Consisting of multiple segments including life sciences, managed care, senior living, hospitals and health systems, the healthcare industry is diverse and faces a wide range of risk management challenges. Yet for many organizations operating in the industry, staffing shortages currently present the most significant risk management challenge. Workplace violence and cyber risk are also among the top risks healthcare organizations are facing.
Adequate staffing was already an issue within the healthcare industry before COVID-19. It’s particularly challenging if you’re operating in the healthcare sector, because it doesn’t only affect the ability to provide patient care, but also affects the quality of care provided. Staffing shortages can accentuate the risks faced every day, especially those related to medical malpractice and professional liability claims. This is a particularly acute issue now, when claims severity is problematic and only growing worse.
Staffing shortages also create other challenges such as employee burnout, mental health issues and employee engagement – all of which impact quality of care.
Agency staffing can help healthcare providers close personnel gaps by offering short- and even long-term employees. But relying on agency staffing brings additional risks such as contributing to malpractice risk. Agency employees aren’t likely to know the organization, the building, where to find things, or even whom to call in the event of an issue, all contributing to greater likelihood of something going wrong. In addition, healthcare professional liability underwriters are particularly concerned about the additional risks introduced with agency staffing and are likely to reflect those concerns in their premiums.
Employers can better attract and retain employees by reviewing total rewards and health and benefits programs to ensure they are competitive. Creating a better work experience for employees through better communications, employee listening strategies, pay equity and change management can also help employers to build a sense of organizational purpose that can help create a stronger connection with employees and retain them.
To help manage insurance costs, you should provide ample information to insurance underwriters, making clear how you’re handling staffing challenges. For example: Are some facilities or departments temporarily shut down? Have you created your own employee “temp” pool, using your own employees to help fill gaps when you’re short-staffed? How are you handling training of temporary employees that are not from within your own pool?.
Similar to staffing shortages, workplace violence is another issue that is all too common in many industries, but it’s more acutely felt among healthcare providers. In fact, from 2011 to 2018, according to the U.S. Bureau of Labor Statistics (BOL), there was an 86% increase in non-fatal, intentionally inflicted injuries among health care and social workers. BOL also found three times as many workplace violence incidents in healthcare compared to all other industries combined. And since the pandemic, workplace violence in healthcare organizations has continued to rise.
Workplace violence also further exacerbates staffing issues. Injured workers will likely require time off and the increased risk of workplace violence makes the industry less attractive to prospective employees.
To address workplace violence, healthcare organizations can have consultants identify and address potential security weak points, train staff in how to better recognize escalating situations and provide strategies and tactics for de-escalating incidents that could turn violent.
Workers’ compensation insurance underwriters will want to have a clear picture of the measures your organization is taking to address workplace violence. Measures such as additional security, video surveillance and technology solutions that can quickly identify when situations are escalating, should all be shared with workers’ compensation underwriters to demonstrate proactive measures taken to mitigate workplace violence risk.
Other strategies for reducing workplace violence include additional security, such as greater use of armed guards and security video. These measures have cost implications and create their own risks such as liability around the use of excessive force, increased accusations of false arrest and discrimination, and privacy concerns. Therefore, solutions for workplace violence often come down to balancing the benefits against the additional costs and risks introduced.
Cybersecurity is another issue that affects all industries, but hits healthcare companies particularly hard. According to WTW claims data, in the first half of 2022, healthcare companies made 25% of all notifications of claims related to cyberthreats – more than any other industry. And over half of these cybersecurity breaches came from ransomware and data breaches.
Healthcare is becoming a bigger target as it grows more reliant on data and technology. Part of the issue is the massive amount of personal information the industry handles, including not only sensitive health information but also financial information such as credit card and Social Security numbers.
Increasing use of artificial intelligence (AI) to assist in diagnoses, treatment of disease and predict patient outcomes means that healthcare organizations will have even more patient data to protect. And the nascent use of AI also presents the potential for additional medical malpractice challenges.
A cyber risk assessment can help you identify gaps in cybersecurity while cyber risk quantification can help inform cyberinsurance purchasing decisions. Data and analytics can also help you to determine whether it’s financially advantageous to retain risk, self-insure it or cover it through a captive.
Data and analytics can help you to better understand where cyber vulnerabilities lie and allocate risk spending more effectively to reduce the exposure. Data and analytics can also enable you to quantify and understand risks across the entire business. Once they are identified and quantified, risks can be prioritized and risk capital can be deployed accordingly. The result is optimal risk solutions, based on your organization’s unique needs.
Another aspect of cyber risk mitigation beyond insurance and technology solutions is the people component of the exposure. A significant percentage of cyber breaches can be traced to employees unwittingly sharing sensitive information or not taking the proper steps to safeguard information. Assessing employee cyber-savviness and training programs can help employees better protect critical information.
Though healthcare organizations face a wide range of risks, the right balance of insurance and other risk mitigation plans can help safeguard organizations and better protect employees and staff.
Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
