Business Question

Recomendations:

make sure your title is as specific as possible – from my reading it would be better as “Insurance and risk management…

change professor name

questions need to be more specific

in depth is too broad – be more specific

explain ERM

refer to sections rather than chapters and parts – be consistant – your road map needs specific steps rather than broad topics

resources appear to be in order – good – you have shown that you have completed some research

there are some writing errors (Does vs do)

expand on the specific rational for the study

expand on training opportunities

be more specific on value based payment models

be more specific as to the strategies available

it appears as the cost of malpractice insurance and litigation is thrown in, but not linked or explained in detail

do not use the word “thing” in a research paper

page 10 – use area rather than the word (place)

insurance provides some coverage of actual financial costs – the cost of insurance is based on potential risks

hospital burning down is too broad – prevention would be better than insurance in this case

page 11 use detailed as opposed to “elaborate”..

explain what you mean by bundled payaments – dont use the word “like” – use such as..including…

wants are not unpredictable – needs are

number 3 page 13..people choose to not undergo healthcare due to the high cost of insurance..

healthcare officals do not become wrong, they perform incorrectly of in error

patients do not get harmed..they are harmed..be mpre specific as to HOW

there are multiple writing errors –

insurance does not shift ALL expenses it saves some of the money –

how do insurance companies gain from having healthcare insurance policies?

make sure you designate your resources within your paper

examples should include more financial figures $

you have done an ok job thus far

but you need more specificity and control of errors to move from a B paper to an A paper

