The healthcare industry is rapidly changing and small to medium-sized insurance companies need to keep pace with these changes or risk sinking along with the numbers of small medical clinics with general practitioners that are shrinking in number. A common underlying factor exists for both healthcare and insurance providers and that factor is risk.
The malpractice crisis has played a major role in fostering the shift in the healthcare realm. Frivolous lawsuits resulted in exorbitant settlements that drove insurance rates higher and limited or eliminated some health care providers’ services. As devastating as this has been for these health care providers, a positive has emerged from the rubble in the form of awareness of the need for risk management from a proactive stance.
Despite the decline in traditional general practitioners, the healthcare industry is booming, adding more than 2 million new jobs between 2008 and 2018, according to the U.S. Bureau of Labor Statistics. Specialized medicine is on the increase as well as home health care and outpatient facilities and treatments. With the availability of more facilities and a higher employee base, the need to manage risk is greater than ever.
From the inception of their industry, insurance companies have been in the business of managing and mitigating risk. Specialized insurance underwriting software has evolved with the industry to decrease the potential for liability and increase the bottom line. These insurance companies now have a unique opportunity to partner with their insured health care providers with enterprise risk management software specifically designed for this purpose. Just as these companies use specialized insurance underwriting software with specific algorithms for identifying risk levels and their severity, the enterprise risk management software provides a similar service at the healthcare provider level.
It is possible for healthcare providers to implement their own risk management policies, but doing so can be expensive to implement and difficult to enforce. For example, educating employees can be time-consuming and expensive as well as the documentation required to substantiate and support these education efforts. Departmental coordination can be difficult to manage, and monitoring incidents can lead to increased liability exposure if not handled correctly.
Insurance companies can provide a valuable service by allowing these healthcare providers to outsource their risk management and place it in the hands of the industry that manages risk as a matter of business every day. By using enterprise risk management software in conjunction with their existing insurance underwriting software, these insurers are able to monitor and manage the level of risk exposure of the health care providers. This allows the healthcare providers to focus less on avoiding malpractice and more on providing quality patient care.