An Operational Risk Prescription for Health Care Services

Tuesday, January 03, 2012 , By Robert Stemper

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Checklists such as those that Dr. Atul Gawande writes about in his book "The Checklist Manifesto" are an important first step in managing risk. Frederick W. Taylor discussed this idea in the 1890s.

The next step for the health care services industry is to develop and execute a robust operational risk management program. It starts with developing a vision. The vision statement should articulate the ideal future state of the organization. Vision enables stakeholders to agree on a destination and the parameters to get there.

There are five salient characteristics:

  • The customer -- who is also the patient - must be the focus. It is not the government or those that provide the services.
  • The interaction of these groups and the customer define the key point of leverage.
  • There must be operational policies and standards agreed upon by all stakeholders.
  • Patient values and professional standards must be reflected in the vision.
  • The customers must actively manage their own health risks.

Risks should only be accepted if there is value in doing so, e.g., to advance knowledge or because there is no other professional choice.

Risks are generally future events that may negatively, perhaps catastrophically, affect the implementation of the strategy to execute a vision. These may change over time, be knowable or not knowable, and are usually cumulative. Cumulative in a sense that minor untoward events may be additive and become catastrophic.

Historical Reference

Risks are often best identified by analyzing historical data. Certainly catastrophic events should be included. Given the fact that risks are usually cumulative, it is important to collect non-catastrophic events also; even if we do not initially know how to link the data. So as our environment changes, new risks may emerge and old ones fade.

In analyzing the data, we must seek to identify risk drivers. Ideally we would like to address the causes of the risk. Addressing signs, symptoms or isolated risks may compromise our ability to achieve the vision and lead to inefficient use of resources. Solutions that ration resources without identifying the drivers are usually sub-optimal.

Since service is "manufactured" between the customer and those interacting with the customer, the drivers may be behavioral. How effectively do the parties interact? Do they act in ways that may create risk? Do they act in a synergistic way to achieve the vision?

Customers have a responsibility to do no harm to themselves. They also have the responsibility to be effective co-manufacturers of the service.

The culture of the organization must be supportive of the vision being executed. The opinions, attitudes and beliefs of the organization are the key enablers of a successful strategy. If the patient isn't viewed as part of the solution-that is a problem. If the process is viewed as more important than the customer or the doctor-that may cause risks. If the service delivery is too atomized-important linkages or systemic drivers may be missed.

One of the reasons to analyze historical risk data is to estimate the value to address it. In other words, if the risk occurred what would be the result? Would it be catastrophic? Would it be isolated?

Wrestling with Data

Some risks may be knowable at a point in time; continuous learning is critical. But some risks also may not be knowable. They may be caused by unforeseeable events and/or have a low probability of occurring.

There are generally four sources of this type of data: proprietary clinical, insurance and loss data; customer feedback; data from other health care organizations (public or private); and data from other service organization - including lessons learned from other sectors that apply to health care.

The data is often overwhelming. It may be best to focus first on the catastrophic events. Where there is experience that suggests certain risks are not likely to be catastrophic, perhaps you should initially defer the analysis.

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