settlement was $200,000. There is no way to even calculate the cost in terms of negative publicity and loss of trust, as well as the pain and suffering caused to the victim and their families.

The losses and exposure occur when a hospital fails to implement a program to adequately pre-screen job applicants for all job categories. In all fifty states, employers have a legal duty to exercise due diligence when it hires, which mean taking a reasonable measure of care. An employer breaches that duty of care when the employer knows or should know facts that would warn a reasonable person that the employee presents an undue risk of harm of third parties or co-workers in light of the work to be performed. By engaging in a background check, a health care organization agency demonstrates that it has taken reasonable steps to insure that a job candidate is safe.

According to an article in Nursing Management magazine:

"In the cases where employees have been injured in the workplace by co-workers, and it is later discovered that the company did not check references and criminal convictions or get a background report—which would have readily disclosed that this person had a problem—the companies have been sued for negligent hiring." (Nursing management, April, 1996)

Where the injured party is a patient, the hospital’s exposure can be even greater. Hospitals have a special duty of care toward patients, especially a patient who, because of their illness or condition, are particularly vulnerable to violence, abuse, theft and other acts.

Health care experts agree that in today’s litigious society, hospitals can no longer survive without a risk management program that includes background screening. According to a recent article in Healthcare Risk Management:

"In the past, most organizations relied heavily on employment interviews or personal profiles to determine an applicants potential honesty quotient. In the era of corporate compliance, health care organizations must take a much more aggressive approach to screening applicants. Building an effective screening program involves taking a fresh look at existing approaches and investigating the applicant’s work background completely. This is a new, and in some cases distasteful, departure form previous employment methods." (Healthcare Risk Management, May 1998)

2. Advantages of a Pre-Employment Screening Program

Without a screening program, there is a statistical certainty that individuals with serious criminal records will be hired by hospital and health care organization. Nationally, it is estimated that at least 10% of job applicants have criminal records that would affect job placement. A hospital or heath care organization that does not do background checks is playing Russian Roulette with its financial future.

According to Staffing Industry Review Magazine (November 1999), companies that fail to engage in a risk-management program of pre-employment screening can experience some of the following:

• Lawsuits by employees or third parties
• Workplace violence
• Unqualified employees
• Lost business and customers
• Theft, embezzlement, or property damage
• Negligent hiring exposure
• Sexual harassment difficulties
• Financial losses
• Fraudulent claims
• Time wasted in recruiting, hiring, and training.

These negative effects can be limited to a great degree by pre-employment screening. Hospital and health care provides obtain four benefits from a screening program: 

1. To discourage applicants with something to hide. Just having a pre-screening job program discourages job applicants with a criminal background or falsified credentials.

2. To eliminate uncertainty in the hiring process. Many employers have learned the hard way that relying on instinct alone is not enough.

3. To demonstrate Due Diligence. A screening program demonstrates that an employer has taken reasonable steps in their hiring process, and affords a hospital or health care provider substantial protections in the event of a lawsuit.

4. To encourage honesty in the hiring process. Screening not only discourages the wrong kind of applicant, but encourages the right applicant to be open and truthful. This introduces honesty into the application and interview process. Employer’s find that just having a background program will encourage applicants to be more forthcoming about their history.

 

3. Office of Inspector General Excluded Parties List

In addition, pre-employment screening can assist hospitals and health care providers in compliance with governmental regulations and accreditation. One of the most important issues for hospitals is a review before every hiring decision of the Medicare Sanction List of Excluded Individuals and Entities. The Federal Department of Health and Human Services, Office of Inspector General (OIG) maintains that list. It contains listing of all institutions and organizations that are excluded by law from receiving any federal monies, such as Medicare and Medicaid.

Most critical for hospitals and health care providers, federal law provides that federal monies will not be paid to any entity in which an excluded individual is serving as an employee, administrator, operator, or in any other capacity, services that are furnished on or after the effective date of exclusion. For a hospital or health care organization that hires a person on the excluded list, there can be tremendous financial repercussions. A pre-employment screening firm can also assist with accessing this database as well.

4. Mechanics of a Risk-Management Pre-Employment Screening Program

Screening normally occurs after a company has decided that an applicant is a good prospect and wants to verify that their hiring assessment is correct. Typically, a hospital or health care provider will make the written consent forms part of the employment application. An applicant with something to hide is discouraged from applying in the first place. Once an applicant becomes a candidate, the forms are already signed and on file, and can be transmitted to the background company for immediate processing.

Screening does NOT invade an applicant’s private life. A screening and credentials verification program seeks to confirm what an applicant has done in their public or professional life, such as previous employment, criminal and civil court records, credit history, driving records, and educational or professional credentials verification. An employer is entitled to obtain job-related information in order to make the best possible hiring decision.

It is also important to note that screening is not an absolute guarantee that a bad hire will not occur. For the price charged by screening companies, employers do not receive in-depth FBI type of reports. But, the program goes a long way to minimize risk at a reasonable cost.

In a pre-employment screening program, all of an applicant’s legal and privacy rights are protected. Pre-employment screening is governed by the federal Fair Credit Reporting Act (FCRA). Before a screening is initiated, an applicant must sign a written consent. In the event negative information is uncovered, an applicant must receive a copy of the report and a statement of their rights before an adverse decision is made. This gives the applicant an opportunity to object in the event any information is inaccurate or incomplete.

