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Abstract

The concept of risk management in hospital had its beginning in the 1970s in the USA, following court decisions which established the corporate liability of the hospital for the quality of care and holding medical staff liable for quality of care. The formal program of risk management is a necessity in all health care facilities in the USA and a prerequisite for accreditation of hospitals. Progressive hospitals in developing countries with western trained physicians are initiating the process of risk management as a safeguard against becoming defendants in major medico-legal lawsuits by making risk management an integral component of hospital management.
Abstract— The concept of risk management in hospital had
its beginning in the 1970s in the USA, following court decisions
which established the corporate liability of the hospital for the
quality of care and holding medical staff liable for quality of
care. The formal program of risk management is a necessity in
all health care facilities in the USA and a prerequisite for
accreditation of hospitals. Progressive hospitals in developing
countries with western trained physicians are initiating the
process of risk management as a safeguard against becoming
defendants in major medico-legal lawsuits by making risk
management an integral component of hospital management.
I. INTRODUCTION
The concept of risk management has been used in banking
and insurance services since the early 1970’s. Risk
management has been an accepted practice in industries in
the West since the 1900s and in hospitals in the U.S. since the
mid-1970s. However, the activities related to risk
management have been in place for decades without the
specific name of “Risk Management.” The term risk
management in the curriculum of postgraduate studies in
hospital administration in Asian countries is almost absent.
Yet, the graduates of these postgraduate programs will be at
the helm of the hospital industry. They will have little or no
appreciation of the critical importance of the continuing
process of risk management in the delivery of quality care
and sustainability of the hospital in the long run.
Risk management activities were inducted into the health
care industry in response to the growing national malpractice
insurance costs. As of the 1970’s, the risk management
function was essentially comprised of Quality Assurance
nurses performing incident report and trending in acute care
hospitals, but there was little to no proactive prevention of
control activities [1].
Risk management is defined as the systematic process of
identifying, evaluating, and addressing potential and actual
risk [2]. Generally speaking, risk management is the process
to protect the assets and minimize financial loss to the
organization. Managing risk is a proactive function. It is
taking action to reduce the frequency and severity of
unexpected incidents, reduce the impact of legal claims, and
promote high reliability performance, system design, and the
Manuscript received May 16, 2012; revised June 21, 2012.
B. Singh is with the Apollo Institute of Hospital Administration,
Hyderabad, Andhra Pradesh, India. (e-mail:balbirahs@gmail.com; tel: + 91
90306 90734)
M. H. Ghatala is with the Apollo Hospitals Educational and Research
Foundation in Hyderabad, India (e-mail: habeeb.ghatala@gmail.com; tel: +
91 99484 40701).
uniqueness of each patient exposes the organization to the
potential for liability.
Risk management should be a common thread throughout
the entire organization. It is recommended that each
employee and volunteer should be charged with risk
management. A designated person appointed as Risk
Manager should be responsible for integrating all
components of the program. In hospitals, this is typically the
Risk Manager, in inpatient settings, it could be
Quality Manger. In outpatient settings, it is frequently the
Head Nurse or Office Manager.
II. MALPRACTICE CLAIMS AGAINST HOSPITALS
The concept of risk management in hospital in India is in
its infancy. The cases of malpractice do not come to the
public attention because India as opposed to the USA is not
as litigious in health care as USA.
The human value in India is not what it should be as in
developed countries, especially as in the West. It has been
noticed that medical doctors do not testify as expert witnesses
in medico-legal cases in India. If a doctor comes as an expert
witness, there will be over a dozen doctors present in the
court room which can intimidate the expert witness and
develop animosity toward the expert witness.
The famous court decisions in Darling vs Charleston
Community Hospital (200 NE 2d 149, 211 NE 2d 53, Ill,
1964, 1965) in 1965 established the corporate liability of the
hospital for quality of care and the Corleto vs Shore
Memorial Hospital (138 N.J. Super. 302 (1975) 350 A. 2d
534) established that the medical staff could be held liable for
quality of care [3].
It was following these two landmark decisions in the U.S.
that effective risk management assumed major importance
because of increasing number of claims against hospitals,
higher damages, and bad publicity affecting hospitals [4].
