SilverLink - Spring/Summer 2008 - (Page 11)

RISK MANAGEMENT Healthcare Industry Risk Reduction, What’s Your Function? Managing Medical Practice Risk by John Marshall, CIC, AAI There have been countless articles, text books and other resources developed to identify, analyze, control and ﬁnance risk. One of the challenges of “risk management” is that as a practice it has a wide variety of applications. Because much of the insurance industry has focused on selling products, the strategy of applying risk management is often conducted in a random versus strategic manner. Developing the right team and method can greatly reduce the exposures you face personally and professionally. • • • • • What types of losses have we had in the past? What types of industry losses have occurred in my industry that I am susceptible to? What regulatory/legal exposures do we face that could affect the practice? What is not covered by my insurance policies? What other issues keep the owners of my practice up at night? Are You Really Handling Your Risk? If your organization’s primary method of managing risk consists of transferring the potential liability to an insurance company, that is certainly one alternative. However, such a solution is not always feasible, and insurance may not always be the best use of the ﬁnite dollars available to manage risk for a smaller practice. More important, it is impossible to transfer all of the risks your medical practice may face, even if you buy every insurance policy available. As many have learned through bitter experience, insurance policies have exclusions—and the fact that “exclusions” means “some items will not be covered,” makes insurance a less-than-perfect solution for transferring potential loss. As you answer, remember that some loss/exposure cannot be quantiﬁed. For example, an employee suffering from depression may not be fully productive as a result; any loss or possible higher frequency of mistakes made by this impaired employee may be impossible to measure. In other words, not all losses are direct or quantiﬁable by a speciﬁc dollar amount. If you focus only on the types of risks that are typically transferred in the traditional insurance markets you could be overlooking potentially devastating exposures to your business. As Americans have discovered in recent months, international issues (i.e., energy costs) and ﬁnancial risks (i.e., lack of capital) can affect your business in ways not even contemplated just a few months earlier. The ongoing problem is that many forms of analysis, including how actuaries determine insurance rates, often miss outliers (severity/ catastrophic exposures) that can, in some cases, change an entire industry overnight. The past also does not necessarily predict the future when analyzing business risk. So Now What? The management of risk does not always involve spending money on insurance policies. There are several strategies you can employ that cost you only the time value of your staff to implement and monitor. If you take a holistic approach to this process and include all business partners with whom you conduct transactions, you might be surprised to ﬁnd out that there are many “best practices” that can be shared. While this process might sound complex at ﬁrst, it is actually quite simple. You can begin by asking yourself the following questions: • • What are the potential personal and business threats to my medical practice? What opportunities/ideas/expansion is my practice considering and what new risks do they create? The Risk Reduction Function When a medical practice does not have a risk manager, by default they often rely for advice on those individuals who sell insurance to their organization. Since expertise does not correlate with the cost of insurance products, you might ﬁnd that those who sell you insurance are not necessarily experts in risk management. The best way to test the credentials of a “risk manager” is to have him or her examine an exposure that is not necessarily controlled by the purchase of insurance to transfer loss. 11 SILVERLINK — SPRING / SUMMER 2008

Table of Contents Feed for the Digital Edition of SilverLink - Spring/Summer 2008

SilverLink - Spring/Summer 2008 Contents Risk Management: Mitigate & Educate Disastrous Distractions Accounts Receivable BoomerCare Risk Reduction, What’s Your Function? Time Out! Double Down Employee Benefits: Who’s Paying Whom for What? Time to Reconcile Keep Your Eye on the Pension Prize Show Me the Money Private Client Services: A Generous Strategy Is There Any Good News Left? Special Insurance for Special Times Client Spotlight: Omaha Performing Arts Internal Happenings: SilverStone Group Wellness Activities Group

SilverLink - Spring/Summer 2008

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