Risk Management in Healthcare

Risk Management is the ability to identify, analyze, and recover from threats to an organization’s daily operations and delivery services. The importance of practicing risk management has grown over the years, with many organizations adopting it as a key principle of operations. The healthcare industry bars no exception. In fact, it could be argued that healthcare systems must be more vigilant than ever when it comes to risk management, as the industry has experienced a robust explosion in technology and medical advancements.

Traditionally, risk management within healthcare has been applied to medical liabilities, limiting legal exposure and maintaining patient safety. However, as jobs and roles within the healthcare industry continue to trend towards more technology-based processing systems, the role of risk management in healthcare has far expanded beyond its original focus of patient safety and reducing medical errors. The added role of healthcare technologies has created a larger concern for cybersecurity threats regarding payments, patient information and financial performances. The growth of medical science, maintaining brand value and the legal and political landscape of services has also proved the field has become very complex over time.

As the industry and its procedures continue to evolve exponentially, risk management practices must too, strive to adapt to the constant changes. Healthcare organizations must focus on an overarching goal of risk management across all departments to create a risk-aware framework. Together, a common goal must be formed to resist, anticipate and be able to recover and learn from disruptions. Healthcare providers much shift their scope to encompass a broader view of the entire healthcare ecosystem.

Because of this, hospitals and healthcare systems are using a new approach to risk management, know as the Evolution of Healthcare Enterprise Risk Management. This perspective allows for an all-encompassing view of the healthcare landscape – from its traditional role of patient safety and medical liability, to new processing systems, software, third-party liabilities and beyond.

According to the weekly medical journal, the New England Journal of Medicine, ERM refers to eight risk domains:

  1. Operational
  2. Clinical & Patient Safety
  3. Strategic
  4. Financial
  5. Human Capital
  6. Legal & Regulatory
  7. Technological
  8. Environmental- and Infrastructure-Based Hazards.

Risk management officers must think critically about these spheres of potential risk when evaluating threats within the company’s infrastructure. These spheres should be used as a guideline to help practice a large-scope view of risk management. Managers should also create detailed strategies for specific, plausible scenarios in order to mitigate, respond to, recover and learn from possible disruptions to these areas of business.

The healthcare industry has become one of the most complex organizations, exposing more entry-ways for risk, and thus leaving it more vulnerable than ever. Because of this, the industry demands the risk management approaches and strategies must be equally evolved and comprehensive. Risk management strategies must reflect those complexities by viewing the entire landscape of the healthcare ecosystem and continually growing alongside it.