Assessing Risk in Healthcare Finance Calls for Stewardship
Our industry has pivoted in strategy to focus on value-based care and population health management, prompting vast investments in infrastructure, talent, scale, and innovation to create a new financial and operational risk profile for healthcare organizations. Meanwhile, the regulatory environment ebbs and flows with changes in leadership and policy at the federal and state levels, with different cadences and twists according to each market’s unique characteristics.
At the root of this transformation, healthcare leaders, board members, and physicians are called to be stewards. They must consider what’s been entrusted to them while gauging the risks and benefits of action or inaction in the context of their local communities and organizational strategy. Many have embraced the perspective expressed by Mark Zuckerberg: “In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.”
Against this backdrop, finance professionals are at the center of teams “leading the change,” developing complex risk-mitigation tactics to anticipate possible trends, outcomes, and implications for significant risks to their organizations. As they rigorously execute strategy, they weave in these tactics to create an integrated enterprise risk framework aligned with the organization’s overall strategy and direction.
Among the most common mitigation tactics are cadence, resource allocation, and collaboration. Staged deployment of strategy, or the cadence of change, aligns the pace of internal change and resource consumption with demand and acceptance from the external environment. For example, if we create a solution that payers are unwilling to pay for or consumers are unwilling to adopt, we take on significant risk. A staged deployment, however, creates decision points along the change curve to ensure the appropriate amount of risk supports the time interval.
Another tactic is allocating a specific amount of energy, time, and resources to invest in innovation outside of core service lines. The result is a shared, clearly delineated understanding of what and how much risk the organization can take, for how long, and to what degree, thereby enabling the organization to have a higher risk tolerance within a well-defined, narrow scope and strategy.
The third tactic is collaboration versus creation. Partnerships, acquisitions, and collaboration create value by flexibly and speedily providing access to the expertise, risk-bearing capabilities, scale, and influence needed for success. The delay to market, external competitors, and overall scarcity of resources have lowered past hurdles between organizations related to a need for exclusive control and autonomy.
There’s no one magic answer to the risk question. Instead, it’s a matter of stewardship—and diligently defining it, one organization at a time.