The Future of Risk Management

The future will bring more demands on risk managers and many more challenges

Insurance market, medical advances will cause change

Health care risk managers will see a number of significant changes in the near future, and the common thread, the experts say, is that risk managers will have to adapt and improve their skills to stay on top. Risk managers have long known that their profession is constantly changing, with the risk manager’s job description rushing to catch up with changes in the health care industry as a whole, and particularly in the fields for which they are most responsible. There are plenty of changes going on right now, and leaders in health care risk management say their job is not likely to be the same five or 10 years from now as it is today.

Keep your skills sharp

The good news, they say, is that risk managers will continue to be valuable players in the organization, and their roles may become even more prominent. The downside, though it should come as no surprise, is that risk managers will have to update their skills and education to keep up with the coming changes. Updating your skills has become a mantra of risk management, but risk management leaders say the coming years may put more of a priority on updated skills than ever before. Yesterday’s risk manager may not have a place in tomorrow’s health care system.

But as long as skills and education are updated, a risk manager is likely to face good job prospects, says Steve Johnson, director of risk management for Wellstar Health System in Marietta, GA. "I think I have job security because I think the health care industry is in a crisis situation," Johnson says. "Risk managers are going to be challenged like every other department in the hospital to do more with less. Our challenge will be to do our jobs lean and mean, to do the best we can to keep a hold of this monster. There will be a lot for us to adapt to, but that means we have job security."

Industry’s problems could mean opportunities

Johnson’s assessment of the health care industry at the moment is less than rosy, but he sees that as an opportunity for the diligent risk manager. To prepare for the future, Johnson says you should look to the problems of today and see what they may lead to in the future.

"Health care is in crisis, no question. It’s a very difficult industry to be in, and that’s going to get worse," he says. "The question is what we can learn from today’s troubles instead of just waiting to see what happens later. For instance, we are going to continue to see shortages in skilled professional services. The average age of a registered nurse in our system is 45 years. What does that tell you about where we’re going to be in 10 years? That’s only going to get worse, and it definitely impacts us from a risk management standpoint."

Jane Bryant, MHSA, FASHRM, director of risk management at Oconee Memorial Hospital in Seneca, SC, agrees with Johnson that a savvy risk manager will look beyond what’s happening right now and see how those issues may evolve. The recent emphasis on reducing errors and improving patient care should lead to some significant changes in risk management, she says.

"We’re going to see, more and more, a bringing together of the things that have an impact on patient safety," she says. "I’m thinking about things like employee health, safety and security, infection control, peer review, and credentialing. All of these things can have an impact on patient safety, and I think we’re going to see some of these areas melding together or at least working more closely together."

The movement to increase patient safety has all the hallmarks of an issue that will be around for a long time, Bryant says. The impetus to reduce errors, not to mention any related regulations, will make the risk manager a more important player in the health care community, she says.

"I would expect that risk managers will be higher in the organization than they are now, particularly the ones that have taken responsibility for a number of divisions or departments under them," Bryant says. "We’re not seeing anything that would diminish the importance of having a good, skilled risk manager with the right education. We’re seeing plenty of reasons that an organization would want that person in a prominent place within the organization."

Insurance market and clinical advances

Not all of the changes that will affect risk managers are strictly risk management issues. Some are closely related, and some will require a new way of thinking to fold them into the risk management process. One significant issue that will affect a risk manager’s future is the hardening of the insurance market, says R. Stephen Trosty, JD, MA, director of risk management at American Physicians Assurance Corp. in East Lansing, MI. The traditional method of acquiring insurance coverage will be less useful in the future, Trosty says, because the market has hardened to the extent that insurers are often unwilling to simply underwrite an organization’s risk with a traditional policy. You still need the insurance coverage, so you’ll have to come up with alternatives, Trosty says.

"If you don’t know how to do that, you’re not alone," Trosty says. "The average risk manager is not familiar with alternative methods of risk transfer and financing mechanisms, but we’ll have to be in the future. We’ll have to learn." (See "Tougher market means more education needed," in this issue.)

Clinical advances also will affect how risk management evolves, says Fay Rozovsky, JD, MPH, DFASHRM, a risk management consultant in Richmond, VA. Some of the most exciting and promising developments in medicine could open up new risks for the future, she says.

"Genetic testing is well on its way to becoming a common way to diagnose and predict problems that people might have later on, for instance," she says. "What does that mean in terms of what a provider is responsible for? Must you administer that test? Must you treat that person differently when the test says a disease is likely in that person’s future? A lot of these questions are unanswered right now, but you can be sure that risk managers will be right in the middle when the answers become clear." (See "Genetics will change risk management," in this issue, for more on how clinical advances will affect the future of health care risk management.)

More regulations, rules are coming

Nearly everyone agrees that risk managers can expect a number of new government regulations and other means of oversight in the near future. Trends in the past years have suggested that risk managers will see more rules that fall under their purview, and that is a little discouraging, according to both Johnson and Bryant. They both say the rules themselves may serve a useful purpose, but they’re dismayed to see risk managers saddled with more and more rules instead of being allowed to act on their own.

"I hate that it’s gotten to where we have to be told to do the right thing instead of doing the right thing on our own," Bryant says. "Most of the regulations that have hit already have some justification for existing, but by the time they get to print, they make doing the right thing extremely cumbersome. I’m afraid we’re in a pattern, and we’re going to see more of that."

Johnson agrees with that assessment, noting that the increasing regulation can lead risk managers to focus too much on simply complying rather than the real goal of the rule. Unfortunately, Johnson expects that to be the case increasingly in the future. "What suffers is the proactive side," he says. "It’s only going to get worse with us putting out fires, which is the only thing we have time for sometimes. I’m afraid that could become a predominant way of operating in the future if something doesn’t change."

More emphasis on privacy, deep pockets

The Health Insurance Portability and Account-ability Act (HIPAA) of 1996 will continue to influence health care risk management unless the rule is derailed by ongoing protests. Trosty notes that many of the existing and anticipated regulations will create risks for providers that are difficult, if not impossible, to insure. "HIPAA [and] the fraud and compliance rules, these are all presenting some very real risks that are not covered by insurance," he says. "So we will need to be able to identify potential new liabilities and see if there is anything out there to insure it. If not, should you develop an alternative risk financing?"

If the HIPAA rule is fully enacted, Johnson predicts that health care providers will see significantly more litigation related to patient privacy. "Protecting patients’ privacy is going to be an area of new litigation as our standards and responsibilities become more clear," he says. "There will be increased emphasis on privacy and protecting patient information, and that can only mean more exposure for health care providers. We’re also going to see an expansion of enterprise liability, where health care organizations are held more and more accountable for physicians not even employed by us. We’ll see more of people using any means possible to tie us into a claim because of our deep pockets."

Good outlook overall, most predict

Risk management leaders point to an array of new risks and liabilities that might be faced in the future — confidentiality, growing use of computers and the Internet, error reporting — but they say the future generally looks good. Challenging maybe. A lot of work, certainly. But not a bad time to be a risk manager.

Trosty says he expects a trend in which the position of the risk manager is continuously upgraded in the organization, becoming more prominent, and more directly involved in key decision-making processes. "There are going to be far more demands and a broader array of demands," Trosty says. "We’ll have to have a broader array of skills and knowledge, but that can make it a more exciting time. We’ve been asking for more involvement in the driving aspects of the organization for years now, and I think we’re going to see more of that now."