1
Risk Management and Insurance in Healthcare
Anylizauri Dávila Soto
MBA Program, Carlos Albizu University
MFIN-504: Managerial Finance
Dr. Dana Leland
February 24, 2024.
2
Context
Traditionally, risk management in healthcare has been reactive and focused on improving
patient safety and eliminating hazards that can jeopardize an organization’s ability to deliver
patient care. Insurance companies remain vital in hospital risk management (McGowan et al.,
2023). However, there have been significant changes in how risk management is viewed in
healthcare. Additionally, insurance has been a major part of the mitigation measures against
financial risks in healthcare (Hatzivasilis et al., 2020). With an increasing cost of care, an
unpredictable economic system, and the rise in emergencies that impact the financial stability of
healthcare organizations, how do risk management and insurance shape the mitigation measures
against financial risks healthcare organizations face?
Purpose
The purpose of this paper is to examine the role of insurance companies and risk
management techniques in mitigating financial risks for hospitals. Financial risk has become a
significant part of any healthcare organization’s management plans. With an increasing
expansion of healthcare technologies, heightened cybersecurity concerns, the unprecedented
growth rate of medical science, and the industry’s dynamic political, legal, regulatory, and
reimbursement climate, financial risk management has become more complex over time
(McGowan et al., 2023). Additionally, insurance firms have always played a key role in
supporting risk mitigation techniques, which lowers the possibility of financial losses
(Hatzivasilis et al., 2020). Regardless, the interplay between insurance and risk management for
mitigating healthcare financial risks must be redefined with the changing risk exposure and
types. Hence, the rationale for this study.
3
Argument
Based on an in-depth document analysis, this paper argues that healthcare organizations
must integrate insurance providers as an integral part of their Enterprise Risk Management
Framework to manage residual financial risks. Insurance is not always the first line of defense
for financial risks for most healthcare organizations (Growth, 2021). However, with today’s riskbearing models, such as CMS’s performance-based payments and bundled payments, the valuebased care movement, financial risk has significantly shifted from the payers to the providers
(McGowan et al., 2023). Thus, financial risk management must be based on a comprehensive
risk management perspective. The link between financial risk management and health care
organization’s success is critical (The University of Scranton, 2021). Incorporating insurance
models with the Enterprise Risk Management framework would thus enable organizations to
achieve a proactive financial risk management that views risk through a broader lens of the entire
healthcare ecosystem (Growth, 2021).
Roadmap
To answer the research question, the paper will first provide a background of risk
management in healthcare. Then, the next section will entail a broader overview of the interplay
between risk management and insurance in healthcare. This will involve a review of the
literature on concepts such as Healthcare Enterprise Risk Management and the critical
components of performing financial risk management in healthcare. The next chapter will entail
an in-depth document analysis of the evolution of financial risk management and the role of
insurance in financial risk mitigation. The second last part will entail a discussion of the findings,
and the last part will provide a conclusion and recommendation on how healthcare organizations
4
can benefit from an integrated risk management framework that incorporated insurance models
with ERM approaches for financial stability and operational success.
Risk Management and Insurance in Healthcare
Healthcare organizations are exposed to different types of risks that can affect its
financial stability and delivery of quality patient care. The risks in this case encompass
increasing care costs, economic uncertainties, technological advances, cybersecurity threats, and
changes in the industry’s political, legal, regulatory and reimbursement environment. Risk
management has arisen as an important part of healthcare management in response to these
challenges. Risk management is a process of risk identification, assessment, and control to avoid
risks to an organization’s missions and activities (Chance & Brooks,2021). Insurance firms also
have an important role to play in risk management of healthcare organizations financial.
Nonetheless, due to fast changes in the risk profile and healthcare environment, the association
of risk management and insurance has to be altered. The aim of the paper is to reflect the role of
the insurance companies and risk management tools in the prevention of financial risks for
healthcare organizations and to give the recommendation how organizations could include
insurance providers into the Enterprise Risk Management (ERM) outlook for better financial
stability and operationally successful work.
Background of Risk Management in Healthcare
In the past, healthcare risk management has mainly concentrated on risk reduction for
patients and safety improvement for patients (Chance & Brooks,2021). The hospital risk
management programs have historically been reactive, addressing incidents and threats faced by
patients and the firm’s ability to provide quality care. Nevertheless, the rapid change in the
health care industry and complexity of the environment it operates has transformed risk
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management into a broader and inclusive approach. Currently, risk management in healthcare
involves not only patient safety but also financial risks, operational risks, legal risks, and
reputation risks (Pascarella, et al.,2021).
There are several forces behind the increasing importance of risk in healthcare. First,
healthcare costs are still on the rise, and it becomes necessary for the organizations to mitigate
risks that may cause financial losses. In addition, the economic system is volatile, and health
