How prepared was your facility for the H1N1 outbreak? Do you have the proper safe guards within your information systems to protect your patients and enforce HIPAA requirements? How has your organization prepared for the growing population of uninsured and the associated rise of bad debt? Is the aging of your nursing or physician staff creating a concern for the ability to recruit fast enough in the midst of a health care provider and nursing shortage? What is the age of your current facility, and when will you need to consider a replacement?
Risks to a health care organization come from external and internal factors, and today's health care executives need to take a portfolio approach to addressing these risks. Enterprise risk management (ERM) is an integrated approach for executive management and boards of directors to address all forms of risk within an organization. This process continues to evolve from the lessons learned in the insurance and banking industries as an answer to world events that demanded a compliance response.
Today, ERM is an internationally recognized method with tools and standards for organizations to apply based on their needs. ERM is breaking the traditional boundaries of how risk has been historically managed in silos within an organization. Traditional risk management utilized "reactive" approaches, which limited visibility throughout the organization to create a well managed strategy for addressing risks in a timely manner. ERM takes a "proactive" approach to managing risks at the top level of the organization, so the impact is minimized and the value maximized.
Historically, risk management in a health care organization has focused primarily on the narrow silos of financial risk and patient safety. Health care organizations today are facing a turbulent environment, rich with changes in regulation, consumer needs, environmental factors and challenges to operations.
Upon the passage of new health care legislation expected in 2010, health care organizations and providers will face challenges to reimbursement, operational requirements and quality standards. Consumers are taking more active roles in their health care choices in the midst of an economic downturn and taking on more financial burden as employers cut insurance benefits. An aging population continues to challenge the capacity of the health care system at a time when many facilities in rural areas, with the highest aging population, are weighted with outdated facilities that require renovations or rebuilds. For a health care organization, these risks are what may prevent them from achieving their objective of delivering the highest quality of care to their patients and communities.
ERM provides health care leadership teams a practical approach to managing the day-to-day operations while aligning risk management with the strategic goals for the organization. Specifically, health care organizations are able to design a structure that enables leadership to make more effective and timely decisions based on improved information and an enterprise-wide understanding of the impact. Successful implementation of an ERM program can lead to the improvement of operational metrics, such as a reduced number of patient incidents, and an impact to intangible metrics, including improved perception of leadership and increased competitive advantage in the marketplace.
There is no better time for health care organizations to turn their focus to a proactive risk management approach. The health care legislation is expected to create significant change in the marketplace throughout the industry over the next decade. Rating agencies, such as Standards & Poors, have broadened their focus toward enterprise risk considerations in ratings to non-financial industries, including health care. Demographic, socio-economic and consumer dynamics are changing and challenging health care delivery, presenting new risks. A structured enterprise approach that applies a practical process for day-to-day management will be the competitive differentiator for organizations to grow and prosper in this environment.
