Analysis of Risk Management in Healthcare


Risk management is defined as “the identification, analysis and evaluation of the risk and the selection of the most dangerous methods of treating it” (American Association of Healthcare Risk Management, 2009, p.11). It can also be defined as a “logical and systematic method of identifying, analyzing, treating and monitoring of the risks involved in healthcare” (Kavaler & Spiegel, 2003, p. 4).

Patient care has been considered a fundamental issue due to enhanced consumer education – people’s expectation of a healthy baby and the litigious nature of the modern society; all these factors have led to increased awareness of risk management by health care institutions. Risk management is about a probability that a particular risk might result in poor outcome and it seeks to minimize such probability. The dynamics of health care has prompted unprecedented changes in approaches to risk management to address the demands of the patients.

Because of health success, there has been an increase in the population of aging people; there is also increase in the population of people living with more than one chronic condition. This has led to new and long term demands for health care. It is estimated that chronic conditions will be the leading cause of deaths and disabilities if they are not prevented or managed well, consequently patients suffering from diabetes have higher health care costs, at least three times more than people without the condition or those seeking direct health care services. Majority of the costly and disabling conditions are caused by preventable risk factors. It has been argued that many diseases or medical conditions can be prevented but health care systems do not utilize the available resources to support the process of prevention. Consequently, health workers have failed in their course of interaction with patients since they can seize such opportunities to inform patients about various healthcare promotions and the disease prevention strategies that are available.

Role of Risk Management Health Care Organizations

It is noticeable that most current health care institutions have perfected the art of responding to acute problems, pressing concerns and the urgent needs of patients only. These pressing and urgent concerns are testing, diagnosing, eliminating the symptoms and prescribing drugs which have become the order of modern health care institutions. This is administered despite the knowledge of health care workers that preventive healthcare is much distinct from the health care treatment of acute health conditions and in this regard healthcare facilities must institutionalize risk management. Risk management is a methodology that enables risk managers to utilize their available resources; it is applicable in both private and public health care organizations and covers the following activities: finance and investment, insurance, healthcare and public government institutions. Risk management involves following the following steps:

  1. Identifying and analyzing the loss exposure.
  2. The examination of feasibility of alternative process to stop the risks.
  3. The selection of the best among the alternative techniques.
  4. The implementation of the selected techniques and
  5. Monitoring, assessing and evaluating the risk management process.

Risk management has also expanded from its integral roles in patient safety and quality to include the protection of visitors, staff and patients. It also encompasses addressing the sources of all the risks and losses.

Risk Management in Healthcare Spectrum

The role differentiation and the responsibilities of a health care risk management professional in any medical center are defined by the nature and the characteristics of the organization where he/she is employed. Consequently, the size of an organization determines the requirements of the organization; this consequently influences the size, the structure and the purpose of risk management program. Risk management expert can be stationed in an acute care hospital, an academic medical centre or an integrated delivery system.

The acute care hospitals provide limited range of services; their services include general medicine and surgery, medical and surgical care service, orthopedic surgery and the primary care services like family medicine and pediatrics. In such hospitals, it is common for risk management expert to assume responsibilities such as quality improvement, patient safety and infection control. These hospitals have limited resources and the workload is also light making risk management expert an attractive position. Most of these hospitals are commercially insured hence decreasing the administrative burden for risk financing and claims management responsibilities. Since matters of compensation lie with the human resources section, risk management professional has only the responsibility associated with prevention and reduction of loss; identification of risk and risk analysis, management of adverse events, staff education and policy generation. Consequently, in a health institution, the management of hazardous materials has developed an area of concern for risk management. It is imperative to ensure that necessary protocols are put in place for storage, use and proper disposal of toxic and radioactive substance; all these are regulated by risk management expert. This is because it can have negative implications for the patients, their families and health care workers (Carroll, 2009).

The fact that it is the decision of the patient as to whether or not to take up screening or to reduce unfavorable dietary behaviors or stop using condoms strengthens the ability of individuals to become risk managers themselves. Healthcare workers also empower the patients since it makes them reduce professional risks like being a subject of litigation or being convicted for misconduct which may emerge from medical risks (Heyman, Alaszewski, Shaw & Titterton, 2009).

