A Guide to Healthcare Risk Management Planning
What Is Risk Management?
Image via Unsplash.com/Oscar Sutton
Risk management is an ongoing process of proactively evaluating, planning for, and responding to potential loss or negative events that could happen in your place of work. A good risk management plan will help you put processes in place to minimize the chance of something happening, and it will reduce the impact if an event does occur.
In a healthcare setting, risk management is critical to help prevent medical mistakes, errors, and injuries that could either cause someone harm or bring about their death. Ultimately, effective risk management plans can help healthcare professionals with the following:
- Prevent or reduce the number of patient deaths resulting from medical errors.
- Promote the well-being of patients and staff.
- Avoid or reduce financial loss for the healthcare institution.
- Minimize the number of medical malpractice claims made against staff.
- Increase the level of trust and respect patients have for the facility and its employees.
Encouraging and requiring every employee to follow best practices for hand hygiene before and after all patient interactions is a simple example of managing risk. Being diligent about washing and/or sanitizing hands can help reduce the spread of hospital-acquired infections, which not only harm patients but can also lead to financial penalties from government-sponsored insurers like Medicare.
In this guide, we’ll:
- Provide you with an overview of what risk management is, the goals of risk management, and the importance of being prepared.
- Show you how to create a risk management plan.
- Give you a sample of a risk management plan template.
- Walk you through the step-by-step process of handling a risk management incident.
- Share recommended healthcare risk management articles, videos, and courses you can check out.
- Provide our list of references for the resources we used to research this guide.
What Are the Goals of Risk Management in Healthcare?
Risk management is an essential piece of the puzzle for achieving the following goals:
- Preventing or reducing the frequency and degree of harm to patients, staff, visitors, and the community.
- Preventing or reducing the number of patient deaths that directly result from errors.
- Preventing unnecessary financial losses for your facility and, if they do happen, reducing their impact.
- Preventing or reducing the number of lawsuits filed against the staff or institution.
One of the first and most essential steps in risk management is to put a formal plan in place to reduce the risk of something happening, as well as one to help your staff properly address and resolve an issue if one occurs. (See the section on “How to Create a Risk Management Plan” in our table of contents.)
The key to creating a successful risk management plan is to tailor it to the specific needs, services, and resources of your practice environment. For example, an outpatient surgery center provides very different services from that of an outpatient PT clinic, and therefore will have a wider set of risks to plan for. For instance, surgery centers will need to plan for numerous surgery complications, while a physical therapy center would not.
When it comes to risk management, one size doesn’t fit all, so you will want to be thoughtful about where your particular practice’s risk can come from.
There are the five essential steps to setting up a risk management plan.
1) Create a formal document with this (suggested) outline.
This document can outline your goals and streamline the structure of your planning. It should include these elements:
- Name and location of your organization
- The plan’s purpose
- The organization’s mission statement
- The person(s) acting as risk manager(s)
- Key leaders of the organization
- The risk
- The probability of that risk occurring
- Qualitative assessment of the level of risk
- Quantitative assessment of your level of risk
- Person(s) designated for communicating information about possible risks or actual events (may be different for each risk)
- How information will be communicated (may be different for each risk)
- Person(s) to whom the info will be told (e.g., staff, leadership, the community, government agencies, etc.) (may bedifferent for each risk)
In the “Sample Risk Management Plan” section of this guide, we’ve set up a chart with the following elements. There, we’ll also walk you through the sample outline of what to include in your plan.
Risk Analysis Chart
2) Identify actual and potential risks.
This will be an opportunity for the risks to be listed, no matter how likely.
3) Analyze each risk.
This is done by evaluating the probability that a negative outcome will take place as a result of the risk.
4) Plan responses to risk.
Consider listing out the set of strategies you want to implement in order to prevent and mitigate risk, as well as contingency plans if something does happen. Strive to review and practice these strategies with your staff on a regular basis (e.g., biweekly, monthly).
5) Manage risk if a loss or adverse event occurs.
This involves establishing a reporting process (i.e. nurse to manager to corporate to federal) for when an event occurs, as well as a plan for managing and controlling the fallout after the fact. It also involves having a reassessment process in place to review the risk after the issue has been resolved.
What Are the Top Risks for Your Healthcare Environment?
Regardless of your job title or what type of license you hold, understanding the basics of healthcare risk management can help reduce your chances of causing harm and lower the likelihood of becoming the target of a medical malpractice case.
It’s important to take some time to assess the risks that are specific to your practice environment. For example, risk can vary widely between ambulatory care and an acute care hospital. While some risks, such as breaches of patient confidentiality, medication errors, and falls, are universal, the likelihood of these occurring is related to the type of practice setting. For example, medication errors occur more commonly in the outpatient setting where there’s more likely to be transitions in care, while patient falls occur more in the acute care and long-term care environments where patients are likely less mobile.
Some things to consider when assessing your level of risk are the types of medical equipment used, the medical procedures that are performed, patient acuity levels, staffing levels, staff credentials and experience, and the different types of medications and treatments administered to your patient population.
Risk in the healthcare environment for both patients and staff is real, costly, and pervasive. Here are some basic healthcare risk statistics and lawsuits related to mismanaged risk to help explain further.
The Statistics on Different Types of Healthcare Risks
Risk #1: Healthcare Data Breaches
According to the U.S. Department of Health and Human Services (HHS), nearly 400 data breaches occurred between April 1, 2016, and March 16, 2018. Each of these breaches affected 500 or more patients.
Risk #2: Medication Errors
Close to 22,000 vaccination errors occurred from 2000 to 2013, as per the Vaccine Adverse Events Reporting System (VAERS).
Risk #3: Healthcare-Associated Infections (HAIs)
Up to 10 percent of hospitalized patients in the U.S. get at least one HAI each year, according to the Centers for Disease Control and Prevention (CDC). Here are some additional statistics from the CDC:
- HAIs affect about 1.7 million patients per year, at a cost of about $20 billion.
- HAIs are responsible for almost 99,000 deaths each year in the U.S.
Risk #4: Patient Falls in Hospitals
About 700,000 to 1 million falls occur in U.S. hospitals each year, according to the HHS.
Risk #5: Patient Falls in Long-Term Care (LTC)
Of the 1.6 patients in LTC facilities in the United States, about half (800,000) fall every year in skilled nursing facilities, according to the Agency for Healthcare Research and Quality.
Risk #5: Workplace Violence in Healthcare
According to the Occupational Safety and Health Administration (OSHA), there were between 23,540 and 25,630 workplace assaults per year from 2011 to 2013 — with about 74 percent happening in healthcare and social services settings.
Lawsuits Related to Mismanaged Risk
In a review of nearly 29,000 medical malpractice cases from 2010 to 2011, one out of nine involved medication errors. (CRICO Strategies of Harvard University, 2016)
Furthermore, during an analysis of about 24,000 medical malpractice cases reviewed from 2009 to 2013, communication failures contributed to 7,149 instances (about 30 percent) of harm to a patient, resulting in a total of 1.7 billion of losses. (CRICO Strategies at Harvard University, 2015)
The healthcare environment is full of risk. The facts and stats provided above demonstrate the need for ongoing, comprehensive risk management — no matter the practice environment — to maintain patient and staff safety.
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