Reputational Risk in Healthcare
The US healthcare sector is confronted currently with a range of often inter-connected challenges, from the burgeoning demands of a greater proportion of aged and chronically ill patients, through the deployment of technology, to a greater focus on quality of care. A common theme across these challenges is the potential they have to harm the healthcare organization’s reputation in both the short and long term. As well as identifying and assessing key risk factors, it is critical for healthcare providers to strategize and identify where a particular situation or set of circumstances has the potential to turn into a full-blown crisis.
Providers should also consider what resources they require to help mitigate the situation and potentially reduce the reputational and financial impact. Insurance now plays a role as carriers are developing products that can support healthcare providers to access expert support across the life cycle of a crisis, as well as addressing financial impact.
The healthcare sector treats and supports patients, their families and wider communities in the most difficult circumstances, which requires a major investment of trust on their part. Where situations arise which, fairly or unfairly, call that trust into question, providers will often have to invest a large amount of energy, resources and money into seeking to offer clarity and reassurance to various stakeholders, as well as having to deal with the direct impact of the crisis itself.
Some crises will be very limited in duration and the process of managing the messaging and reputation management is likely to be after the event. An example of this would be a violent incident at a hospital. The immediate threat itself will usually have been resolved within a relatively short timeframe, albeit with potentially devastating consequences, but the repercussions could continue for a considerable amount of time.
For example, concerns could arise about alleged failings in the hospital’s security, or accusations be made that the hospital had in some way been given prior warning of the threat that an individual posed, which it had failed to process and act upon adequately. In circumstances where patients and their families have a choice about which facility or network provides care, they may choose alternative providers for what they perceive to be their peace of mind.
Some crises can be more sustained and play out over a period of weeks, or even months. A healthcare provider may find itself having to defend its reputation in the face of a situation that is changing on a daily if not hourly basis, with various stakeholders and media outlets demanding frequent updates and responses. A contamination scenario serves as a good example of this dynamic. It can often take some time to identify the precise nature of a contamination and then to isolate its source and assess the extent of potential spread. By this stage, other patients, staff members and hospital visitors could have been contaminated, or be in fear of having been exposed. Even once the contamination has been contained and dealt with, there are often lingering concerns amongst stakeholders of a residual risk of exposure, which may prompt them to stay away from the hospital, potentially over the long term.
Whatever the crisis, the challenge of responding effectively has been transformed by social media. Issues will rapidly be communicated and amplified on a range of social media platforms, often without the rigour expected from traditional media in terms of establishing base facts and vetting sources. Healthcare providers may also lack proper expertise to deal with a crisis on social media, from either in-house resources or existing external media and PR relationships. Experienced crisis management support can be crucial in monitoring the wider reaction to a crisis and constructing the messaging and positioning in response to it.
About the author:
Wayne joined Beazley in August 2006 as a member of the Management Liability team. He is responsible for underwriting various ML coverage lines including D&O, EPL, Fiduciary and W&H. He has over 20 years experience in the insurance industry, having held roles in broking, claims and underwriting.