organizations should have risk management schemes in order to safeguard their financial
solvency. Secondly, modernization of medical science and technology has also given birth to
new threats to healthcare organizations, which includes the likes of cyber threats and liability
risks. The political, legal, regulatory, and reimbursement environment of the healthcare sector is
ever-changing which would mean significant risks to the organization that needs to be properly
managed (Pascarella, et al.,2021).
Risk management has become a significant part of healthcare management and
operations due to the increasing complexity of the healthcare environment. Healthcare
organizations need to create a risk management lifestyle, where all know about probable risks
and ways to avoid them as mentioned by Chance and Brooks (2021). In the era of value-based
care and alternative payment models like bundled payments and performance-based payments,
payers have transferred the financial risk to providers, thus rendering financial risk management
a top priority for healthcare organizations (Pascarella, et al.,2021). Consequently, healthcare risk
management has shifted from a reactive to a more proactive and strategic approach. In addition,
regulatory agencies such as The Joint Commission and the Centers for Medicare & Medicaid
Services (CMS) have stressed the significance of risk management in healthcare. Regulations, as
well as, standards concerning risk management that organizations must adhere to in order to
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maintain their accreditation and avoid penalties. Not doing so poses the organization in jeopardy
but also affects its financial standing.
New Trends of Enterprise Risk Management in Healthcare Industry
The conventional way of risk management in healthcare is characterized by
fragmentation and departmentalization where different departments manage the specific risks
within their operation areas. This method has become obsolete and fails to provide an effective
solution to the dynamic risk landscape in the healthcare sector. In addition to that, in traditional
risk management approaches, the emphasis tends to be more on patient safety and clinical risks
but the financial risks of a healthcare organization which could highly determine the financial
sustainability and long-term success of the organization are ignored.
Enterprise Risk Management (ERM) as a paradigm in healthcare is an embryonic
reflection of these shortcomings of traditional risk management practices. Under ERM, a
company treats risk management as an enterprise-wide activity and includes all stakeholders in
the risk management process (Pasquarelli, et al.,2021). This includes service providers, insurers,
regulators, and other external stakeholders. ERM is meant to embrace a systematic approach to
risk management by addressing the risks that affect the whole health care organization and not
merely on the risks within the different departments.
The change in the healthcare environment has led to several organizations adopting
ERM, which is used to manage risks and ensure that such organizations remain financially stable
and successful. The increasing cost of care, technological changes, healthcare policy and
regulation changes, and shift towards value-based payment models have imposed substantial
financial risks to healthcare organizations (Pascarella, et al.,2021). Hence, fragmented and
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departmental risk management approach is inadequate in managing the financial risks that affect
the survival of health care organizations.
One of the main benefits of ERM is the ability to detect and assess the risks which
influence the entire healthcare organization. In this way, the healthcare organizations are
provided with the comprehensive risk exposure picture that helps the organizations evaluate and
develop efficient risk management strategies (Chance & Brooks,2021). Importantly, it is so in
the modern dynamic healthcare system when healthcare related organizations are exposed to
numerous threats either of which can affect their performance seriously.
Furthermore, ERM awakens the sense of risks and spreads the risks management culture
in healthcare facilities. This is achieved by involving all the parties who are participating in risk
management process, including the operating staff. A risk management culture in the healthcare
organization, enables recognition and elimination of the potential risks at the early stage and,
therefore, the communication of possible significant financial losses (Chance & Brooks,2021).
Moreover, ERM provides a platform for collaboration between different healthcare
organizations and insurance companies in the management of monetary risks. In the ERM
framework, insurance providers are part of healthcare organizations, which collaborate with
these providers to identify, assess, and mitigate risks ((Khunti et al.,2021). This type of alliance
is particularly important in the current healthcare market where value-based payment models and
alternative risk-sharing arrangements are causing the insurance products that ‘hedge’ the risk
higher.
The move to ERM in healthcare has been a slow but steady process but it is gaining
momentum as healthcare organizations confront increasingly complex financial risks. Healthcare
organizations need to incorporate this model in their risk management strategies in order to
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respond to current and future risks effectively. ERM enables the healthcare organizations to have
a united risk management; hence, ensuring their financial sustainability as well as success in the
long run.
Interplay between Risk Management and Insurance in Healthcare
The healthcare sector is plagued with many risks, starting from the medicine errors to the
legal liabilities, natural calamities, and cyber threats. In this regard, risk management and
insurance are very important aspects in the proper and efficient functioning of the healthcare
system. Risk management in healthcare entails the activities of hazard identification, risk
