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Financial Health

for Healthcare Professionals

Risk Management—When Bad Things Happen to Good People

BY DANIEL CASCIATO BASED devastating if they do ness, conviction, bravery, In a partially insured situation, you
ON THE BOOK SERIES occur. Examples include and love for family. One choose what you want and don’t want
“THE HEALTH OF YOUR WEALTH” hurricanes and earth- catastrophic event can to insure. You control your risk by
BY HOWARD WOLKOWITZ quakes. destroy a lifetime of plan- determining how much risk you will
• Low cost/high proba- ning. Being able to afford keep and how much you will transfer to
Risk is the probability or threat of bility risks are likely to risk and choosing to take the insurance company.
damage, injury, liability, loss, or any occur but will probably on risk are very different Insurance protection comes from dif-
other unwanted occurrence caused by not be devastating if they things. ferent companies offering policies with
external or internal forces, that may be do, such as a sickness There are many risks in different designs, definitions, tradeoffs,
addressed through preventative action. requiring a doctor visit life; how many do you and strengths. Address risk by deter-
As consumers, we purchase insurance or a short-term disability. want to self-insure? mining how much coverage you need,
to protect against the things we fear. People often buy Balance premiums against how long you want coverage for, what
Any time you can mitigate risk with a insurance if they have HOWARD the cost of catastrophic you want to accomplish, and what hap-
check, you’ve made a good investment. experienced loss or WOLKOWITZ damage? Allocate and pens if you want the coverage to go
Over your lifetime, you will experi- damage either personal- budget premium dollars longer.
ence volatile and unpredictable eco- ly or through another to mitigate these risks? Address potential risks with your
nomic climates. It’s more important person. Risk management insurance Reposition premium dollars as your trustworthy advisors team. Specifically,
than ever to make sure your practice will probably be your largest single risks increase and decrease over time? there are four types of risks that may
and personal assets are properly pro- expense. It covers dying too soon, living affect you and your medical practice:
tected. too long, living with a disability, getting Self-Insured, Partially Insured, Risk Management and Premature
While you can’t eliminate risk, you sued, losing something valuable, and Fully-Insured Death Quantify the financial impact on
can prepare for and manage it. income tax leakage. In a self-insured situation, you have your family, if your income is not guar-
Understand the different types of risk, Which risk management mistake will no insurance. You are prepared to anteed to continue when you die.
tradeoffs regarding risk, and how to put have the least impact on you and your absorb all risks as they occur and will Risk Management and Family Health
a price tag on each risk. Your advisors’ family? After all, the purpose of risk fund that loss with your personal dol- Issues Unexpected health issues can
role is to create a cost/benefit analysis of management is to prevent an accident lars. When self-insuring, the cost of affect a family physically, financially
each potential risk. from wrecking your life. being wrong greatly exceeds the cost of and emotionally. Assuming that you
There are two risk categories: Identify the right strategies and solu- being right. will always be able to work and to con-
• High cost/low probability risks that tions to effectively manage the various In a fully insured situation, you have tinue to earn your income has risk.
aren’t likely to happen, but could be risks that arise at all phases of life. Risk insurance protection for every risk with Continued on page 6
management is a sign of maturity, bold- the lowest copay and lowest deductible.

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South Florida Hospital News southfloridahospitalnews.com August 2017 3