RISK MANAGEMENT MITIGATION & INSURANCE FOR PRIVATE PRACTICE

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2 RISK MANAGEMENT MITIGATION & INSURANCE FOR PRIVATE PRACTICE Chris Mariani AMA Queensland Insurance Solutions

3 Agenda 1. Risk Management fundamentals, some tools and strategies you can use. 2. Common private practice risks 3. What does a private practice insurance program look like? 4. tips and traps

4 GENERAL ADVICE WARNING The information provided in this presentation is of a general nature and does not take into account your objectives, financial situation or need. Please refer to the relevant Product Disclosure Statement before purchasing any insurance product. AMA Queensland Insurance Solutions is a trading name of KSLR Pty Ltd, a Corporate Authorised Representative of Insurance Advisernet Australia Pty Limited, AFSL Corporate Authorised Representative No: Chris Mariani, Authorised Representative No

5 What s risk management really about?

6 Formal structure to risk management Risk Management standard AS/NZS ISO 31000: 1. establishing the context 2. risk identification 3. risk analysis 4. risk evaluation 5. risk treatment 6. communication and consultation, and 7. monitoring and review

7 Risk Audit - Privacy RISK QUESTION: Dear doctor, can you please provide me a copy of your Privacy Policy, how do you make is accessible to patients and tell me about your processes to protect patient privacy? ANSWER: The answer usually falls into three categories

8 Risk Audit - Privacy A. What s a Privacy Policy? B. We have one, but I ve no idea where it is or when we last looked at it. The PM is responsible for privacy. C. We recently updated our Privacy Policy, it s on our website & also a hard copy at reception. We have detailed processes & it s a regular item at management meetings and it s included in our staff induction & training process. We re all responsible for patient privacy, but Mary takes the lead as the appointed Privacy Officer.

9 Risk Audit - Privacy Do you have a complying Privacy Policy? - Needed from $0 income if a health business - Top draw in reception, better still - on your website - Privacy Fines up to $1.7m for entity and $340k for individuals - Patient info collection form Dear patient, we take your privacy seriously. Please speak to us if you have any queries or concerns and our Privacy Policy is available from reception or on our website.

10 Risk Register? What are the risks? What are our objectives? What controls are in place? What is the residual risk

11 Risk Register heat map

12 Benefits of a Risk Register Summary of key identified risks and how these are managed Shows commitment to risk management and practice improvement Helps determine what risks should be insured

13 Incident Register Incident No Discovery Date Date incident occurred Brief Description 1 1/6/15 1/6/15 Hard copy patient record left unattended at reception has disappeared. Search of rooms conducted Person who discovered Receptionist

14 Benefits of an Incident Register Single source of truth even when people leave Identifies systemic issues needing management action and opportunities for process improvement Shows commitment to risk management and practice improvement Helps determine what incidents need to reported to insurers.

15 Feeds into your Incident Register 1. Monthly staff survey Survey Monkey Has any patient made a complaint? Are you aware of any near misses or adverse events? Do you have any suggestions how we can better run the practice, improve processes, tools needed etc.? General feedback and whatever else you want to ask 2. Patient surveys IF YOU ARE GOING TO DO IT IT THEN REQUIRES MANAGEMENT ACTION!!

16 It starts with the practice structure Patient Billings $ Dr Smith Practice Owner Bills patient sole trader Retains X% as drawings Dr Jones Room Rental Bills patient sole trader Retains X% as draws Dr Lee Room Rental Bills patient sole trader Retains X% as drawings Smith Medical P/L (service entity) Receives x% from doctors Pays staff, rent, expenses Smith Family Trust (Owns rooms and investments) Trustee = Smith1 P/L Receives rent and other income

17 Common Private Practice Risks 1. Medical negligence claims practice/staff/doctor 2. Practice Premises risks Slips & trips Loss or damage to premises, fit-out, equipment Loss of revenue 3. Management & Employment issues Responsibilities as a director Employment liability Employee theft Employees injured 4. IT and systems Cyber attacks, privacy breaches, regulators Lost revenue & costs to get data back

18 Medical Indemnity (doctor/entity/staff) Workers Compensation Business Package Management Liability Cyber risks policy Insurance Program Matching risks to insurance cover: 5 Pillars IMPORTANT: This is not a comprehensive list of risks or insurance policies available, but provides an overview of some of the major risks and policies.

19 Overlapping covers Medical Indemnity - doctor Cyber Risks Medical Indemnitypractice Management Liability

20 Premiums? Medical Indemnity doctors? (speciality dependant) Practice Indemnity - $1,000-$3,000 Management Liability - $1,500-$2,000 Cyber risks - $1,500 Business Package - $1,500 - $3,000 Workers Comp -.5% of employee wages Premiums depend on various factors such as Policy limits, declared values, turnover, staff numbers, location, construction, The above are average premiums for a start up practice.

