Risk Management in Healthcare

The clinical and administrative systems, processes, and reports are included in risk management in healthcare, which is employed to detect, monitor, assess, mitigate, and prevent risks. By employing risk management, healthcare organizations safeguard patient safety as well as other things like the organization's assets, market share, accreditation, reimbursement levels, brand value, and community standing.

The Value and Purpose of Risk Management in Healthcare Organizations

Deployment of healthcare risk management has traditionally focused on the important role of patient safety and the reduction of medical errors that jeopardize an organization's ability to achieve its mission and protect against financial liability. But healthcare risk management has become more complex over time with the expanding role of healthcare technologies, increased cybersecurity concerns, the medical science's fast pace, and the industry's ever-changing regulatory, legal, political, and reimbursement climate.

Moreover, with the value-based care movement and today's risk-bearing models such as bundled payments and CMS's pay-for-performance programs, financial risk is increasingly shifting from payers to providers and requires a broader view of risk management. In May 2017, Moody's Investor Services released a report highlighting the link between risk management and hospital operating margins.

For these reasons, hospitals and other healthcare systems are increasingly shifting their risk management programs from primarily passive, to promoting patient safety and preventing legal exposure through a broader lens across the healthcare ecosystem. Expanding into something that actively looks at risk.

Industry members understand the importance of extending healthcare risk management beyond patient safety and medical liability, but that transition has been slow. According to the Healthcare Financial Management Association (HFMA), “Despite the growing importance and awareness of the importance of programs today, many healthcare providers have been slow to adopt more sophisticated approaches. The current state for most providers falls between 'basic' and 'evolving' maturities for ERM programs.”

Evolution of Healthcare Enterprise Risk Management (ERM)

In order to expand the role of risk management across the organization, hospitals and other healthcare facilities are adopting an approach called Enterprise Risk Management. ERM includes traditional aspects of risk management including patient safety and medical liability and expands them with a “big picture” approach to risk across the organization.

ERM encompasses eight risk domains:

• Operational
• Clinical & Patient Safety
• Strategic
• Financial
• Human Capital
• Legal & Regulatory
• Technological
• Environmental- and Infrastructure-Based Hazards

Key Components of Performing Risk Management in Healthcare

To navigate the healthcare risk continuum, healthcare organizations managers need to:

Identify risk 

As risk management involves managing uncertainty and new risk is constantly emerging, it is challenging to recognize all the threats. However, by using data analysis, institutional and industry knowledge, and involving everyone – patients, staff, administrators, and payers – healthcare risk managers can uncover threats and predict otherwise unpredictable events. may cancel out.

Risk quantification and prioritization 

Once risks are identified, it is important to assess, rank, and prioritize them based on their likelihood and impact, and allocate resources and assign tasks based on their actions. Risk matrices and heatmaps can be used to accomplish this. This also helps visualize risks and facilitates communication and shared decision-making.

Investigation and Reporting of Sentinel Events 

A sentinel event, developed by the Joint Committee, is defined as “a medical event that results in the death or serious physical or mental injury of one or more patients and is not related to the natural history of the patient." In the event of a Sentinel event, rapid response and thorough investigation address immediate patient safety concerns and mitigate future risks. An established plan promotes calm, deliberative responses and transparency from employees so that corrective actions can be implemented and evaluated. Sentinel events are not necessarily the result of errors. However, in order to achieve transparency and thorough evaluation, healthcare organizations need to create an atmosphere of respect, trust, and cooperation among employees and managers.

Compliance reporting 

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Like joint commissions, federal, state, and other regulatory agencies require reporting certain types of incidents, such as sentinel events, medication errors, and medical device malfunctions. Incidents such as wrong place or patient surgeries, workplace injuries, medication errors, etc. should be documented, coded, and reported.

Capture and learn from Near Misses & Good Catches

“Near misses” and “good catches” occur when mistakes or unwanted events are avoided through luck or intervention. This is often the best way to identify and avoid risks. Healthcare providers should build a culture that encourages reporting so that preventative measures and best practices can be implemented. 

Think beyond the obvious to uncover potential errors 

Active errors are obvious and easy to spot. For example, if a nurse gives a patient the wrong amount of medicine. Potential errors, on the other hand, are often hidden and only revealed through analysis and critical inspection. Were the charts difficult to read due to poor lighting? Were nurses rushed because there were too many patients with high vision? Consider why. 

Accident investigation using proven analysis models 

Accident analysis models are used to understand the relationships between potential faults and causes and risks. For example, understaffing and overwork often lead to medical errors. Applying established models increases the effectiveness and efficiency of risk management. Two accident analysis models used in medical risk management are the Sharpe and Blunt end assessments of the clinical error model. FMEA or Failure Mode and Effects Analysis, and Root Cause Analysis are also used and contain a detailed framework for uncovering the causes and effects of medical errors.

Invest in a Risk Management Information System (RMIS)

There are several reporting and risk management platforms on the market that invest in a robust risk management information system (RMIS). These systems provide tools for documenting incidents, tracking risks, reporting trends, benchmarking data points, and making industry comparisons. You can generate reports on losses, incidents, unpaid claims, and lost work hours for injured employees. RMIS can significantly improve risk management by reducing overall costs by automating recurring tasks while improving performance through available and reliable systems.

Finding the right balance of risk funding/transfer/retention 

Risk funding involves an organization's methods of efficiently and effectively financing losses arising from risk. This includes risk transfer, typically through insurance contracts, and risk retention, such as self-insurance or proprietary insurance.

Create a health risk management plan

Healthcare organizations need an established and ongoing risk management plan. A risk management plan is a guiding document for how an organization strategically identifies, manages, and mitigates risks. Hospital administrators and all department heads should be aware of and involved in the development and ongoing evaluation of the plan. A healthcare risk management plan communicates the purpose, scope, and objectives of an organization's risk management protocol. It also defines the roles and responsibilities of risk managers and other employees involved in risk mitigation. Below is an example of a health risk management plan.

The format of the risk management plan will vary from organization to organization, depending on the analysis of existing systems and historical data, and the unique characteristics of each healthcare facility.

Risk management in healthcare - a crucial moral imperative!

In healthcare, risk and uncertainty are inevitable. Human nature, the complex and multi-tiered provision of care, and the highly complex healthcare system ensure that healthcare facilities face a disadvantage. However, these occurrences are mitigated by risk management tools. 

Amid vertical integration, new market entrants, and value and performance-based payment models impacting the bottom line, a rigorous risk management strategy is paramount to the profitability of any healthcare organization. By establishing a continuous and systematic approach to mitigating the risks associated with the healthcare sector, a growing number of healthcare organizations are helping to improve the quality of care and financial strength as they navigate turbulent times of change. are successfully protected.

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