In a healthcare setting, lack of centralized system of reporting may result in desperate and duplicative efforts and furthermore an unnecessary spending. The laboratory department for example may help in reducing labeling errors associated with the increasing patient incidences which are caused by the repeated revisions of laboratory implements. The turbulent economic moments resulted in healthcare organizations taking initiatives on managing risks. There has been a paradigm shift from reactive risk management to strategic risk management. Strategic risk management approaches health care risks through a centralized incident management reporting system which improves communication and contains risks, cuts costs and improves efficiency. When a patient, for example, suffers injury in the process of receiving treatment due to lab errors then such information is filed through centralized communication system for future precaution.

Impact of Risk Management

This sections deals with the impact of risk management on the cost of health care, staffing capability, and other health care activities. Healthcare is increasingly becoming a complex and cost-straining task. There are risks to patients, the public, healthcare workers and to corporate healthcare organizations. Risk management engages everyone in the process.

Every healthcare institution has its own risk management strategies but the common factor is that they all have impacts on the patients, healthcare workers and the cost of healthcare. Risk management is instrumental in cutting down excess spending in healthcare. The escalation of compliance and costs of management is necessary to ensure that healthcare costs are reduced. Healthcare institutions and healthcare practitioners have all witnessed cases of malpractices which have resulted to rising jury cases and the diminishing availability of insurance due to their withdrawal from the market. Healthcare costs that are linked with medical liability claims, insurances and the prevailing patient safety issues have been reduced due to limited risk financing (American Society for Healthcare Risk Management, 2011).

Medical staff experience risks in their duty of delivering healthcare. Healthcare workers should be adequately compensated when they suffer injuries in their course of duty (American Society for Healthcare Risk Management, 2009). Hospital staff is the heart of organization’s risk management. These individuals need to be equipped with resources and adequate training to enhance the success of risk management strategy; there is need for staff development in education. Effective mitigation of risk management in healthcare can only be achieved in an environment where there is adequate staffing. Healthcare staff can be subjects of court proceedings when they violate regulations governing risk management or when they cause medical errors.

Risk Management and the Government Regulatory Environment

Regulatory compliance describes the policies and the procedures that are applied in ensuring that rules and regulations governing hospitals are adhered to. Regulatory compliances explain the purposes of making sure that healthcare personnel and medical practitioners are informed and that they can take necessary measures of complying with the necessary laws and regulations. The instruments that are charged with the responsibility of formulating laws are: “Centre for Medicare and Medicaid Services; Conditions for Participation and Joint Commission Standard (JCAHO), state laws, HIPAA and Emergency Medical Treatment and Active Labor Act (EMTALA)” (Kavaler & Spiegel, 2003, p. 1). JCAHO is an accreditation body for all hospitals which requires hospitals to comply with their standards of providing safe and quality health care services to be licensed to operate.

Health care is considered one of the best regulated industries in USA. This regulatory regime is generated through the establishment of legislative actions and regulations administered by the executive arm of government or professional organizations. The violations of these laws and regulations might result in imprisonment; this implies that the understanding of these regulations is imperative for persons or individuals indulging in risk healthcare management practice. Just as members of other organizations or industry, providers of healthcare must meet the standards set by federal regulations and those set by the Occupational Safety and Health Act (OSHA). Consequently, risk standards may be promulgated through regulation, legal or practice guidelines (Kavaler & Spiegel, 2003).

Practitioners in the healthcare sector do not arrive at healthcare problems spontaneously; their selections are influenced by the existent regulatory regimes which can apply incentives or sanctions in their administration of the regulations. Regulatory systems place much attention on the safety of the patient.

Role of Interest Groups and Healthcare organizations

The Joint Commission on Accreditation of Healthcare Organization (JCAHO) is charged with the responsibility of evaluating and accrediting all healthcare organization and healthcare programs in US. Their latest duty is the promulgation of patient safety standards in 2001. JCAHO and other interest groups participate in risk management through the following ways:

Provision of leadership: interest groups are instrumental in the provision of leadership in healthcare especially in the advancement of the principles of patient care and reduction of risks. This is necessary in balancing of fiscal accountability and the quality of patient care. These interest groups provide the data of all risk costs that are presented by particular behaviors, costs incurred in managing the behaviors and how to eliminate the risks from such behaviors. These organizations provide an economic analysis on the cost of risks and the amount that can be used on claims and settlements. They have ranked medical errors as having huge financial costs and they have not been factored into consideration when prioritizing the risks that face an organization (Kuhn & Youngberg, 2002).