assessment, control, and elimination of threats that may affect the delivery of healthcare services
(Khunti et al.,2021). However, insurance is the tool that healthcare institutions use to shift the
cost of these risks to insurance companies. This essay investigates the dynamic of risk
management and insurance in the healthcare sector.
The health industry is naturally high risk since its operations are complex. It includes the
services rendering by healthcare providers like hospitals, clinics, and physicians, as well as the
utilization of medical equipment and medicines. Each of the components is at risk, where the
risks may have adverse effects to the patients, the healthcare organizations, and the healthcare
professionals. Though, a medical mistake, can cause damage to a patient, sometimes even death,
which represents a significant hazard to the healthcare provider. The cost of litigation and
medical malpractice insurance has a great impact on the financial viability of a healthcare
institution (Chance & Brooks,2021). Consequently, risk identification and management in a
proactive manner is an essential tool to guarantee patients’ safety and the sustainability of
healthcare organizations.
9
Risk management approaches in healthcare are preventive. According to Chance and
Brooks (2021), the first action is to find the risks through risk assessments that are
comprehensive. The process of risk assessments is the recognition of all possible threats in the
healthcare environment, which may include device failures, natural calamities, and medical
mishaps. Assessment of these risks follows with considerations on how likely they are to
manifest and their effects on patients, staff, and the organization. Once the risks have been
identified and appraised, the next thing is to create risk response plans.
Scripting of safety precautions and guidelines is one risk management strategies in health
care. They are introduced in order to form certain standards protocols and approaches that would
minimize chances of mistakes and harm to patients. As a case in point, health care institutions
have some infections control measures that curb the spread of infections within their premises. In
addition, the healthcare providers are required to adhere to strict guidelines or protocol in dealing
with the patient medication so as to prevent medication errors that may cause serious harm or
death (Khunti et al.,2021). Added to this, proper training and continuous of healthcare
professionals also play as a very crucial element in errors prevention and risk protection.
Patient safety is also one of the models of risk management used in the health care
industry. Safety programs for patients are designed to identify the potential risks for the patients
and implement methods to prevent them (Khunti et al.,2021). Another example is the utilization
of electronic health records which make it possible for healthcare providers to instantly and
accurately access patient data. This reduces the likelihood of mistakes due to illegible
handwriting or misplaced medical records. In addition, quality improvement initiatives are used
by healthcare institutions to identify and eliminate internal processes and procedures that pose a
risk to patient safety. Preventive measures also minimize risks and ensure high-quality care.
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Regardless of the type of risk management techniques implemented, risk in the healthcare
sector cannot be eliminated totally. Chance and Brooks (2021) says that this is the place where
insurance comes into play very much. Insurance is a contract that protects health care
organizations and providers from the financial consequences of potential risks. In healthcare,
there are numerous types of insurance, such as medical malpractice insurance, property and
casualty insurance, and general liability insurance. All these coverages have specific role to
control different risks of the healthcare organizations.
Medical malpractice insurance is perhaps the most well-known type of insurance in the
healthcare sector. It provides immunity to health care professionals in a medical error related
lawsuit. Malpractice insurance basically covers the cost of legal defense, settlements, and
damages awarded to the injured party. Medical error insurance cover is important for the
healthcare organization since lack of medical errors insurance cover may result in significant
financial loss in case a healthcare facility is forced to foot these costs without insurance cover.
The malpractice insurance is a security cover and comfort to healthcare professionals that their
assets are secure in case of a lawsuit.
The physical assets of healthcare facilities, such as buildings, equipments and inventory,
are protected by property and casualty insurance from losses or damages caused by natural
disasters, accidents, or theft. This kind of insurance is quite important in the healthcare field
because it gives protection against massive financial losses that may result from an unforeseen
incident. For instance, in case a hospital was burned down, fire insurance would provide the
payment that would rebuild or replace damaged equipment and structures. Consequently, it
assures the perpetuation of services and ensures the financial viability of the health-care
organization.
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General liability insurance provides healthcare organizations with coverage for financial
liabilities that result from accidents or injuries that occur in their facilities. Hospitals and other
healthcare facilities are places with high traffic and accidents do happen. As an example, a slipand-fall injury that occurs in a hospital could lead to substantial financial liabilities if the injured
party chooses to seek legal action. General liability insurance will protect the organization from
this risk by paying for the legal costs and damages ordered to be paid to the injured part.
The symbiotic relationship between risk management and insurance in health care.
Strategies of risk management are used to identify and try to eliminate the possible risks and
insurance is an insurance policy that protects the organization from the financial consequences of
these risks. Control and management of costs is one of the major advantages of insurance to
healthcare institutions (Chance & Brooks,2021). To illustrate, medical malpractice insurance
cost would be much lower for the healthcare organizations with an elaborate risk management
plan. The reason for this is that insurance companies view these organizations as less risky hence
their premiums are lower. Moreover, insurance companies offer some risk management services
to healthcare organizations, which include risk assessments and recommendations on risk
avoidance and mitigation.
In addition, the option of insurance coverage leads to more convenient risk management
by healthcare organizations. It acts as a financial firewall which enables organizations to
concentrate on providing the best health care services without having to concern themselves with
the possible financial consequences. This is critical for small healthcare organizations that do not
have enough money to cover a large risk event (Khunti et al.,2021). In such a situation, the
continuity risk should be insured, and that, in return, would ensure the health of the organization.
Financial Risks in Healthcare and the Role of Insurance
12
Risk management as a significant concern for the healthcare organizations is fueled by
the high cost of care, unstable economic systems, and proliferation of medical technologies and
innovations. However, the change to alternative payment models like bundled payments and
value-based care have shifted financial risk from payers to providers, and therefore, healthcare
organizations should use good financial risk management systems ((World Health
Organization,2021). Insurance companies are active participants in these risk management. They
furnish coverage not only via insurance contracts, but also help organizations to find the existing
risks and to develop the ways of their reduction.
Financial Risks
1. High Healthcare Costs
Among the most critical financial risks in healthcare is the cost of medical treatment.
Across the world, the healthcare costs have constantly been rising, making it one of the most
expensive sectors. In 2017, globally, health care spending absorbed 10.6% of the gross domestic
product (GDP) and is projected to grow further in the near future as per the World Health
Organization (El‐Boghdadly et al.,2020).
The major reasons of the expensive healthcare are sophisticated medical technologies,
expensive medications, and aging population. The developments in medicine, i.e., new
treatments and technologies, have led to the significant improvement in the quality of care;
however, they should be noted that at a high price. Research and development of new drugs and
medical devices are costly and their expenses are recovered through higher prices charged to the
consumers (Karlsson & Fraenkel,2020). Moreover, the elderly need more medical attention
which further escalates the costs of healthcare.
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High healthcare costs poses financial dangers to patients and healthcare providers alike.
These costs for the patients represent a huge economic loss, which can affect their general good.
Patients may postpone or refuse essential medical care because of lack of money to afford it, and
thus put their health in jeopardy. Healthcare providers find it difficult to recover the high costs of
medical treatments leading to financial burden and poor quality care.
2. Unpredictable Expenses
Healthcare wants do not come planned, hence, making the budgeting of medical expenses
tasking. Unforeseen costs that can drain an individual’s savings can arise from accidents, sudden
illnesses and chronic conditions. The unanticipated costs for healthcare providers may take the
form of natural calamities, pandemics or sudden disease outbreaks.
These unforeseen expenditure entail high risks for both the patients and the service
providers. Patients can suffer financial burden and bankruptcy if they are not well insured.
Unforeseen costs for health care providers often cause them trouble to maintain their cash flow
and interfere with their capacity to offer care to the patients, particularly in times of crisis.
3. Limited Accessibility
Unavailability of affordable quality healthcare is a significant financial risk for both
individuals and the healthcare industry. There are a lot of people who do not have healthcare due
to not being insured or not being able to afford it. Lack of access is a financial risk for the patient
and cost to the provider as well.
The cost of medical treatment can be a huge financial burden for people without the
insurance coverage. This will cause them to postpone or avoid the required medical attention
which will result in the higher cost and serious health issues later. This would also pose risks to
healthcare providers who might incur the cost of treating the uninsured or underinsured.
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4. Medical Errors and Malpractice
Healthcare risks include medical errors and malpractice that can be financially
devastating. Medical errors are sustained when healthcare professionals become wrong in the
diagnosis, treatment, or care and subsequently the patients suffer severe, in some cases lifeendangering, outcomes. Concerning negligence is a type of healthcare failure when the standard
of care is not met and patients get harmed. However, these risks pose a threat of expensive
malpractice suits, which in turn can ruin the financial base of health care providers as well as
their reputation. Moreover, medical errors provoke unnecessary and costly medical procedures,
augmenting medical expenses even more.
5. Fraud and Abuse
Healthcare fraud and abuse are common problems that lead to huge financial losses. This
may involve fraudulent services, falsification of medical records, and inappropriate billing
practices. Such fraudulent activities not only harm the patients who are forced to pay increased
healthcare costs but also impose financial risks upon insurance companies and healthcare
providers.
Also, this sort of fraud impacts the health system in a broader sense, making the costs of
the medical treatments to go up. These activities have to be investigated and handled by
insurance companies leading to higher administrative costs. Healthcare providers are also at a
risk of losing revenue from the false claims thus compromising their capability of providing
quality care.
Role of Insurance in Managing Financial Risks in Healthcare
1. Financial Protection
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The main advantage of insurance in health is to offer financial security to the individuals,
the healthcare providers as well as the insurance companies. Through the sharing of medical
expenses, insurance makes healthcare affordable and accessible to patients and providers.
Healthcare costs rise over time, and this fact creates the problem of being unable to
access the healthcare care that one needs. Nevertheless, when a person has a health insurance
policy, the financial risks of health care are shifted to the insurance company. It saves them from
the high expenses that are associated with treatments, hospitalizations and other medical services
(El‐Boghdadly et al.,2020). Further, it offers peace of mind in terms of financial stability; people
know that they have an insurance scheme to cover their medical costs should there be any sudden
and unforeseen expenses.
Moreover, insurance provides healthcare providers with protection against financial risks
of treating the uninsured or underinsured. Insurance cover allows healthcare providers to be paid
on time for their services, and this reduces the chance of cash flow problems. This gives them the
opportunity to focus on providing quality care to patients without being concerned about the
financial part. In addition, insurance companies also gain from having healthcare insurance
policies. The more financial risks they manage and mitigate for their clients the more stable
financial position they achieve and continue providing the insurance coverage for the bigger
population.
2. Risk Management
Insurance is the key instrument in the management of financial risks in healthcare. It
facilitates risk transfer from the individuals and medical care providers to the insurance
company, relieving them of stress of financial loss and free them to concentrate on delivery of
quality care.
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Healthcare is a high-risk sector that has chances of accidents, injuries, medical errors, and
malpractice suits. With the right insurance cover, such risks are manageable. For instance,
malpractice insurance ensures that healthcare providers are protected against the risks of funding
extravagant malpractice lawsuits, making them focus on providing quality care to patients.
Insurance in addition encourages patient risk management. Having health insurance
enables individuals to receive preventive care and other necessary medical services which are
imperative in decreasing the likelihood of expensive medical emergencies in the future (Karlsson
& Fraenkel,2020). Furthermore, insurance companies have very strong risk management policies
which make sure that their policies remain viable and continue to offer financial support to their
clients.
3. Cost-effectiveness
Insurance brings about savings in medical services by negotiating lower prices for
medical services with healthcare providers. Insurance companies have developed providers’
networks, which provide services at cheaper rates as per agreement (World Health
Organization,2021). This enables people with insurance to get the required medical care at a
reduced price as compared to those without insurance.
The insurance companies also put in place cost containment measures which include preauthorization requirements and utilization review processes that are aimed at reducing
unnecessary and expensive medical procedures. This in turn, allows healthcare costs to be
managed and patients to be given the right and effective type of treatment. Insurance also makes
healthcare providers cost-effective. Collaborating with insurance companies and accepting lower
rates, the providers get the opportunity to draw more patients, which results in more revenues
and profits.
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4. Quality of Care
Insurer plays a large role in healthcare quality management. The activities of healthcare
providers are closely followed by the insurers to comply with the standard of care of the
industry. This also includes engaging auditors, evaluating medical records, and obtaining
patients’ feedback. In addition, insurance providers pay the healthcare facilities that satisfy
quality and outcome measures, thereby ensuring the delivery of high and evidence-based care.
This is beneficial not only for the consumers who are provided with the appropriate treatments
but also the likelihood of resultant complications and additional medical costs are reduced.
5. Innovation
Insurance plays a crucial role in promoting innovation in the healthcare industry. The
rising costs of healthcare lead insurance companies to seek for the ways to reduce costs with the
maintained high standard of care (El‐Boghdadly et al.,2020). As a result, innovative payment
models have been developed and value-based care, which rewards healthcare providers for
providing quality, cost-effective care, is one of such models.
Insurers also make investments in research and development of the technology that will
be used in healthcare or the new treatments that will be implemented in healthcare to make it to
be more effective and efficient. This benefits not only patients who gain access to advanced level
of medical care but also creates opportunities for healthcare providers to improve themselves
(Singh & Garg,2022).
Integration of Insurance Providers into Enterprise Risk Management Framework
The inclusion of insurance entities into ERM framework is a proactive way of financial
risk management in healthcare. One of the ways on how this is achieved is by partnering with
insurance companies and embedded their risk management expertise and including their
18
resources into the overall risk management strategy of an organization (World Health
Organization,2021). Doing this, healthcare organizations are able to more easily identify,