The turnaround time for a screening is typically two to three business days. If a screening company is also used to check references, than it can may take an additional day if previous employers delay in returning phone calls.

In terms of cost, a typical screening program will normally be less than what a new employee is paid on just the first day on the job. Hospitals and health care providers that perform pre-employment screening find that this amount is minimal compared to the damage that just one bad hire could cause.

5. Recommended Steps to Consider When Initiating a Pre-Employment Screening Program for a Hospital or a Health Care Provider

The following steps are recommended in instituting a pre-employment screening pogrom for a hospital and health care provider:

1. Implement A Policy And Educate Hiring Managers About The Policy And Program

Before implementing the program, the hospital or health care provider must prepare a policy statement that clearly outlines the organization’s commitment to hiring the most qualified individuals in a safe and secure environment that benefits healthcare providers, patients, and the community.

Before starting a pre-employment screening program, it is generally advisable to communicate to all hiring managers and department heads exactly what the program is all about. Managers need an opportunity to "buy-into" the program. Managers are more likely to assist in the implementation of the screening program once they understand that it is a benefit to them and the organization, that all applicants legal rights are respected, that it does not increase or ad to their administrative burden, and that ultimately, a screening program is a critical part of a hospital’s risk-management survival.

Employment Screening Resources is able to assist a hospital or health care organization in drafting policies and procedures to meet an organization’s needs.

2. Determine The Level Of Screening, And What Is Performed In-House And What Is Outsourced

As part of developing policies and procedures, an organization needs to make two decisions. First, the organization must decide what level of screening is appropriate for each position. The screening can vary by position, as long as for each position, there is a consistent program. In other words, an organization can do less screening for cafeteria workers than for medical technicians, but all cafeteria workers and all technicians must be treated the same. A screening provider can assist a hospital or health care provider with suggested levels of screening.

Secondly, a hospital or health care provider should determine what part of the screening program to perform in-house, and what aspects should be outsourced to a professional screening company. That is purely a matter of the time and resources that the human resources department of a hospital or healthcare provider has available, and what portion is more cost–effective to outsource.

For certain tasks, such as criminal records checks, nearly all organizations that have reviewed the process outsource that task. That is a highly specialized service that requires unique resources and skills. Furthermore, it is heavy legally regulated. Also, by outsourcing that task, an organization can operate under the legal protection of the Fair Credit Reporting Act.

3. Selection of a Service Provider

In choosing a company to provide pre-employment services, a hospital or health care organization should use the same criteria that is utilized in selecting any other provider of human resources services:

1. Expertise--A screening service must have the proven ability and knowledge to provide this professional service. A review of the company’s web site and materials, as well as contacting a firm’s current clients for a professional reference can be helpful in establishing a firm’s qualifications.
2. Legal compliance--There are numerous issues surrounding legal compliance. A screening service must understand the laws surrounding pre-employment screening and hiring, and make a commitment to provide an organization with only the information an organization may legally possess.
3. Personal Service and Consulting--It is critical to keep in mind that pre-employment screening is much more then just providing raw data. An organization should look for a firm that is available to provide personal service to the hospital or health care provider. A screening company should be able to assist the human resources department in the same manner that any other consultant is available. The human resources department should expect immediate assistance on any special situations that arise, or if assistance is needed. An organization should stay away from any service provider that is merely in the business of selling information and data.
4. Training--A service provider should be able to work directly with the human resources department and to conduct whatever on-site training and orientation is necessary.
5. Familiarity with the health care industry-It is important to choose a firm that is familiar with the health care industry, and is working with other hospitals and health care providers.
6. Pricing--Although it is important to obtain competitive pricing, it is usually not advisable to choose the lowest cost provider. As the old saying goes, you always get what you pay for.
7. Performance Guarantee—A service provider should provide an on-time performance guarantee so that all reports are returned timely.
8. Internet options—A service provider should be able to provide reports and service with an Internet option in addition to faxing reports.

4. Attach Required Release Forms To All Applications

After policies have been developed and introduced, and a determination has been made as to which services are to be provided, the screening provider should then create customized release forms that are attached to each application. Most organizations implement a screening program by selecting a start date after which all new applicants are screened. For a variety of reasons, most organizations do not attempt to screen existing employees.

5. Set-Up Method To Coordinate Background Reports From One Office

Most organizations will designate a person or a group to co-ordinate the screening. Typically, once a hiring manger has made a selection, the job application and signed release forms are is forwarded to the human resources office. At that point, HR will review the application and release forms for completeness and then forward to the screening provider. It is usually advisable that all background reports remain with HR, and be maintained in a secure file, apart from the employee’s personnel files.

If the negative information leads to a decision not to offer employment, the screening provider should assist the organization in the necessary procedures. These consists of sending the background report to the applicant along with a statement of rights, and asking the applicant to contact the screening provider if they feel that anything in the report is inaccurate or incomplete. If the decision is made final, a second letter must then be sent. A screening provider should assist an organization in setting up these procedures.

For more information on implementing a pre-employment screening program as part of the risk-management strategy for your hospital or health care organization, please contact Employment Screening Resources (ESR). ESR is a full service pre-employment screening firm that specializes in legal compliance, consulting and training, guarantee turnaround time and instant Internet access. See our web site at www.ESRcheck.com for more information about background screening.