Decoded: Healthcare Enterprise Risk Management (ERM) Plan

Cyber attacks have the power to bring down the entire healthcare system in one night. The best example would be the recent ransomware attack on Change Healthcare. This facility lost millions of dollars with just one attack, the entire billing, claims, and prescription processes were disrupted. This cyber attack is a gentle reminder that healthcare facilities need more robust risk management protocols and techniques.

Deployment of healthcare enterprise risk management (ERM) can alleviate cyber attack risks, thus ensuring patient safety. Implementing neat and clean ERM protocols requires an expert’s touch. Hiring the right team for it can safeguard healthcare organizations from potential threats. Before we jump on the implementation part, let’s understand what is healthcare enterprise risk management, along with its domains. In the later sections, we will cover the process of implementing healthcare ERM, followed by challenges.

Healthcare Enterprise Risk Management: An Overview

The ASHRM (American Society for Health Care Risk Management) states, “ERM in healthcare promotes a comprehensive framework for making risk management decisions.”

ASHRM further states guiding principles for enterprise risk management framework:

  1. Identification: Track and monitor risks, including those spotted in the near future. Communicate the detected risks to the concerned stakeholders.
  2. Assessment: Have risk clarity – pattern of each risk, how it will happen, and ways to mitigate it. Consult a risk management team if needed.
  3. Evaluation: Recognize and analyze the risk. Set out a protocol on how to tackle it.
  4. Response: Take action on the identified risks as per the ERM strategy.

Healthcare ERM vs. Traditional Risk Management

Here’s a brief synopsis on “the difference between healthcare ERM and traditional risk management.”

Components Healthcare ERM Traditional Risk Management
Leadership ERM is integrated into the overall healthcare organization’s risk strategy. Senior leaders proactively identify and address risks. Only a specific department or team is responsible for managing risks. All decisions are made at the operational level.
Data Leverage modeling and data analytics to detect and address healthcare risks. Traditional risk management relies on qualitative data and subjective assessments.
Risk Appetite Calculated risks that lead to success and innovation. Focus on minimizing risks to a predetermined threshold. 
Proactivity ERM is included within healthcare organization’s overall planning process, thus making it proactive. Considered a separate entity, making it reactive and responds to risks as they appear. 
Scope A comprehensive view of risks across the entire organization. The focus is on siloed departments. 

Healthcare ERM: 8 Key Domains

Healthcare organizations tend to face risks across varied fronts. The ASHRM has categorized these risks into eight domains. Healthcare organizations can take into account these domains while formulating a risk management plan.

  1. Operational: Operational risks are those arising from failed internal processes, systems, or people. Examples of operational risks are documentation, chain of command, and staffing.
  2. Clinical or Patient Safety: Clinical risks are those that affect the delivery of care to patients. These include medication errors, HAC (Hospital Acquired Conditions), or failure to follow evidence-based practice.
  3. Strategic: This includes risks associated with the direction and focus of the healthcare organization. For instance, reputation, sales, M&A, media relations, health reforms, business arrangements, etc.
  4. Financial: Every risk that affects the financial sustainability of the healthcare organization. Examples are capital expenses, litigation, foreign exchange, credit and interest rates, costs associated with malpractice, insurance, etc.
  5. Human Capital: This has everything to do with human resources. Risks included are staff retention, turnover, absenteeism, productivity, work schedules, compensation, etc.
  6. Regulatory or Legal: These risks arise when failure to manage, identify, and monitor regulatory, legal, and statutory mandates on federal, state, and local levels. These risks generally occur due to abuse and fraud, product liability, IPR, etc.
  7. Technology: This domain encompasses devices, hardware, machines, and tools, but also includes methods, systems, and techniques. Risks can revolve around cyber security, EHR, RMIS (Risk Management Information Systems), use of tech for diagnosis and research, etc.
  8. Hazard: Some of the risks are natural calamities, security, facility management, etc.

Process of Healthcare Enterprise Risk Management

Every organization runs differently, but here are essential aspects that must be included in every ERM plan:

1. Identify Organization’s Aim

Before formulating the risk management plan, understand what’s the ultimate aim of the healthcare organizations. Why there’s a need for an ERM plan? It can be for handling financial risks, compliance, cyber security risks, or human resources. Based on this aim, make a healthcare ERM plan that clearly states the benefits and purpose of the healthcare organization.

Apart from this, define specific goals that would help the organization in curbing medical malpractice, liability claims, and overall risks. Ensure that the plan has all the necessary steps to reduce the hazards.

2. Form a Team

A risk management team is mandatory to incorporate the enterprise risk management strategy for healthcare facilities. The team encompasses the CEO, COO, CFO, CIO, CTO, and the management team of the concerned healthcare organization. The team helps the organization to stay on par with the healthcare ERM process via regular meetings.

Additionally, information such as risk management tools, principles, and methods are shared with the team, so issues can be solved as quickly as they arise.

3. Onboard IT Experts

An organization’s information can be used to develop an RMIS (Risk Management Information System). To achieve this, healthcare facilities can consider outsourcing to a healthcare software development company that can solve tech issues. The choice of whether to outsource or hire an in-house team depends on the resources, budget, and time.

Additionally, project requirements and flexibility can also impact the decision. But, in a long-term scenario, outsourcing a software development team can turn out to be fruitful as it is less expensive than an in-house team.

4. RMIS Development

This is the part that is handled by the development team. The process starts with a consultation call, this helps the development team to gain more clarity on the project. Based on it they can build features, infrastructure, architecture, and user experience.

The RMIS development also involves a QA team that tests the software for bugs and flaws. The development team also helps with the launch process, followed by software maintenance. They may also go ahead and educate and train the staff on RMIS solutions.

5. Assess Current Risks and Prioritize Them

The risk management team is tasked with assessing and prioritizing the risks that may harm the healthcare organization. The team categorizes the potential risks and then formulates a plan to tackle them effectively. For example financial, operational, regulatory, or operational risks. Once risks are identified, the team can prioritize the risk, its impact, and frequency.

6. Risk Mitigation

Risk mitigation is an essential part of the healthcare enterprise risk management plan. Every organization wants immunity from ransomware attacks and data breaches. So, ensure there’s proper communication between the stakeholders and the risk management team. Along with this, create a contingency plan, reporting protocols, and communication plans to mitigate risk effectively.

Healthcare ERM: Potential Roadblocks

Organizations can face myriad roadblocks when it comes to healthcare enterprise risk management. Key challenges are:

  1. Compliance: Failure to meet regulatory requirements can affect patient privacy, safety, and the quality of care. It can also entail reputation damage, loss of accreditation, and financial penalties. Implement HIPAA standards to maintain compliance for healthcare ERM.
  2. Communication Problems: Siloed communication channels hampers collaboration between various departments and prevents seamless data flow. Have a robust, clear, and concise communication plan in place to enhance collaboration between departments.
  3. Data Management: Handling surplus data is a significant issue as it needs to be collected, categorized, analyzed, and protected. An incomplete database can impact risk management plans. So, have an accurate data management protocol in place.
  4. Choice of Tech: Healthcare organizations must consider scalability, regulatory requirements, usability, interoperability, and security when it comes to choosing technology. One mistake and the entire system can collapse or disrupt.

The choice of your risk management software can impact the way your facility tackles potential threats. Having the perfect team to develop the software is even more essential to avoid cyber attacks. Arkenea, a healthcare software development company helps in risk management and creating software solutions. We customize it as per your preferences and needs. To get top-notch risk management software, jump on a consultation call with us.