21 When to insure? The choice to insure could be from: Legal requirement E.g. a medical practitioner must hold medical indemnity Employers must have workers compensation Contractual requirement E.g. lease agreement requiring public liability Protection from significant financial loss

22 RISK Common risks in private practice Case study examples

23 Contracts Insurance Requirements section - E.g. public liability in lease agreement Indemnities section/clause Tips: - Contractual indemnities generally excluded. The insurer is not liable for any liability that the insured assumed by contract, waiver, guarantee or warranty, unless liability would have attached in the absence of such contract - Use a broker who can review your contracts and provide advice - Aim for you re responsible for your mistakes & I m responsible for mine - Understand commercial risk/performance guarantees

24 Risk - buying an existing practice Unknown incident (failure to diagnose) occurred in 2008 Dr Smith buys practice in 2013 Becomes a known circumstance in 2018 $5m demand made against the entity. Error by locum & they can t be found.

25 Risk = reliance on rooms GP medical centre Significant water damage - storm water drain blockage Closure for 2 months Insurance claim total ~$700k: 1. Damage to property ~$100, Loss of revenue: ~$600,000.

26 City Contractor dumped The North West Star Risk = Patient Privacy Sep 21, The records found dumped at the household waste area of the tip belonged to the practice... On 12 March 2014, the Privacy Act was amended. It is now possible for a $340,000 fine against individuals and $1.7m for the entity. Privacy Policy = compulsory for medical businesses Fines cover = management liability, Patient claim = medical indemnity

27 Risk Practice Hat v Doctor Hat Healthcare giant must pay $300,000 in HIV test mix-up May 21, ewra.html#ixzz2icy3fOVe THE corporate healthcare giant founded by Australia's richest GP has been ordered to pay almost $300,000 in damages to a man who was infected with HIV after his former partner was wrongly given the all-clear by a doctor at its Bondi Junction medical centre. The man would not have contracted the virus if the centre's administration staff had updated his then-partner's contact details and sent a recall letter to her current address, Justice Megan Latham said in the NSW Supreme Court yesterday. Justice Latham ruled yesterday that Idameneo should pay 40 per cent, finding both the reception and in-house pathology staff failed to follow the company's policy and procedures manual, and check the patient's address and phone number.

28 Russian hackers hold Gold Coast doctors to ransom, Tue 11 Dec 2012 Risk Cyber risks The hackers are demanding a ransom of $4,000 to decrypt the sensitive information held on a server at the Miami Family Medical Centre. IT security expert Nigel Phair says this latest attack is a "wake-up call" with businesses around Australia hacked five to 10 times a week. The Miami Family Medical Centre will continue to operate, even though Mr Wood admits it is "very, very, very difficult" without patient records. Mr Wood warns other businesses to "check your IT security and don't leave backups connected to servers ".

29 Risk commercial contract Individual structure Group Structure

30 Risk - DIY Lodged claim dispute over wages Claim declined - wages exclusion Paid circa $45,000 in legal fees Engaged advice and within a few days insurer reversed decision and paid the $45,000 The doctor should have lodged the claim as dispute over the status of a contract

31 Risk management actions and tips Take a formal risk management approach Risk audit what are my key risks? Risk Register, Incident Register Survey monkey regular staff process Documentation/processes Privacy Policy, Policies and procedures manuals systemize it Employment contracts / independent service contracts / OH&S Risk Management is important You can t insure your reputation or medical registration

32 Risk management actions and tips Before spending $, can I get advice for free: Privacy Policy, templates, contracts, resources and legal advice AMAQ, College, MDO, AAPM, Insurance broker Get advice on contracts Indemnity clauses you re responsible for your mistakes and I m responsible for mine Understand performance guarantees and commercial issues Seek legal and insurance advice Lease, room rental, independent service contracts

33 Risk management actions and tips Financials controls Employee theft is a common event Segregation of duties, 2 signatories, Audits, master vendor list Security Physical protection deadlocks, alarms, fire protection Data security backups, cyber security review, experts Structure Do you understand it, can you draw a diagram of the $ flow Asset protection & wealth creation

34 Risk management actions and tips Get a great practice manager They should be your internal risk manager On insurances Insure the stuff that matters law, contract, major risks Name the right entities Get advice, avoid online. beware General Advice = No Advice

35 CONTACT DETAILS AMA Queensland Insurance Solutions Chris Mariani Direct: