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Managing Risk on the Business Side of Medicine: Case Studies and Best Practices

August 26, 2019

Running a medical practice involves making business decisions that can increase the risk of adverse patient outcomes, professional liability, and regulatory violations. Yet, the skills and training that support conscientious, excellent medical care do not always facilitate skilled business decision-making.1,2

medical-practice-staff-meeting-600x400These risk-laden business decisions that contribute to NORCAL Group claims are frequently associated with improving the bottom line or saving time. Other business decisions do not necessarily affect patient safety, but can increase liability or regulatory risk (e.g., entering into a contract without understanding the terms, using misleading marketing materials, or responding to negative physician reviews). Physicians are additionally constrained in business decision-making by ethical and professional expectations.3

If a business opportunity seems too good to be true, it probably is. Vendors and business promoters without healthcare practice expertise may not understand why a business proposal is illegal or unethical. Using advisors and approaching the uncertain business issues head on instead of avoiding them can protect patients and avoid the risk of lawsuits and regulatory actions.

A common thread in many of these cases is misunderstood contract obligations. The cost of having an attorney review a contract is money well spent, particularly when one considers the time and effort it takes to litigate overreaching contractual obligations. Another commonality among these cases is accepting the risk when cutting corners, but then discovering that the damages are far greater than anticipated. It may take time to do something right, but if something goes wrong, there will be evidence of a reasonable process, assuming everything has been adequately documented.

The aim of the resources linked below is to highlight the more common business decisions that have contributed to patient injuries or complicated the defense in NORCAL Group claims. Risk management strategies are not meant to replace legal advice, but instead to prompt consideration of practice policy and protocol-making to avoid the triggers that can result in lawsuits and regulatory actions, and to facilitate satisfactory and effective claims resolution.

More Information About Managing Risk on the Business Side of Medicine

This content from Claims Rx


1. C. Zuzek. “Business Basics for Physicians.” Physicians Foundation. 2014. (accessed 3/26/2017) (resource not available online at the time of publication)

2. Rebecca Fox, MD. “Physicians Need Business Training to Run Their Practices Well.” Physicians Practice. 10/13/2013. (accessed 7/26/2019)

3. Susan Kreimer. “Five Ethical Challenges in Healthcare.” AMN Healthcare. 7/7/2010. (accessed 7/26/2019)

Filed under: Article, Practice Manager, Business of Medicine



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