Organizations like the Leapfrog have designed an analysis that is linked with the institution of specific safety measures. They evaluate their efficiencies, the cost of labor and the outcome of the patient. These organizations design evidence risk management, and analytical approach to risk management.

Improvement of organizational performance: the development of a reliable organization which is instrumental in healthcare safety is the responsibility of interest groups.

Strategies and Recommendations

Risk management is a structured approach that aid in managing uncertainty through human activities which include: assessment of risk, devising strategies to manage it and mitigation of risks through managerial resources. Among the strategies that can be employed in combating risks are: the option to transfer risks to another party, avoiding the risk, eliminating the negative aspects of the risks and the option of acceding to all or some of the consequences of certain risks.

Due to the fact that several health conditions can be prevented, health care workers in their interaction with the patients should include prevention support instructions. This is because when the patients are provided with information and skills which can minimize some health related risks, they are more likely to apply in a relevant context. The risk related behaviors can exponentially reduce the long term burden and the health demands arising from chronic conditions. To enhance preventive health care, it is fundamental to raise awareness which can stimulate the commitment and action of patients, their families and the policy makers (WHO, 2002).

Risk management can only be achieved through collaboration at the health care stage among the patients, families and other actors in health care which is necessary to prevent factors that can lead to diseases. A hospital that wishes to implement risk management should undertake the following actions:

  • Healthcare workers and the management should support a policy shift that will enhance integrated services and facilitate preventive healthcare.
  • The healthcare institution or provider should promote financing systems which can aid preventive healthcare
  • It should equip the patients with the required information and the right skills in the prevention of self management.
  • Healthcare workers should make prevention a core component of healthcare instructions and interactions.

Several healthcare facilities have opted for healthcare promotion campaign as a strategy to convince people to abandon the pleasures that led to particular medical conditions by arguing that it will help them to minimize risks of developing long-term health condition (Emslie & Hancock, 2008).

Impact of Risk Management on Health Care Policy

A consistent process should be implemented for effective risk management program. This risk management program should encompass the following principles:

  • It should provide for policies and the procedures which are only meant for risk management.
  • A process of reviewing the policies of an organization and the procedures should be developed.
  • And a tracking process.

Risk assessment is considered a fundamental factor in enhancing the work environment in the healthcare sector. It is the responsibility of employer to assess the risks and to devise some protective and preventive measures. USA legislations put more emphasis on prevention and not the cure aspect of treatment, a measure that strengthens the role of assessing risks in health and safety management (American Society for Healthcare Risk Management, 2009).

There are various management tools and strategies that are used in hospital; these may be applicable in meetings, hazard surveillance, and analysis of hazard vulnerability and designing of risk analysis forms.


Risk management is a common phenomenon to all health organizations. It is the responsibility of the employees, employers and policy makers to integrate all components of risk management. The safety and the quality of healthcare is a critical matter to healthcare services. There are several cases of death and accidents which result from various forms of medical error and negligence by the healthcare workers. These medical errors may emanate from surgical errors and inaccurate diagnosis and incorrect administration of drugs or anesthesia. These errors have often led to huge financial and emotional expenses to the patients, their families, to the healthcare institutions and the society at large. Emerging from the various incidences of medical errors and negligence is the erosion of relationship and trust between the doctor and the patient.


American Society for Healthcare Risk Management. (2009). Risk Management Handbook for Health Care Organizations: Student Edition (5th ed). New York, NY: John Wiley and Sons.

American Society for Healthcare Risk Management. (2011). Risk Management Handbook for Health Care Organizations (6th ed). New York, NY: John Wiley and Sons.

Carroll, R. (2009). Risk Management Handbook for Health Care Organizations (5th ed). New York, NY: John Wiley and Sons.

Emslie, S & Hancock, C. (2008). Issues in Healthcare Risk Management. New York, NY: Cengage Learning.

Heyman, B., Aleszewski, A., Shaw, M & Titterton, M. (2009). Risk, safety and clinical practice: health care through the lens of risk. Oxford: Oxford University Press.

Kavaler, F & Spiegel, A.D. (2003). Risk management in health care institutions: a strategic approach (2nd). New York, NY: Jones & Bartlett Learning.

Kuhn, A.M & Youngberg, B.J. (2002).The need for risk management to evolve to assure a culture of safety. Qual Saf Health Care, 11(1), pp.158–162

WHO. (2002). Integrating prevention into healthcare. Media Centre. Web.

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