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What is Risk Management in Healthcare?

December 4, 2020

Patient safety takes first priority in healthcare. To protect patients and reduce the possibility of injury, it is necessary to determine and address the risks that can threaten patient safety. Identifying those risks is only the first step in risk management. Healthcare organizations must also address, assess, monitor, and prevent risks through the implementation and improvement of systems and processes at both the clinical and administrative levels.

By following a thorough risk management healthcare program, healthcare organizations protect their patients and also protect themselves. Risk management in healthcare can lead to a good record of patient safety, which helps a healthcare organization maintain their community reputation, obtain accreditation, receive reimbursements, and become a provider of choice.

Enterprise Risk Management (ERM):

Enterprise risk management considers risk management in healthcare in terms of making decisions that not only manage risk but also consider the connection between risk management and total value. ERM evaluates risk for all departments within a comprehensive framework of guiding principles and practices. ERM considers eight risk domains:

8 Risk Domains Associated with ERM:

      • Operational: Operational risks refer to internal processes, people, or systems that fail in a way that affects business operations. These could include errors or negligence in credentialing, staffing, documentation, event management, not following standards of practice or chain of command failures
      • Clinical & Patient Safety: These risks involve inadequate patient care and can include medication errors, safety events, failure to follow evidence-based practices or hospital-acquired conditions.
      • Strategic: Strategic risks threaten the focus, direction, goals, and brand of the organization. Potential strategic risks could damage an organization’s reputation through mismanagement of relationships and partnerships, marketing, advertising, sales, media relations, mergers and acquisitions, conflicts of interest, marketing and sales, affiliations and joint ventures, and contract administration.
      • Financial: Risks to an organization’s financial well-being can come from risks to revenue, financial ratings, or capital. They can include malpractice, litigation, and insurance costs, capital structure, capital equipment, capitation contracts, credit and interest rate fluctuations, days of cash on hand, foreign exchange, programs, and facility growth, capital equipment, corporate compliance (fraud and abuse), accounts receivable, billing and collection.
      • Human Capital: Decisions associated with an organization’s workforce should be evaluated carefully as part of risk management in healthcare. Hiring, staffing, turnover, absenteeism, work injuries, productivity, compensation, termination, and work schedules can all incur risks that should be considered as part of an organization’s ERM.
      • Legal & Regulatory: Laws, regulations, and mandates should be identified, monitored, and followed so that compliance is ensured at a local, state, and federal level. Potential legal pitfalls include Centers for Medicare and Medicaid Services (CMS) Conditions of Participation (CoPs) and Conditions for Coverage (CfC), fraud and abuse, licensure, accreditation, management liability, product liability, and intellectual property.
      • Technological: Risk management in healthcare should include technological issues that can arise from the use of machines, software, hardware, devices, and systems. Increased use of technology for diagnosis and treatment during COVID-19 can augment potential technological risks. Organizations can also incur risks from social networking and Electronic Health Records.
      • Environmental- and Infrastructure-Based Hazards: This domain refers to assets. Exposure to natural and environmental hazards fall into this category. Examples can include floods, fires, storms, tornadoes, chemical spills, facility management, parking, security, and construction.

    Challenges That Should Be Addressed in A Risk Assessment Plan

    You cannot predict every scenario, but as you develop your risk assessment plan, you’ll need to determine how you and your team will respond in unexpected or dangerous situations. To get started, organize your plan around four key challenges:

    • Patient Safety
    • Federal Regulations
    • Medical Errors
    • Legislation and Non-compliance Risks

    Your organization may have other challenges to address in addition to this list.

    Developing A Risk Management Plan

    To develop a risk management plan, an organization should ask itself what could possibly happen and how to manage adverse events if they occur. As you create your plan, you can use government resources as a guide. The Department of Health and Human Services, Food and Drug Administration, and the American Society for Healthcare Risk Management have all issued directives that will help you maintain compliance with laws, regulations, and best practices.

    After you’ve considered the types of risk most likely to occur in your organization, your next step is to analyze those risks and how you will respond to them. Here are several questions to ask during your analysis:

    • What adverse situations might happen?
    • How likely is it that those situations could occur?
    • What would the outcome be if they happened?
    • How can we reduce the likelihood of this event happening?
    • How (and by how much) can we reduce the impact of the adverse event?
    • What consequences can’t be avoided if the event were to occur?

    Essential Factors in Healthcare Risk Management Plans

    To create an effective healthcare risk management plan, there are several important factors you should include.

    • Purpose/Goals: All members of a healthcare organization should understand the purpose of their risk management plan. Goals (such as reduce the number of adverse events or increase patient safety) should be clearly articulated so progress can be measured.
    • Education/Training: Education and training help you and your staff stay in compliance with legal requirements. These should include new employee training, ongoing training, annual reviews, and training specific to events, compliance, and new equipment or software.
    • Patient/Family Complaints: Make sure employees understand how to properly document patient and family complaints as part of your risk management in a healthcare plan. This should include a record of the complaint, response times, staff response, and actions taken.
    • Contingency Preparation: Healthcare organizations should prepare for large-scale emergencies as part of their risk management plan. These should include natural and manmade disasters such as storms, fires, disease outbreaks, loss of power, loss of communication, terror attacks, or mass shootings.
    • Reporting/Response: Risk management plans should include mandatory reporting requirements. The plan should clearly lay out the procedure for how to report the event and document the organization’s response.
    • Mitigation: It’s important to learn from the situation. Your healthcare risk management plan should outline your response system and how you will follow up once it’s over. You should also plan for improvement so that your organization doesn’t repeat any failures.

    Provider Screening Reduces Healthcare Risk

    Creating a risk management plan is vital to the well-being of your patients and your organization. As you develop your plan, you will need to update it as your organization changes. Risks are inevitable, however, if you develop a risk management plan, you’ll minimize the danger to patients, staff, and your organization that could occur during an adverse event. In an emergency situation, it’s much easier to follow a plan than it is to improvise.

    As you develop your risk management plan, Verisys can help reduce risks to your patients and your organization. With its continuous monitoring and adverse event reporting, Verisys provides up-to-date information that can alert you to potential concerns with a provider’s license or exclusion status soon after the information is published. Provider screening and license verifications will help you stay in compliance with laws and regulations so that you can hire providers with confidence and follow the guidelines for your healthcare risk management program.

    Juliette Willard Written by Juliette Willard
    Healthcare Communications Specialist
    Being creative is my passion! Writer. Painter. Problem Solver. Optimist.
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