The malpractice cases against doctors and hospitals in the
U.S. reached a crisis stage in early 1980’s. The price of
insurance in the commercial market became so high that
many hospitals established their own captive insurance or
trust arrangements for self-insurance. This was the
beginning of formal “incident reporting” and the addition of
in-house risk managers to analyze trends and suggest
interventions to prevent or mitigate claims.
The challenges being faced by hospitals in the U.S. due to
general increase in claims frequency and increasing larger
awards in several states where there is no cap on the
magnitude of awards have resulted in: (i) A renewed
awareness and concern about patient safety and medical
errors, (ii) decreased insurance availability, (iii) increased
financial risk that must be assumed through higher retentions
or deductibles, (iv) higher premiums, (v)minimal, if any,
Risk Management in Hospitals
Balbir Singh and M. Habeeb Ghatala
International
Journal of Innovation, Management and Technology, Vol. 3, No. 4, August 2012
417
Index Terms—Hospitals, liability, medical negligence, risk
management.
coverage enhancements, and often coverage exclusions, and
(vi) more selectively by insurance carriers [5].
III. ESSENTIALS OF RISK MANAGEMENT PROGRAM
Following are the basic essentials of the risk management
program in a hospital:
1) Appointment of a Risk Manager who will have the
support of the governing board, CEO, medical staff, and
other segments of the hospital community.
2) Risk Manager to make the rounds and meet department
heads to acquaint each of them with his/her
responsibilities.
3) Implement the following six-step program with the
cooperation of the Risk Management Committee to
ensure that the hospital is doing all it can in the area of
risk management.
(a)Identification of situations in the hospital that could
produce an incident that would result in financial loss.
(b)Evaluation of incident reports for at least six months
and comparing available data on incidents in other hospitals
to be able to identify those situations in the hospital that are
likely to yield an incident.
(c)Elimination of needlessly dangerous procedures that are
performed on the premises, sale of equipment that can result
in product liability suits.
(d)Reduction of risks so that the hospital can feel
comfortable in instituting an internally funded and operated
insurance mechanism.
(e)Transfer of liability by having "hold harmless"
agreement with drug and equipment manufacturers.
(f)Insurance coverage through the best option among the
commercial, captive, and self-insurance by itself or in a
combination to meet the needs of the hospital in the most
reliable and cost-effective manner [6].
Furthermore, the hospital will have the following
components as an integral part of their risk management
program [7].
1. In-hospital grievance or complaint mechanism.
2. Continuous collection of data with respect to negative
health care outcomes.
1. Medical care evaluation mechanism.
2. Educational programs for hospital's staff personnel
engaged in patient care activities.
3. Continual refinement of risk management procedures
and make them an integral part of the JCAH standards.
It should be stressed that the key to a successful risk
management program is its loss control program. All
necessary steps should be taken to have an effective loss
control program through institutional commitment,
documentation, education, developing a functional
organizational model, improving communications, and
continuing evaluation.
IV. INCIDENT REPORTING AND RISK MANAGEMENT
Incident reporting is an integral part of risk management.
Studies on reporting of adverse events suggest that healthcare
professionals, particularly doctors, are reluctant to report
adverse events to a superior. The results show that healthcare
professionals, as might be expected, are most likely to report
an incident to a colleague when things go wrong. The
reporting of incidents to a senior member of staff is also more
likely, irrespective of outcome for the patient, when the
incident involves the violation of a protocol. It appears that,
although the reporting of an incident to a senior member of
staff is unlikely, particularly among doctors, it is most likely
when the incident represents the violation of a protocol with a
bad outcome [13],[19]. The culture of medicine with its
emphasis on professional autonomy, collegiality, and
self-regulation is unlikely to foster the reporting of mistakes
[14].
Since risk management is the process of controlling
incidents which are inconsistent with the normal practice and
activities of the hospital, incident reporting becomes the
foundation stone of a sound system of managing risks.
Incident reporting process is designed to accomplish the
following tasks [8]:
1. Identifying and detecting risks.
2. Assigning values to risks.
3. Anticipating losses.
4. Deciding upon objective steps to minimize the impact
on the patient and the hospital.
An incomplete or incorrect incident report can impede the
detection process. It is recommended that the incident report
should:
1. Fully describe exactly what transpired.
2. Be simple and practical in format and take the least
amount of time and effort to complete.
