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Healthcare Industry Challenges, Risk, and Solutions.


The healthcare industry is important to all of us and is one of the largest and fastest growing industries in the United States. Although positioned to experience significant growth in the coming years, the industry is plagued with challenges that can increase its exposure to many types of financial losses.


According to McKinsey’s 2024 insight on the U.S. healthcare, the industry’s profit pools are expected to grow from $583 billion in 2022 to $819 billion by 2027. Attributing much of this growth to select areas within four segments namely; Medicare Advantage, outpatient care facilities like physician offices and ambulatory surgery centers, software and platform businesses such as patient engagement and clinical decision support, and specialty pharmacy. Other segments, like general acute care and post-acute care, are expected to continue to have slow growth. Nonetheless, the growth potential and profits of any business within these segments will be influenced by factors unique to them and how well they capitalize on opportunities and manage the challenges they face.


As in any industry, healthcare is exposed to a myriad of risks and challenges that can disrupt operations, impact staff, patient, and public safety, reduce trust, mar reputation, and erode profits. Some of these risks include the following:


TECHNOLOGY


Cyber Security Risk

The first on our list is cyber security risk, not only because of the February 21, 2024 cyber security breach at Change Healthcare (the largest healthcare payment system owned by United Healthcare), but also because cyber security risk is increasingly becoming the number one worry of business and organizational leaders. A fact reinforced in a number of Risk Reports released this year by notable Risk and Insurance entities including that of Allianz. The incident at Change Healthcare exposed the impact of a cybersecurity attack on the systems and the vulnerabilities inherent throughout the industry at large. At the end of the day, the ransomware attack was estimated to have cost upwards of $20 billion in losses and compromised data, however, the shutdown of a payment system is but only a segment of the healthcare operations. A cyberattack can impact critical health-related operations and cause more than financial losses.


Data Security Risk

An indisputable fact is that electronic health records are valuable and vulnerable in the hands of anyone including third parties (vendors, consultants, allied healthcare, etc.) who aid in the operation of a healthcare organization. Protecting patient privacy and health records is even more imperative as a sound business objective and in adherence to HIPAA Privacy and Security Rules.


Technology and Telemedicine

Innovations in technology in general have enabled the industry to push boundaries to develop efficiencies; however, technology is without its inherent and external risks and vulnerabilities.


Enabling sensor technology and smart device connectivity with internet of medical things (IoMT) have enhanced real time data collection, analysis, and easy dissemination of patience data to physicians to make informed decisions and improve patient treatment. It is undeniable that technology has also enabled telemedicine and remote patients monitoring and treatment particularly, during the pandemic which, otherwise would have been nearly impossible.


According to the Journal of General Internal Medicine, the use of telemedicine in the United States, although uneven, rose to 75 percent (nearly 194.4 million) in 2021. The percentage of hospitals offering at least one form of telemedicine service went from 46 percent in 2017 to 72 percent in 2021. The American Health Association’s fact sheet indicates that 76 percent of hospitals in the United States connect with patients and consulting practitioners using some form of remote access technology.


As plausible as technology has been and continues to advance medicine and patient treatment, it also opens room for new patient privacy and regulatory risks, along with a host of other issues.


WORKPLACE VIOLENCE


Increasing workplace violence in the healthcare industry is a risk issue that is gaining attention. Workplace violence is defined by OSHA as any act or threat of physical violence, harassment, intimidation, or other threatening disruptive behavior that occurs at the work site. It ranges from threats and verbal abuse to physical assaults and even homicide.


According to the Bureau of Labor Statistics healthcare workers make up 73 percent of all (reported) workplace violence victims and are four times more likely than other employees to lose time recuperating from the injuries they sustain from the incidents.


In the healthcare system, anyone including patients, staff, visitors can be a victim. Likewise, the culprits can be anyone, from patients, family of patients or employees, present or former employees, outsider hostile groups and individuals, to third parties in conflict with the facility, employees, or patients.


HEALTHCARE ASSOCIATED DISEASES AND PATIENT SAFETY


According to the Centers for Disease Control, one in thirty-one patients at a hospital facility has a healthcare associated disease. Healthcare associated diseases cost the hospitals $28.4 billion a year and $12. 4 billion to society due to early death and loss of productivity.


An important segue to workplace violence and healthcare associated disease is overall risks to patient and clinical safety. Patient safety issues can range from violence attacks as mentioned above to, healthcare associated diseases, surgical mistakes, medication errors, patient misidentification, hospital acquired conditions, errors and omissions, and patient or visitor injuries attributable to slips, trips, falls, assaults, or all other injuries as a result of incidents that occur at the healthcare facility.


The legal, financial, regulatory, and operational implications and ramifications of increasing workplace violence and patient safety issues, if not mitigated well, can be problematic for any organization.


There are a host of challenges that the healthcare industry faces everyday however, without diminishing the importance of all others, the list above is simply to highlight a handful of the risks that can be mitigated and managed to reduce their adverse impact.


There are traditional and specialty insurance policies available to reduce the financial burden should a loss event related to any of these risks materialize, however, insurance is not and should not be the only solution in the proverbial tool kit. A holistic approach to enterprise risk management can be implemented to minimize risk, build resiliency, and augment the insurance policies that healthcare organizations and practitioners purchase to protect themselves and their business operations.


At Axios Risk Solutions, LLC., we help small and medium-sized enterprises, families and individuals minimize and manage their business risks through tailored risk management strategies and protect their business and assets through a variety of insurance solutions in the market. To request a quote or speak to us, call 404-480-0272.




Author: Sandra Owusu-Fianko

Sandra Owusu-Fianko is the Principal and Risk Advisor at Axios Risk Solutions, LLC. She has extensive experience in the insurance industry and a MS degree in Enterprise Risk Management. She is passionate about finding appropriate risk management and insurance solutions for her clients.

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