What Is Risk Management In Healthcare?

January 17, 2023

Running a healthcare organization is full of uncertainties and risks.

As a result of today's complexities in healthcare, the industry faces many challenges daily. Healthcare entities will encounter several risks when interacting with these systems due to their imperfect human nature.

Since the 1997 IOM report estimating between 44,000-98000 annual deaths due to medical error, risk management became not only a regulatory responsibility but a moral responsibility. Constant measures needed to be taken to reduce these numbers. 

The importance of continually improving your risk management practice at your facility cannot be overemphasized. It is your best protection against frequent medical errors, financial leaks, and poor patient care.

The difference between life and death in patients, staff, or anyone within your facility could be your ability to proactively identify, comprehensively analyze and efficiently mitigate potential risks facing your hospital or healthcare facility.  

Defining Risk Management in Healthcare

Risk management in healthcare can be defined as the administrative and clinical measures, systems, and processes instituted to identify, monitor, analyze, mitigate and prevent risks in the healthcare facility. 

Risk generally can adversely affect your finances, operations, compliance standing, and more. However, risk management gives you measures to put in place to either prevent or deal with them. 

A robust Risk management strategy enables you to systematically and proactively safeguard your patient and, by extension, save your organizational assets, accreditation, market share, reimbursement levels, brand value, and overall reputations.

Healthcare risk management has predominantly centered on reducing medical errors and patient safety. 

However, due to the industry's fast evolution, the expanding role of healthcare technologies increased threat in Cybersecurity, and the ever-changing compliance policies on reimbursements, the scope of healthcare risk management have broadened over time.

Why Do We Manage Risk In Healthcare?

Risk management encompasses every process carried out within the facility. From patient safety and compliance to operating margins and HR. There are many reasons why healthcare risk management is essential; here are a few of them:

Improves Patient Safety

Effective risk management practice helps optimize patient safety by promoting practices and policies to reduce the medical error rate. Risk managers need to stay on top of important updates on trends that might threaten patient safety. 

For instance, the Centers for Disease and Control (CDC)  published research that showed that the prolonged use of urinary catheters is primarily responsible for catheter-related urinary tract infections. 

A health risk management will use this information to implement a risk management plan that will require providers to evaluate catheter usage routinely. Of course, the result will reduce the risk to the patient. 

Helps Plan For Catastrophic Events

It would help if you were prepared for emergencies as you never know when you may experience them. Emergencies can range from natural disasters to security breaches and even technical emergencies.

A common type of emergency you need to prepare for in the healthcare industry is a disease outbreak. You should have a plan in place for when these unfavorable events happen. 

The principal purpose of risk management in healthcare is to protect the lives of everyone who interacts with your healthcare facility. 


There are growing concerns on cybersecurity issues; your patient's information is at constant risk of a data security breach. 

With a good risk management plan in place, you are well prepared for these tendencies, and you can effectively deal with the problem before they even occur.

How to Perform Effective Risk Management In Healthcare

To practice effective risk management within your facility, you need to employ qualified health administrators. They would develop, implement and track your healthcare facility's risk management plan. 

To effectively manage risk within your facility, your managers need to;

Identify Risk

If you are not intentional about risk identification, you will miss out on many hazards you could have seen coming. Due to risk management's reliance on uncertainty, keeping up with the ever-emerging potential risks your facility faces can be challenging.

You can be on top of the situation by leveraging institutional and industry knowledge engaging every entity that interacts with the facility like; staff, patients, payers, and administrators. It would be easier to identify potential risks with analytical and pattern recognition skills. 

Analyze and Prioritize risk

After risk identification, you need to perform risk analysis. It involves weighing, comparing, ranking, and prioritizing risks based on their probabilities and impact of occurrence to allocate resources and assign tasks based on these parameters. 

A practical approach to risk analysis can be using heat maps and risk matrices. This will help visualize risks, aid communication, and enhance collaborative decision-making. 

Carry Out Compliance Reporting 

The Joint Commission, Federal, State, and other regulatory bodies require that specific medical incidents be submitted. Incidents that need to be reported include; medical errors, medical device malfunctions, data breaches, and sentinel events. Such events need to be documented, coded, and logged.

Investigate and Report Sentinel Events

The Joint Commission defines sentinel events as "a patient safety event that may result in severe, temporary harm, permanent harm or death which is not related to the natural course of the patient's illness." When such events occur, you need to make a quick and deep inquiry to identify the parent cause. 

Also, you need to put proactive measures in place to prevent a re-occurrence. Having a plan for such occurrences promotes transparency and ensures that corrective actions can be taken and evaluated. 

Use Risk Management Information System

RMIS makes it easy to track risk, document incidents, detect and report trends and make industry comparisons. A click can generate reports for losses, open claims, incidents, lost work time for injured employees, etc. 

Risk Management Information Systems helps centralize all patient data and facilitates faster, easier and deeper analysis. The presentation of data makes it easy to identify the most minute patterns and warning signs before they become a serious medical hazard.

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