This article was originally published in San Francisco Business Times.
Digital health care companies are leading the revolution in consumer-centric healthcare, but the promise of breakthrough innovation and better patient outcomes won’t be fully realized without a systematic approach to risk identification and management.
Made possible by low-cost technology, abundant venture capital and the Internet of Things (IoT), digital healthcare companies are creating new business models and service delivery options. But in reshaping the industry, digital health care companies – along with their venture, IT, legal and HR partners – must understand the risks to fully realize the opportunity.
Navigating the overlapping areas of risk
Marsh & McLennan Agency has recognized the seismic shift occurring in the healthcare industry. Management teams of digital health companies need to holistically address risk, including the four major types we are seeing with increasing frequency.
Patient Injury represents both significant financial and reputational risk to digital health companies. Injuries can occur for a variety of reasons – a technology failure, a hack, or human error. Because technology powers the delivery and support of many types of healthcare, there are numerous ways in which claims can be made.
Privacy and cybersecurity are among the most daunting risk management challenges for digital healthcare companies. Personalized health data requires the highest level of security and privacy. The increasing number of data breaches, ransomware and DDoS attacks – and the disastrous financial and reputational consequences resulting from them – demand that digital healthcare companies exercise extreme caution in managing medical and non-medical data.
Regulatory risk is particularly complex for digital health companies. Complying with federal, state and local regulators – each with different mandates and priorities – can expose organizations to increased risk and expense, while also impacting their business model. The specific risks include complying with myriad state licensing and practice requirements, meeting the FDA’s Digital Health Software Precertification (Pre-Cert) Pilot Program, managing multiple government payers and uncovered claims, addressing state medical board actions, reconciling billing errors or omissions, and complying with HIPAA.
Technology risk is driven by the accelerating pace of innovation. There is an ever-present danger of systems failure. With every new technology update comes the possibility that a client’s network could go down or malfunction, which could negatively affect the delivery of care. If your firm is responsible for an outage or downtime, you will be liable for the related damages and expenses.
Learn how Marsh & McLennan Agency’s digital health practice group helps organizations see around the curve and not only manage the existing risks, but future risks as well.