Risk Management in Healthcare

Risk Management in Healthcare: Is Your Organization Hitting the Mark?

Risk is a word that every industry holds with great gravity. Risk management in healthcare, one of the most regulated industries, involves considerable complexity.

Managing risk is part of every aspect of life sciences healthcare. As compliance requirements evolve and intense scrutiny continues, healthcare organizations must ensure they have a healthcare risk management system that hits the mark.

In this post, we’ll be discussing the basics of risk management in healthcare, what defines an effective risk management system, and resources that can support your efforts.

What Is Risk Management in Healthcare?

In general, risk management in healthcare describes activities, processes, policies or other actions that reduce liability. The plethora of risks that life science healthcare organizations face crosses every facet of the business. Risk exists inherently for life sciences, from protecting intellectual property, to complying with regulations, to concerns around cybersecurity.

In this post, we’ll be discussing the basics of risk management in healthcare, what defines an effective risk management system, and resources that can support your efforts.

Types of Risk

Including every specific risk for healthcare would be daunting. Instead, the categorization of these risks is more useful.

Regulatory Risks

Risks tied to not following regulations or compliance mandates

Strategic Risks

Risks that could inhibit your organization from achieving business objectives

Operational Risks

Risks that occur due to ineffective internal controls, relating to processes, human error or external events

Technology Risks

Risks that relate to cybersecurity threats and any others that would cause downtime

Emerging Risks

Potential future risks that need close monitoring

Fundamentals of Healthcare Risk Management Systems for Life Science

When speaking about healthcare risk management, there are critical fundamentals to guide the process. We’ve broken them down into four categories:

1. Understanding how the DOJ assesses risk
2. Defining a healthcare risk framework
3. Understanding how to implement your framework
4. Defining necessary resources

How the DOJ Assesses Risk

Before developing a risk framework, it’s important to understand what the Department of Justice looks for when assessing risk. The DOJ does not have a rigid formula for evaluating risk, but assesses on a case-by-case basis using the following criteria:

• The location of the company’s operations
• The industry sector
• The competitiveness of the market
• The regulatory landscape
• Potential clients and business partners
• Transactions with foreign governments
• Payments to foreign officials
• Use of third parties, gifts, travel, and entertainment expenses
• Charitable and political donations

The DOJ will also consider the design of your compliance program. They will want to know if:

• Your program has been tailored based on the type of risk typical in your industry
• Your program is subject to periodic review that can lead to updates in policies and procedures
• You program has a process for tracking and incorporating changes in compliance laws or making adjustments due to your own past violations or those of other companies operating in your industry li>

So it makes sense to know what the DOJ expects from your compliance program before you start laying the groundwork. Once you understand how these points apply to your healthcare business, it’s time to start building and implementing a framework.

Healthcare Risk Framework

For healthcare to best manage risk, organizations typically apply a framework. There is an abundance of variations on these frameworks, but in general, they should include:

Risk Assessment

Diagnosing and identifying all risks and determining the organization’s ability to respond to these risks. In this step, organizations are developing a baseline. Regular assessments should continue, at least annually. Reassessing may also be necessary if significant regulatory changes occur.

Risk Remediation

The next step is developing processes to remediate or mitigate known and potential risks. These plans need specific details of best practices for each risk. It’s a strategic document that also assigns responsibility. For example, cybersecurity risk mitigation includes the tools and methods to prevent and monitor breaches assigned to IT stakeholders.

Risk Monitoring

Risk is a 24/7/365 discipline. It never disappears, and new ones appear regularly. Organizations must continually monitor all areas of vulnerability, regulatory mandates, and internal and external factors.

Healthcare Risk Management Plans: How to Implement

In the case of most existing life sciences companies, you likely have a risk management plan. However, just because you have one doesn’t mean you’ve fully adopted it. For organizations just starting out in the industry, you’ll want to heed these implementation best practices as well.

People

Internal teams and external consultants are perhaps the most valuable assets. Some organizations, depending on size, have large teams of compliance and risk experts. Others may have a few staff members that partner with consultants to create a robust team.

Training Resources

Educating staff is vital to implementation and continual adoption. Organizations need to have a way to deploy this training. It could be through a third-party LMS (learning management system) or broadcasted internally. You may need support to create a curriculum, too.

Communication Tools

Risk does not diminish without healthy communication. Those that manage elements or risk need secure communication channels that enable them to collaborate in-person or remotely.

SaaS (Software as a Service) Platforms

These platforms are almost as important as your people. With the right platforms, you’ll be able to manage, monitor and improve risk vulnerabilities.

Professional Standards & Practices

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides the gold standard for enterprise risk management. Its guidelines, updated in 2020, defines compliance-related risks, describes how an efficient compliance program should run, and reviews various strategies for keeping our program up-to-date with current laws and precedents. The COSO guide is crucial reading when building your own compliance framework.

Reimagining Your Healthcare Risk Management Program

The burden of risk management, compliance, and ethics is heavy. You can find relief by partnering with our experts. If you’re aware of gaps or lack the bandwidth to feel confident with risk management, we can help.

We have the experience and breadth of solutions to strengthen or build your program that includes the seven elements of an effective compliance program, as defined by HHS OIG.

Learn more about the MedCompli Compliance Program Assessment today.