To be a savvy navigator of a risk financing program, there are two equal-and-opposite levers to understand: managing and financing risk. The goal is to always keep these two levers in balance, pushing or pulling to achieve optimal conditions. They are typically managed by a team of clinical staff and C-suite executives who act in collaboration on the day-to-day mitigation of risk (Risk Management) and on overarching and programmatic goals (Risk Financing) to achieve the perfect balance of risk to reward. In a hospital’s budget, it may look like a simple line item, but in practice, it’s so much more. 

Some of the most expensive components of a hospital’s risk financing portfolio include medical malpractice, general liability, and workers’ compensation risks. From patient to visitor to staff, this risk trifecta is designed to protect each of them through a comprehensive, 360-degree experience. For CEOs and CFOs who are responsible for balancing the budget, their investment in risk financing comes down to dollars and cents in terms of incoming revenue and reimbursements versus outgoing premium costs. Meanwhile, clinical staff such as Medical Officers or Nurses, have their eye on patient care and outcomes. In an ideal world, these two groups are in simpatico, but when financing programs aren’t going well, the gap between the two can feel like a chasm. 

In the interest of narrowing this gap, their goals cannot be separate. Success in connecting Risk Management to Risk Financing is possible when the two seemingly disparate groups are brought together. Kathy Freyman, Chief Innovation Officer at Inspirien, recommends getting the clinical staff and the executives in the same room together and forging conversations. “The nature of face to face communication,” she says “often leads to numerous “ah-ha” moments.” 

A unified front is so critical because sometimes the ripple effect from an adverse claim can extend beyond the budget, beyond patient and employee safety, and into a hospital’s reputation. This formal record of the people translates to bad press, shows up in consumer reviews, in online searches, and ultimately can impact the hospital’s future operational viability. Conversely, imagine the reputational rewards when the experience is better than expected.

The best way to begin bridging financial strategies is to bridge people’s understanding. It’s human nature that when we understand each other, the more we care about each other. Kathy goes on to say the best way to help your people is to “empower them.” Especially in a market that is hardening, Kathy adds, “you want to spend your money wisely and keep your premiums low” she said. “That’s done by taking an active role in managing these key hospital risks.”