3. Contain the name, address, age, and condition of the
individual involved, along with exact location, time, date,
and description of the occurrence.
4. Have physician's examination data.
5. Include checklist or questions to remind the reporter to
include such items as bedrail status, reason for
hospitalization, description of those involved, witnesses, and
extent of out-of-bed privileges.
V. RISK MANAGEMENT COMMITTEE
It is recognized that committee structure is essential for the
proper and effective functioning of the risk management
program. The Assistant Administrator for Quality Control
will chair the Risk Management Committee which will have
representatives from the following departments:
1. Quality Assurance
2. Blood Bank
3. Medical Audit.
4. Infection Control
5. Safety and Security
6. Accreditation
7. Education
8. Physicians
9. Nurses
10. Legal Counsel
11. Tissue Committee
12. Professional Liability Committee
13. Professional Practices Committee
14. Medical Discipline
International
Journal of Innovation, Management and Technology, Vol. 3, No. 4, August 2012
418
15. Medical—Legal Committee
16. Antibiotic Use
17. Therapeutics
18. Pharmacy
19. Medical Records
20. Utilization Review Committee
The purpose of the Risk Management Committee will be to
assist the Risk Manager in fulfilling the responsibilities of the
position to minimize injuries to patients, visitors, and
employees, and financial loss to the hospital.
VI. STRENGTHENING OF RISK MANAGEMENT PROGRAM
In view of the rapid changes in all facets of the health care
industry, there is a need to continually strengthen both
monitoring and evaluation of the risk management program.
Following are some of the needed areas of strengthening [9] -
[12]:
1) Continuing education of staff and responsible key
persons.
2) Monitoring and evaluation of the integrated programs.
3) Communication with peers at local, regional, state, and
national organizations in order to improve the program
at the hospital.
4) Discovering situations that present potential for
accidents.
5) Availability of sophisticated data on past occurrences.
6) Identifying areas of high risk in the hospital.
7) Development of an incident report form to meet the
contemporary needs.
8) Requiring the staff to file incident reports immediately
after incidents have taken place.
9) Reporting physician and nurse related incidents.
10) Monitoring and improving quality of care provided by
physicians and other providers because increasing
numbers of claims are holding hospitals liable for
everything that occurs within them (hospital premises).
11) Continuing support of all segments of the hospital
community.
12) Statistical data from both internal and external sources.
13) Patient representative program characterized by integrity
and ability to level with the patient.
14) Reduce the level of risk sufficiently so that the hospital
can assume that risk itself through the less expensive
self-insurance.
15) Elimination of needlessly dangerous procedures and
prescribed medicines even though safer substitutes may
be found.
A survey by accreditation agency like Joint Commission
International (JCI) can be helpful. The survey is designed to
be individualized to each organization. To be consistent and
support the organization’s efforts to improve performance
accreditation is highly recommended. During an
accreditation survey, the JCI evaluates an organization’s
performance in terms of functions and processes aimed at
continuously improving patient outcomes. This assessment is
accomplished through evaluating an organization’s
compliance with the applicable standards in the JCI
Accreditation Manual, based on the following [15]:
1) Tracing the care delivered to patients.
2) Verbal and written information provided to JCI.
3) On-site observations and interviews by Joint
Commission surveyors.
4) Documents provided by the organization.
VII. STAFF TRAINING AND RISK MANAGEMENT
The Joint Commission on Accreditation of Healthcare
Organisations (JCAHO) reports that orientation and training
failures were the second most common root cause of sentinel
event. The survey covered the years 1995-2004. Lack of or
limited staff training were found to be the most common
staffing-related factor in root cause analyses [16].
Many organizations have been using teams as a means of
achieving organizational outcomes (such as productivity and
safety). Research has indicated that teams, especially those
operating in complex environments, are not always effective.
There is a subset of organizations in which teams operate that
are able to balance effectiveness and safety despite the
complexities of the environment (for example, aviation,
nuclear power). These high reliability organizations (HROs)
have begun to be examined as a model for those in other
complex domains, such as health care which strives to reach
status of high reliability [17].
