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Risks in health care vary significantly. They can include issues that relate to patient safety (e.g., medical errors), insurance details, federal regulations and their applications, changes in policies and specifics of using new ones, etc. As risk management in hospital facilities and clinics can focus on a great number of different issues, only a set of those will be addressed in this paper.
Contracts with providers
Hospital facilities work with providers either by employing them or contracting with them. In both cases, it is essential for a risk manager to understand the degree of control that the facility has over the providers, as its liability directly relates to the providers. If the risk manager is unable to identify how the signed contracts will impact the facility’s operations, it can result in lawsuits and other negative outcomes for the facility.
Implied warranties of Article 2 of the Uniform Commercial Code
As Herzig et al. point out, specific attention should be paid to software contracts in healthcare settings (167). If not disclaimed differently, the implied warranty of title and the implied warranty of non-infringement apply to software products. The risk, however, is that the vendor might try to disclaim these warranties once an infringement claim is brought. Therefore, it is important for the risk manager to assess how possible it will be to have “both the warranty and the infringement indemnity” (Herzig et al. 167).
Contract review in healthcare facilities
New regulations and legislation, as well as performance evaluations, can raise questions about the necessity of contract continuation. When reviewing a contract, a risk manager needs to ensure that correct legal names are utilized in the contract, performance measures are set correctly, insurance requirements are specified in detail, confidentiality issues are addressed, the contractor is required to be trained and licensed to provide the specified services, and termination provisions are specified in detail. Without these basic components, the changes in the contract or their termination might become problematic in the future and pose an additional risk (including losses) to the facility.
Limitations of liability
Limitations of liability in healthcare are specific because the liability for death and bodily injury cannot be limited; the same applies to confidentiality breaches. Such state of affairs results in a high number of lawsuits filed against healthcare facilities. Nevertheless, it is important for a risk manager to remember that malpractice claims are valid when patients can prove that the physician was unable to comply with the professional standards, that the breach of duty caused the damage, that the patient has an injury due to this damage, and that a physician-patient relationship existed during the time the damage was done. These factors can help the risk manager assess the facility’s ability to respond to such claims and examine what it can do to prove that they are invalid.
It is important for a risk manager to remember that the gap-filling provisions (from 2-301 to 2-328) can give serious power to the court in enforcing (or not enforcing) contracts. As Clark and Ansay point out, section 2-302 gives the power to the court to regulate (e.g., not enforce) a contract in the case if a party was the victim of the procedural unconscionability (contracting that results in one-sided terms) (291). Such power is usually invoked by the court to protect buyers that are subjected to high-pressure sales tactics and/or do not have a good command of English. As to the gap filler mentioned previously in the paper (2-312), it is important to notice that the courts do not always give effect to warranty disclaimers, which should be taken into consideration if it is necessary to bring an infringement claim.
Clark, David, and Tuğrul Ansay. Introduction to the Law of the United States. Kluwer Law International, 2002.
Herzig, Terrell W., et al. Implementing Information Security in Healthcare: Building a Security Program. HIMSS, 2013.