evaluate, and manage financial risks, which will result in better financial sustainability and
operation performance.
Aligning risk management activities with an organization’s objectives and operations is
one of the key components of integrating insurance providers into ERM. In this setting, risk
management approach adopted by the organization is not stand-alone but rather included with
the organization’s strategy and decision-making. Owing to the dynamic and complex nature of
the healthcare environment, a holistic risk management approach is essential, and involving the
insurance providers into the ERM structure will facilitate its accomplishment (El‐Boghdadly et
al.,2020).
In addition, insurance companies have huge data and risk management knowledge and
they are great allies for healthcare organizations. Synergies with insurance companies help the
organizations to obtain risk management resources and knowledge regarding possible risks and
their impact on their organization. This information will help the organizations to develop better
risk mitigation strategies and be prepared for any financial risks in future.
Financial risk landscape changes is one of the major explanations for the integration of
insurance providers into ERM in healthcare. The emergence of alternative payment models such
as bundled payments and value-based care has made healthcare organizations more financially
at-risk (Singh & Garg,2022). Payers have transferred the financial risk burden from them to
providers. Hence, it is important for health organizations to have efficient financial risk
management policies in place. Insurance companies as partners can provide financial security
19
through insurance policies and also help in the development of risk mitigation strategies that are
in sync with the business roles.
Including insurance providers in ERM would further enable a complete approach to risk
management in the healthcare industry. However, traditional risk management strategies in
healthcare focus on the safety of the patient and the elimination of hazards that could threaten the
ability of the organization to provide care. Nevertheless, in view of the alterations in the risk
workforce, risk management faces a more increased level of complexity in the analysis from an
extensive view. This wide perspective encompasses all risk categories such as financial risks,
operational risks, legal risks and reputation risks (Singh & Garg,2022). Through the inclusion of
insurance providers in the ERM framework, organizations could have a more complete risk
management plan that covers all potential risks and their potential impacts on the organization.
In addition, in healthcare, risk management and insurance are interrelated. Insurance
companies do not just sell the clients protection through insurance policies but also provide risk
management services to their clients (El‐Boghdadly et al.,2020). Such services are targeted at
helping companies to recognize and assess potential risks, create risk reduction measures, as well
as to maintain ongoing support and resources for efficient risk management. Secondly, they also
provide an organization with claim and loss management, which is often a great source of risk to
the financial position of an organization. Integrating insurance providers into the ERM
framework will enable organizations to have a comprehensive financial risk management plan
that will include both the insurance and risk management.
An ERM framework which incorporates insurance providers is more proactive and
comprehensive in addressing financial risks in healthcare. Availability of risk management
expertise and resources, alignment of risk management efforts with organization’s objectives and
20
operations, and a broader view of risk management that includes insurance, the financial risk
management of the healthcare organization tends to become better (Karlsson & Fraenkel,2020).
The changing risk landscape and financial risk burden on health care organizations require an
integrated risk management framework. Integration of insurance providers into ERM can
facilitate this, as a result, better financial stability and operational efficiency.
Conclusion and Recommendations
In conclusion, risk management and insurance play a vital role in management of the
financial risks in health care. In the dynamic context of the health care industry, the relationship
between these two aspects requires change in order to suit the dynamic risk environment which
strengthens the financial strength and operational excellence of health care organizations. An
interdependent strategy which incorporates insurance models within ERM framework provides a
proactive and all-inclusive risk management posture for healthcare organizations. Health
organizations should assess their current risk management solutions and incorporate insurance
companies into their ERM practice for improved financial risk management. In addition,
continuous monitoring and assessment of the risk management strategies and collaboration with
insurance companies enable firms to be well prepared to address any economic risks which can
arise.
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research paper rubric
A
formatting and grammar
includes
grammar & spelling
double spaced
12 point font
title page
resources page (minimum 5 beyond textbook)
length (minimum 15 pages of text)
paragraph 1
what question are you researching
topic within Healthcare..
topic within Financial Management
why is this important
paragraph 2
what is your specific purpose
explain #1 in detail
paragraph 3
what are you trying to show
evidence
#resources
sound argument
research
paragraph 4
HOW..
what are your potential obstacles
what are your limitations
what is your strategy
what steps will you take
conclusion
what did you do
what did you find
how can your paper be applied
did you find what you thought you would
what are the unanswered questions
B
C
D
F
9
8
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18
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10
18
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12
10
18
16
14
12
10
18
16
14
12
10
9
8
7
6
5