Staff training is crucial to the successful management of
risk exposures resulting from the interaction of humans and
biomedical technology. The need for staff training in general
and cross training to meet particular needs is not limited to
permanent personnel of the facility. The increased use of
clinical staff from per diem pools and commercial companies
that provide individuals for short- or long-term assignments
raises significant orientation and training challenges for
health care facilities. However, public expects that all staff
authorized by a health care facility to use a piece of medical
technology are competent to do so, regardless of the
individual's employment status[18].
The institution must be prepared to meet the full spectrum
of biomedical technology training needs. This can range
from initial training in the use and support of a new piece of
equipment, ongoing in-service training to individualized
remedial training when indicated. Depending on the
complexity of the biomedical technology in use clinical
providers may require education about the equipment. For
example, others whose responsibilities include maintenance
or calibration, such as biomedical engineering personnel and
those responsible for routine cleaning, disinfecting, or
sterilization of certain medical devices also need customized
in-service training [18].
The health care organisation must ensure adequate
supervision of the clinical practice of each of its professionals.
This process is frequently included in the organisation’s
credentialing and peer review programs. Health care
organisations must develop and implement
competency-based performance parameters for each
professional category. The scope of competencies required
should be in accordance with the regulatory requirements of
each professional group [18].
International
Journal of Innovation, Management and Technology, Vol. 3, No. 4, August 2012
419
VIII. TRAINING AND AWARENESS AMONG PATIENTS,
FAMILIES, AND NON-MEDICAL PERSONNEL
It is important to create awareness amongst staff as well as
patients, families and non-medical personnel regarding safety
rules and regulations applicable to the respective countries.
They should be informed about various law and enactments.
The need for training and awareness is not limited to
hospital-based sites. It also applies to leased settings in which
health care organization employees provide ambulatory
health care services, but the building owner furnishes the
housekeeping staff. The public is increasingly aware of
biomedical devices, such as automatic external defibrillators
(AED) at airports and businesses. Television series featuring
scenarios using such biomedical technology have become
popular. This can encourage a cavalier among lay people
about the significant realities involved in biomedical
technology. For example, in at least one reported case, a
death occurred when a worker in housekeeping service
"playing with a defibrillator" placed the paddles on a
coworker's chest[20]. Similarly harm may occur if the
respective staff is not trained for precautions in diagnostic
and other procedures.
Situations that involve unauthorized access to or handling
of biomedical devices by non-institutional personnel are not
new. When protective containers for used needles and other
sharps came into widespread use there were instances of
children trying to access units that were within their reach.
The red colour brick-shaped "sharps container” resembled a
popular building block for children. Children have also been
involved in serious incidents with electric beds during
upward or downward movement of the bed [18].
Inadvertent unplugging of an intravenous pump by
untrained staff can result in shut-off due to battery depletion,
which at times can go unrecognized. This can cause
potentially serious patient care ramifications [18].
IX. FIRE SAFETY PLAN AND EMERGENCY DRILLS
Every country, state or province has its own code for fire
safety. In India, it is essential to prepare fire safety plan
according to Clause C-8 (Annex - E) of part-4 of National
Building Code of India, 2005 duly incorporating the
following important components [21]:
1) Fire Safety Director/ Dy. Fire Safety Director.
2) Fire Wardens and Deputy Fire Wardens.
3) Building Evacuation Supervisor.
4) Fire Party.
5) Occupants Instructions.
6) Fire Command Station, Signs
Before fire & emergency drills are planned in hospital, the
following points must be of prime consideration [21]:
1) The purpose of fire and emergency drills.
2) Formulation of fire drills routine.
3) Instruction and training.
4) Details of fire drills.
5) Frequency of drills.
The fire and emergency drills should be conducted at least
quarterly for the first two years. Thereafter fire & emergency
drills shall be conducted once in every six months.
The fire and emergency drills should not be allowed to
become stereotype as the situation under actual fire
conditions may vary widely. For example a stair case may be
unsuitable due to smoke or other causes. Before arranging a
fire and emergency drill where a staircase is presumed to be
blocked, it is essential that an alternative safe route is
available which leads to open air and safety [21].
X. CONCLUSIONS
Risk management has become an integral part of hospital
administration in most of the developed countries in general
and the USA in particular. However, the needed attention to
the concept and process of risk management in the
developing countries is yet to be given. Since we are living in
a global village and with advances in communication
technology, the day is not far when patients will initiate law
suits against the health care providers and hospitals for
medical malpractice and negligence threatening patient
safety. It is recommended that hospitals give serious
consideration to implementing and /or strengthening risk
management programs to protect their assets and minimize
financial losses.
