Imagine the year is 1952 and a young patient is undergoing a tonsillectomy in a small city hospital. One doctor and perhaps five nurses provide all the care the patient needs during the brief stay, including anesthesia and administering the three or four necessary medications. The medical record runs only a few pages. No technicians or specialists are present, and certainly no risk manager. And although medical malpractice exists, at least according to the town's gossip mill, the threat of it doesn't hang like a cloud over the medical staff; people didn't sue much in those days,
Now fast forward 40 years. A young patient undergoing a tonsillectomy is surrounded by complex equipment and a team of specialists. The hospital is equipped with machines that smash kidney and gall stones, lasers that disintegrate diseased tissue and endoscopes enabling surgeons to perform through tiny incisions or body openings; the hospital and its staff also have the resources and equipment needed for multiple organ transplants, genetic manipulation and many other procedures that were m the realm of science fiction a few decades ago. Compared to the astonishingly sophisticated and complex technological capabilities of today's medical centers, the small city hospital of the 1950s seems quaint and non-threatening.
However, the benefits conferred by modern medical technology do not come without problems. For today's more sophisticated medical environment, combined with society's penchant for litigation, has created a broad array of perils for risk managers in the health care industry. And amidst this turbulent situation, health care risk management has developed into a distinct discipline that requires the risk manager to deal with the dilemmas posed by the regulatory and technological changes that have vastly altered the medical field.
Risk Financing Concerns
Today, medical malpractice claims usually account for the largest proportion of losses in health care organizations. For this reason, health care risk managers spend a good deal of their time on risk control and risk financing activities associated with medical professional liability. In large hospitals, several employees may be devoted to risk and insurance management, with one or more people concentrating exclusively on medical malpractice loss prevention and control.
However, today's health care risk managers must also concern themselves with many other potential sources of loss. Specifically, the health care risk manager must implement risk control and risk financing systems in such diverse areas as comprehensive general liability; directors' and officers' liability; workers' compensation; pollution and hazardous waste; business interruption; employee dishonesty; and coverage of property, vehicles, boilers and machinery. Health care organizations often combine elements of commercial insurance, self-insurance and other risk financing mechanisms to design and secure as cost-effective a program as they possibly can.
A general principle of health care risk management is that resources must be allocated appropriately among the various clinical services in health care organizations. For example, physicians who concentrate their practices on the treatment of conditions for which little or nothing can be done, such as severe strokes or degenerative neuromuscular diseases, often pay far less for malpractice insurance than physicians specializing in such frontier treatments as laser or transplant surgery. These procedures are perceived as posing more risk of iatrogenic -i.e. caused by the physician injury. Likewise, hospital professional liability losses are greatest in the higher-risk departments - obstetrics, surgery, anesthesiology and emergency medicine - and accordingly receive more risk control emphasis.
But the health care risk manager's responsibilities do not stop there; several other major developments during the past few decades have contributed to the need for aggressive risk control and alternative methods of risk financing. …