The annual American Society for Hospital Risk Managers conference is nearing, and if you’ve looked at the conference program, you’ll notice it’s full of educational sessions on enterprise risk management (ERM).
That’s really no surprise: Without an ERM program in place, it makes it exceptionally difficult for healthcare organizations to to predict the next steps they must take to be competitive and financially viable — especially in today’s uncertain market, regulatory and reimbursement environment.
Whereas traditional risk management in healthcare was borne out of protecting hospitals and doctors from the surge of malpractice and professional liability suits of the 1970s and 1980s, ERM is more holistic. It takes into account much more than one hot-button issue at a time — looking across departments at operational, financial and strategic risks, in addition to anticipating one-off unexpected risks.
Even more, the evolution of technology has evolved ERM into what is now being called Integrated ERM. While many healthcare professionals are aware of the term “integrated risk management” in the context of managing hazard-based risk beyond the inpatient care settings within their health systems and integrated delivery networks, Integrated ERM is different.
Integrated ERM brings all risks from across the enterprise together to determine how they interrelate — uncovering insights that have previously been hidden within individual silos. The often-cited benefits of adopting Integrated ERM within healthcare institutions include:
High-quality patient care In addition to effectively highlighting patient safety issues that can then be resolved, Integrated ERM also enables healthcare organizations to more easily adopt increasingly popular patient-centered value-based care models.
Compliance While Integrated ERM is not about managing risk solely to meet compliance requirements, compliance is often a benefit of taking risks out of silos, obtaining a comprehensive view of those risks, and uncovering a plan of action that goes well beyond compliance standards.
Resilience Because Integrated ERM accounts for both the upsides and downsides of risk, it can help organizations to better withstand hazards, as well as thrive in the wake of a changing marketplace when value-enhancing risks are taken, like adding a profitable new clinical business line, or merging with other providers
Proper Investment Integrated ERM hinges on well-founded data that can rank your risks and offer insight on where to invest. Whether you invest in risk mitigation or value-incented risk-taking, you can feel more confident about your spend.
Improved Processes Integrated ERM can eliminate redundancies that often transpire due to operating in silos. The resulting transparency and collaboration means less likelihood of creating additional problems in one area after solving for a problem in another area.
All these benefits can come to fruition in a multitude of ways. For instance, many healthcare organizations are switching from fee-for-service or volume-based payment models to value-based payment models, whereby healthcare providers are incentivized based on the level of quality care they provide patients.
Such a shift isn’t as simple as merely adjusting payment or invoicing practices, though. It involves tweaking, and even overhauling a variety of processes and practices that stretch across all eight ERM risk domains. After all, it’s not just a new method for payment. It’s really a new method for care.
That’s why taking the Integrated ERM view of the shift to value-based care — or any other critical healthcare issue — is so important. Managing risk in a vacuum can cause organizations to overlook other critical risks that could be costly, or refrain from taking risks that have a tremendous upside, which could be even more costly.
Healthcare organizations that lack the data, tools, processes and frankly, the mission to take an Integrated ERM approach could face even greater failure in the form of business disruption or financial losses.