Business, Management

Managing risk in the practice

The coronavirus crisis was a disaster few had on their radar. KAREN CROUCH explains how a risk management plan can reduce a practice’s exposure during a downturn.

Karen Crouch.

Quoting an ancient maxim “may you live in interesting times” is a serious understatement during the current crisis triggered by COVID-19. But what this emergency has shown us is the importance of Risk Management.

This article views this concept as an umbrella term, embodying a combination of plans/actions aimed at keeping the practice operational and viable during a crisis.

Earlier articles highlighted the need to have various Risk Management plans in place such as:

Change Management: Processes to address unexpected and planned alterations to normal circumstances or procedures which require behavioural or clerical/clinical changes in compliance.

Contingency Planning (or Business Continuity): To anticipate possible disruptions to daily operations and develop mitigation options to ensure smooth ‘disaster recovery’.

Succession Planning: To address possible loss of key personnel through cross-training of staff to ensure that single points of failure do not place the practice at risk. 

Pandemic Plan: While this may be appropriate for medical conditions like Influenza outbreaks, COVID-19 highlights the need for an ‘action plan’ to help cope with a different set of protective measures.

While practice owners focus on quality healthcare – the primary objective of their vocation – some fail to recognise that practices are businesses with the exposures and risks of any commercial venture. So, while development of key ‘plans’ may be viewed as administratively burdensome, their relevance and applicability – or lack thereof – become key dependencies when a disruptive event occurs.

Consequently, meaningful Risk Management is often overlooked, ultimately leaving practices open to possible harm or failure. After all, serious disasters don’t occur every day, week or year, or can they? Did anyone include COVID-19 in the most comprehensive Risk Management plan?

However, while appropriate behavioural actions such as washing hands and social distancing may be dictated by medical authorities, the potential impacts on daily practice operations will deserve consideration, including key absences, staff/client exposure.

Large companies have sophisticated plans, catering for all eventualities, positive or negative, whereas health practices may only require practical, smaller scale plans. By its very term, the process naturally starts with ‘risk identification’ in order to highlight mitigation options.

Generally, the basket of Risk Management plans should address the following:

Succession Planning: A meaningful plan to cater for the short or long term absence of key personnel, including clinical and administrative staff.

Technology: Given the criticality of IT, are there adequate back up plans?  Are records of down time kept and is maintenance efficient i.e. is system uptime adequate or is an upgrade appropriate?

Strategic & business plans: Are these in place and regularly reviewed for currency?

Legal/regulatory compliance: Have recent audits been performed on OH&S, record retention/storage, Privacy Act and other legal compliance requirements?

Financial: Is a budget in place to manage expenses and track income to targets?  Is it consistently monitored to avoid business risks, including cash flow planning, without which a practice may not meet its obligations as they arise?

Contingency: Are plans in place to cater for various disasters, ranging from loss of transport or communications to inability to access premises?

Plant & Equipment: Are supplies and practice assets in order, regularly checked for damage, and inventoried to avoid excessive stock storage?

Insurance: Is an annual review conducted with insurers/brokers to ensure standard risks are covered including ‘key man’ exposure if patient care is heavily reliant on one or two individuals.

Competitors: Have competitors established practices close by? To what extent may they attract business away? Is defensive action required such as a pricing review or an increase in marketing?

Debt Collection: Many practices collect payment after consultations, so this task is generally lower priority, but proper procedures should be in place to recover outstandings.

The current COVID-19 crisis will undoubtedly introduce the need for new measures, not previously thought essential. Consider the current scenario where we now scrutinise the number of clients in the waiting room, ensure social distancing limits (and make furniture placement adjustments accordingly) and enforce hand sanitisation, among other measures.

Risk Management may be as convoluted as the creator intends, but it need not be a complex document.

It is usually composed by an experienced business manager and should be regularly monitored by practice managers and practice owners to address the mitigants identified for listed risks.

ABOUT THE AUTHOR: Karen Crouch is Managing Director of Health Practice Creations Group, a company that assists with practice set ups and administrative, legal and financial management of practices. Contact Karen on e-mail kcrouch@hpcnsw.com.au or visit www.hpcgroup.com.au.