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Integrating BUSINESS and CLINICAL management
- By Shirley Liew
- Published 10/02/2010
- Risk Watch
- Unrated
In today’s health and aged care environment there are potential problems on a number of fronts. Connectivity, integration and convergence are all forcing providers to do much more with much less.
The challenge is to continue providing high quality care using astute business models. The key is to strengthen risk management and resilience and achieve long term sustainability.
Failings of the traditional model
Traditional risk management is focused on specific categories, or ‘silos’, of risk and the way in which a particular risk may affect a certain aspect of organisational health. In aged care, the focus on clinical risks associated with liability and sanctions often means that other risks, such as reputational risks, are not considered. The silo approach also fails to address the affect of one risk on another, thus compounding the impact of a potential incident.
In the area of human resources for example, risks such as workforce fatigue, staff education levels and the decreasing labour pool, all have the potential to affect each other. For example, a decreasing professional labour pool can create a demanding and stressful work environment that promotes workplace fatigue.
Similarly, events like the Victorian bushfires have escalated the focus on emergency management and disaster recovery planning. To be successful in these circumstances, it is helpful to adopt an enterprise-wide risk management strategy.
The integrated approach
It is difficult for those outside the sector to grasp the uniqueness of aged care risk management. While it shares some elements of risk management with other industries, the potential severity of a catastrophe or injury in aged care is distinct. Aged care functions non-stop and poor outcomes can result in dire consequences – even a loss of viability. As a result, traditionally risk management has placed emphasis on addressing clinical risks. Such a narrow approach may not actually lead to the safest outcomes for residents or clients.
What about the challenges posed by continuous advances in medical research and technologies? Although these advances support the goal of improved patient care, they come with a price tag: new risks. What is the risk that these advancements will threaten the ethical and moral values of an institution?
Enterprise risk management (‘ERM’) is useful because it considers a broader approach for addressing an institution’s risks. And with stakeholders demanding greater risk transparency, it is becoming increasingly important to assess and respond to an institution’s myriad risks using a strategic risk management program.
Emerging risk management priorities
From our work with leading aged care organisations, we are witnessing an evolving role for risk officers who have identified the following three risk management priorities:
There is a trend towards integrating compliance, governance and risk management efforts. But how can we do less and achieve more?
Tools such as scenario planning, sensitivity analysis and forecasting are valuable resources for an integrated approach to risk. For example, protecting patient confidentiality is often identified as a compliance risk. However scenario planning will open up a range of other possible risks. The way information is obtained, stored, retrieved, accessed, archived, destroyed and the medium with which it is stored, communicated and transmitted all have points of vulnerabilities.
Trend forecasting also provides key insights into the trends and expectations of things to come.
Analysis, management and planning
A systematic approach to risk management in progression or combination will help achieve effective risk management. Many risk management frameworks are available for use such as the AS/NZS4360, IS31000 and COSO framework. Whichever approach is chosen, the key to achieving effective risk management is founded in the following steps:
The challenge is to continue providing high quality care using astute business models. The key is to strengthen risk management and resilience and achieve long term sustainability.
Failings of the traditional model
Traditional risk management is focused on specific categories, or ‘silos’, of risk and the way in which a particular risk may affect a certain aspect of organisational health. In aged care, the focus on clinical risks associated with liability and sanctions often means that other risks, such as reputational risks, are not considered. The silo approach also fails to address the affect of one risk on another, thus compounding the impact of a potential incident.
In the area of human resources for example, risks such as workforce fatigue, staff education levels and the decreasing labour pool, all have the potential to affect each other. For example, a decreasing professional labour pool can create a demanding and stressful work environment that promotes workplace fatigue.
Similarly, events like the Victorian bushfires have escalated the focus on emergency management and disaster recovery planning. To be successful in these circumstances, it is helpful to adopt an enterprise-wide risk management strategy.
The integrated approach
It is difficult for those outside the sector to grasp the uniqueness of aged care risk management. While it shares some elements of risk management with other industries, the potential severity of a catastrophe or injury in aged care is distinct. Aged care functions non-stop and poor outcomes can result in dire consequences – even a loss of viability. As a result, traditionally risk management has placed emphasis on addressing clinical risks. Such a narrow approach may not actually lead to the safest outcomes for residents or clients.
What about the challenges posed by continuous advances in medical research and technologies? Although these advances support the goal of improved patient care, they come with a price tag: new risks. What is the risk that these advancements will threaten the ethical and moral values of an institution?
Enterprise risk management (‘ERM’) is useful because it considers a broader approach for addressing an institution’s risks. And with stakeholders demanding greater risk transparency, it is becoming increasingly important to assess and respond to an institution’s myriad risks using a strategic risk management program.
Emerging risk management priorities
From our work with leading aged care organisations, we are witnessing an evolving role for risk officers who have identified the following three risk management priorities:
- ensuring that the organisation is in fully compliant;
- monitoring and identifying emergent risk; and
- extending risk principles into the wider business strategies.
There is a trend towards integrating compliance, governance and risk management efforts. But how can we do less and achieve more?
Tools such as scenario planning, sensitivity analysis and forecasting are valuable resources for an integrated approach to risk. For example, protecting patient confidentiality is often identified as a compliance risk. However scenario planning will open up a range of other possible risks. The way information is obtained, stored, retrieved, accessed, archived, destroyed and the medium with which it is stored, communicated and transmitted all have points of vulnerabilities.
Trend forecasting also provides key insights into the trends and expectations of things to come.
Analysis, management and planning
A systematic approach to risk management in progression or combination will help achieve effective risk management. Many risk management frameworks are available for use such as the AS/NZS4360, IS31000 and COSO framework. Whichever approach is chosen, the key to achieving effective risk management is founded in the following steps:
- Identify the risks to be managed by adopting a comprehensive, well structured and systematic process. Any risks not identified at this stage are likely to be excluded from further analysis. It is therefore important to obtain a holistic and integrated view of possible risks.
- Consider the potential consequences of risks in terms of severity. Ensure that the analysis rigorously considers the context and criteria of the risks, the level of uncertainty and the needs of decision makers.
- Evaluate the risks. Compare the estimated level of risk with the pre-established criteria and rank the risks to identify management priorities. Ascertain tolerance levels and tolerable risks, based on parameters set by the board. Develop a risk treatment and response plan.
- Develop a range of response options for treating risks and assess these options. Options include avoiding the risk, changing the probability of the risk occurring, change the consequences of the risk, sharing the risk or retaining the risk and making appropriate provisions for dealing with adverse outcomes, should they arise.
- Monitor and review the effectiveness and performance of the risk management process and the risk treatment plan. By analysing incident reports and understanding the root-causes, risk managers are often able to identify opportunities to strengthen organisational control designs.
- Last but certainly not least, communicate.
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