REFERENCES
International
Journal of Innovation, Management and Technology, Vol. 3, No. 4, August 2012
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[1] K. Woodfin, “ History of health care risk management programs,” in
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Madison, Wisconsin in 1970. Prof. Ghatala did post doctoral studies in
independent learning and distance education at the University of
Wisconsin-Extension in Madison in 1971-1972. He earned his Masters in
Health Care Administration from Texas Woman’s University Campus at
Texas Medical Center in Houston, Texas in 1986.
He held several faculty and administrative positions in higher education
in USA. He was Associate Director of Center for Community Development
and Assistant Professor of Education and Sociology at Humboldt State
University in Arcata, California. He also served as Assistant Professor of
Social Work in the College of Community Services at the University of
Cincinnati in Cincinnati, Ohio. He was appointed as Associate Professor and
Assistant Dean of Continuing Education at Weber State University in Ogden,
Utah. He was appointed as Director of Academic Programs at the Saudi
Arabian Educational Mission to the USA in Houston, Texas, USA. He was
then Director of Department of Education and Training at Security Forces
Hospital in Riyadh, Kingdom of Saudi Arabia. Upon returning to the USA,
he was Assistant Vice President of Human Resources Planning and
Development and later Director of International Relations at Hahnemann
University Medical Center in Philadelphia, Pennsylvania, USA. He was then
Vice President of Human Resources, Training and Education at Global
Health Group in Conshohocken, Pennsylvania, USA. He also worked as
international management consultant and Financial Services Professional
with New York Life Insurance Company in Cherry Hill, New Jersey, USA.
He is currently Dean at Apollo Hospitals Educational & Research
Foundation in Hyderabad, India.
He has co-authored the book, Current Issues in Distance Education
published by UNESCO’s NGO-B International Council on Correspondence
Education. He has published over 50 articles and reviews in professional
publications. His areas of current interest are Telemedicine, Risk
Management, and Human Resources Development.
International
Journal of Innovation, Management and Technology, Vol. 3, No. 4, August 2012
421
[20] “Playing with medical devices can be a deadly game.” in Health
Devices, vol. 31, no. 7, July, pp. 269-270, 2002.
[21] Guidelines for fire and emergency drill and evacuation procedure for
apartment buildings. [Online]. Available:
http://fireservices.ap.gov.in/docs/
was born in 1982 in Bhopal,
Madhya Pradesh, India. He received his Bachelor
of Homoeopathic Medicine and Surgery
(B.H.M.S.) from L.B.S. Medical College in
Bhopal, Madhya Pradesh, India in 2008. He
completed his Post Graduate Diploma in
Preventive & Promotive Health Care from
Wellness Rx and Apollo Hospitals Educational
and Research Foundation in 2009 from
Hyderabad. He earned his M.B.A. in Health Care
Management from Apollo Institute of Health Care Management in
Hyderabad, Andhra Pradesh, India in 2011. He participated in various
CME’s including Life Style Medicine for Stress Management from Harvard
Medical School and Training Program for Public Health Departments” of
Johns Hopkins Center for Public Health Preparedness.” He is a certified
Project Management Professional from IIT, Delhi.
At present he is serving as Assistant Professor in Apollo Institute of
Hospital Administration, Hyderabad, Andhra Pradesh, India. Earlier he has
worked as Application Specialist (I.T.) with Apollo Health Street. He also
served as Night Manager at Bhopal Medical Center (Diagnostic Unit) and
Information’s NGO as an Executive.
Dr. Singh is a member of Red Cross Society, Expressions Education and
Health Care Society and Health and Wellness Association of India
M. Habeeb Ghatala was born in 1939 in
Hyderabad, India. He earned B.Sc. in
agriculture from Osmania University in
Hyderabad, Andhra Pradesh, India in 1959. He
received M.S. in extension education and
sociology from Kansas State University in
Manhattan, Kansas, USA in 1961. His Ph.D. is
in extension/continuing education and
sociology from the University of Wisconsin in
D D r. Balbir Singh
P rof.
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