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Today’s health and aged care environment are experiencing problems brewing in
various fronts. Connectivity, integration, convergence are challenging providers to
navigate a world of reduced margins to do much more with much less and further
impacting quality outcomes.
The challenge is in providing quality care within astute business models. The key is in
strengthening risk management and resilience to achieve long term sustainability.
Traditional risk management is focused on specific categories of risk (silos) and how
a particular risk might affect one aspect of organisational health (e.g. insurance costs,
accreditation). Identifying clinical risks associated with liability costs and sanctions
very often leads to not considering impact of non-financial risks – e.g. financial and
otherwise, that could also be identified and measured, reputational risks, etc. It also
fails to take into account impact of one risk upon another, thus compounding impact
of potential downside.
For example, literature is replete with human resource issues relating to:
• Workforce fatigue;
• Educational levels of nurses and their effect on patient outcomes;
• Staff intimidation in the area of safe medication practices; and
• The decreasing labour pool.
It is not easy to identify how the impact these issues have on each other. However,
one could see how a decreasing professional labour pool can create a demanding and
stressful work environment that promotes workplace fatigue.
Similarly, events like 9/11, Victorian Bushfires, etc have escalated the focused effort
on emergency management and disaster recovery planning. To be successful, these
efforts have had to adopt enterprise wide risk management.
Risk management for health and aged care providers is not a socially or legally
ordained program. It is simply an organised effort to identify, assess and reduce,
where appropriate, risks to patients, visitors, staff, and organisational assets. Risk
management is nothing new, as Shakespeare’s Julius Caesar puts it, “the fault…is not
in our stars, but in ourselves.” Untoward or adverse outcomes tend to yield a broad
spectrum of possible explanations. What steps or programmes have we put in place to
ensure we reduce the incidence of preventable accidents and injuries to minimize the
financial loss to the institution should an accident occur?
It is difficult for those outside the sector to grasp the uniqueness of health and aged
care risk management. Whilst there are some similar elements to risk management in
other industries such as workers’ compensations, fleet safety, workplace safety,
hazard identification and mitigation, the potential severity of a catastrophe injury to a
patient/resident is distinct. Aged care functions 24/7 and poor outcomes can result in
dire consequences, sometimes viability. As a result, traditional risk managers have
placed emphasis on addressing clinical risks. Such narrow approach can be limiting
and might not result in greatest enhancement of safety outcomes for patients/residents.
What about the new challenges posed by continuous advances in medical research and
technology? Although these advances support the goal of improved patient care, they
come with a price tag: new risks. What is the risk that these advancement would
threaten the ethical and moral values of an institution?
From our work with leading organisations, we are witnessing an evolving role for risk
officers who have identified the following three risk management priorities:
Scenario planning, sensitivity analysis and forecasting also provide valuable insight
and depth to risk management discussions.
Trend forecasting also provides key insights on trends and expectations of things to
come.
Public
Operations
Relations
Internal
Insurance Audit/
Compliance
Risk
Manager Nursing/
Strategic
Medical
Quality
Environment
Assurance
• Consider the potential consequences of risk events in terms of their severity Ensure
there is sufficient rigour of the risk analysis in keeping with the context and risk
criteria, the level of uncertainty in the analysis and the needs of decision makers.
Liability Property Business Personnel Financial Operations Strategic
interruption
• Slips and falls • Real -facility • Net income • Employee injury • Price • Productivity • Funding
• Medical • Personal • Extra expenses • Benefits • Credit • Information mechanism
professional • Intellectual • Contingent • Retention • Loss of management • Viability of
• Clinical trials property business profits • Process mergers
interrruption • Regulatory risk • What services or
– sanctions, products to offer
fines, penalties
• Evaluate risks – compare the estimated level of risk with the pre-established
criteria and rank the risks to identify management priorities. Ascertain tolerance
levels and tolerable risks, based on parameters set by the board. Develop a risk
treatment and response plan.
• Treat risks- Upon identifying risks, develop a range of response options for treating
risks, assess these options. Options range from avoiding the risk, in which case you
decide not to proceed with the activity likely to create the risk, change the
probability of occurring to enhance outcomes and reduce probability of losses,
change the consequences of risk, share the risks or retain the risk and make
appropriate provisions for dealing with risk should it arises.
• Given the dynamic context resulting from the constantly changing external and
internal environments, an institution should monitor and review the effectiveness
and performance of its risk management process and changes as well as that of the
risk treatment plans. Intrinsic in the risk treatment plan should be that of effective
controls. By analysing incident reports and understanding the root-causes, risk
managers often able to identify opportunities to strengthen organisational control
designs.
Some examples of key risk indicators associated with non-compliant homes include:
Adopt a strategic approach to risk management. Also look at culture and the
importance of risk culture is greatly influenced by leadership from the board. Walking
the talk forms the basis of a successful risk framework
Whilst the above issues relate mainly to patients, some key business risks which are
often ignored has proven critical to ultimate financial risks and hence long term
solvency and viability of the institution.
One example is that of contract management and service level agreements with third
party providers/contractors, e.g. IT, managed care, transaction processing, consultants
and physicians etc. Service failures or interruptions could result in unintended
increases in medical and operating expense that might negatively impact cash flow,
liquidity, financial performance and capital. They might also result in injury or
damage to third parties what might result in expense to the institution.
Some key risks issues relate to provider credentialing, vicarious exposures, apparent
authority and ostensible agency, good faith and fair dealing, provider selection and
compliance.
Advertising risks may pose a legal risk to the institution – e.g. exaggerating qualities
of a product, and when you cannot live up to the claims it makes for itself. Be clear
whether you are adopting a strategy of factual message or opinion message. Factual
messages provide objective, verifiable information to the consumer. Certain facts
about the facility may determine consumer preference in certain cases, e.g. religious
or ethnic affiliation, the cost of the services, hours, etc. Opinion messages try to
influence the consumer to believe that the facility offers a positive subjective
attribute. Advertiser should be able to substantiate claims and types of testimony used.
Languages such as “best care”, “world class facility” ‘first class staff’,
“extraordinary”, “individualised care”, should be avoided.
Benefits of ERM
If avoiding sanctions is not incentive enough, try resilience. Apart from a broad base
approach, ERM provides opportunities to improve efficiencies, streamline compliance
costs and provides management and stakeholders a better view of risks.
This further facilitate improved decision making and creates greater empowerment,
control and monitoring of risks. Understanding and reporting key risks indicators also
helps to improve transparency.
Finally, having clear view of risk and an integrated model of risk management
increases flexibility and responsiveness of a provider to respond and be more
opportunistic. This is critical for organisations to be successful and build the
resilience and challenges which abound.
If you require further information, please contact Shirley Liew, +61416287694, sliewsn@hotmail.com
or visit www.shirleyliew.com