Risk management in healthcare entails the use of systems and processes to prevent negative risks and support positive ones. While risk management traditionally referred to mitigating risk to protect patient safety, evolving conditions have broadened its scope to encompass the protection of patients, staff, and the healthcare organization itself.
As organizations adapt to value-based care, improving care quality is increasingly linked to financial viability. Successfully managing clinical, financial, and operational risks is an interconnected endeavor that requires strong leadership. In this guide, we'll answer commonly asked questions, and discuss eight factors that influence risk management in the healthcare industry. We'll also provide best practices that you can put into place as you guide your facility toward safe, compliant practices that can keep up with industry changes.
Managing Risks in Healthcare: Overview
Hospital risk management earned a spotlight in the 2000s, when the Institute of Medicine reported on the high number of deaths due to medical errors in hospitals. The report triggered legislation to safeguard patients and increased efforts to manage risks. For some time, the healthcare industry's approach was preventative and reactive, focused on identifying risky clinical practices and learning from adverse events, with the aim of improving patient safety.
The scope has since expanded, and there's a trend toward building in continuous risk management processes to all areas of operations, such as hiring and choices in technology. This broader focus reflects the many ways patients can be impacted by operations. In addition to having an expanded focus, current approaches acknowledge that not all risks are "bad," that healthcare businesses may have to take on some risks in order to thrive.
Risk Management in Healthcare: Examples
Here are examples of some risk mitigation activities that could take place in a hospital, related to medication administration:
- A hospital develops protocols to promote safe medication administration.
- Their HR team considers risks associated with hiring decisions to ensure only qualified nurses are onboarded and allowed to deliver medications.
- Hospital leadership purchases and installs bar code medication administration technology.
- The hospital legal team purchases hospital professional liability insurance to protect the facility's financial assets should a medication error occur.
Risk Management in the Healthcare Industry: FAQ
In healthcare, risk management is about more than just preventing lawsuits or protecting assets. Patient lives are also on the line. Mistakes are often the manifestations of systematic flaws, making the big-picture view imperative. Here are some common questions about current risk management strategies.
What is risk management in healthcare?
Risk management is the use of strategic initiatives to reduce negative fallout from risks. It also involves analyzing opportunities to make sound decisions. Specialists and teams enact plans and policies to protect patient safety and promote continuous quality improvement (CQI). Legal teams, human resources (HR), information technology (IT) departments, and facility leadership also influence strategies.
What are the factors that influence risk management in the healthcare industry?
There's a growing awareness in the industry that effective management of risks involves a comprehensive, big-picture view of the many factors influencing risk. The American Society for Health Care Risk Management (ASHRM) promotes an enterprise risk management (ERM) framework with eight domains that healthcare organizations must consider:
- Operational
- Clinical and patient safety
- Strategic
- Financial
- Human capital
- Legal and regulatory
- Technology
- Hazard
Why is considering risks important in healthcare?
Through managing risks in many areas, not just clinical patient care, healthcare providers have a better ability to offer productive, safe services. Effective risk mitigation strategies can improve patient outcomes, leading to proper reimbursement levels and positive recognition within communities.
Mitigating dangers (such as environmental hazards and compliance failures) can prevent consequences such as:
- Patient harm
- Staff injuries
- Fines
- Lawsuits
- Brand damage
- Financial instability
Establishing a stance toward risks that may have positive results is also important. An organization's strategies should define how much risk is acceptable and for what aim, so that organizations are ready to innovate and adapt.
What are the steps in the risk management process?
The exact steps of the process depend on the type of risk that is in consideration. For example, compliance risks may be addressed by first establishing a committee that's responsible for oversight, while facing AI-related risks could require an entirely different first step. In broad strokes, here are the phases that the process will go through:
- Preparation
- Analysis
- Implementation of a risk response
- Assessment
The process can be considered a continuous feedback loop. Once a response is assessed to determine effectiveness, the cycle can begin again.
What are the core concepts of risk management in the healthcare industry?
The foundation of risk management is the protection of patient safety. To reduce risks associated with direct patient care, facilities rely on:
- Incident reporting to create visibility related to adverse events and near misses.
- Root cause analysis to examine incidents retrospectively to unearth systemic flaws and weaknesses.
- Continuous quality improvement to test risk reduction policies and procedures and evaluate their effectiveness.
Best Practices for Managing Risks in Healthcare
Taking steps to identify and remediate risks within your organization is important, and could make the difference between helping a patient and causing unintended harm. Your stance toward risk will also inform the way you integrate technology into operations, a crucial consideration given the rapid expansion of options. Here are three best practices to consider.
1. Use a Facility-Wide Approach
The enterprise risk management framework highlights the interconnectedness of the areas of operations where risks can occur. If you notice departments working in isolation, consider taking steps to facilitate better collaboration with other teams. This can help department leaders understand the concerns of their coworkers and formulate effective responses.
2. Include Third-Party Vendors in Risk Assessments
Risk analysis shouldn't stop at the facility's walls. Healthcare facility ecosystems often function with support from outside companies. For example, an increasing amount of innovative technology is getting integrated into healthcare systems, often sourced from third-party companies.
When considering areas of operations, look past departmental borders to the vendors they partner with. Consider medical equipment suppliers, software vendors, and environmental services from contracted firms.
3. Foster a Just Culture for Clinicians
Help unit managers establish a work atmosphere that encourages error reporting. Within a just culture, clinicians can communicate with management about events that fall outside of their routine and expected workflows without fear of undue retaliation. When staff can safely report errors that are rooted in systemic flaws, these vulnerabilities can be investigated and remedied.
Mitigate Hiring Risks by Considering Pre-Verified Candidates
Risk management in healthcare requires participation from many departments, all working together to create a system that supports patients to the highest degree possible. Help your hiring team contribute by recruiting from our network of pre-verified nursing candidates who are qualified to deliver the care your patients deserve.