The most recent published edition of the Aon General and Professional Liability Benchmark for Long Term Care Providers has been released. The report analyzed liability costs for long term healthcare providers in thirteen different states in order to better estimate “ultimate loss rates,” which is the per-bed cost of liability for long term healthcare providers such as skilled nursing facilities. According to Aon, healthcare liability expenses are projected to increase in 2019, by as much as six percent.
The projected national 2019 loss rate, detailed in the report is estimated to be $2,410 per occupied bed. This means that a facility with 100 occupied beds can approximate that their liability expenses in 2019 will be close to $241,000. In 2018, the countrywide estimated loss rate per bed was $2,270, so this is a significant increase in liability costs for long term healthcare providers. One of the biggest factors affecting liability costs is the recent increase in healthcare professional liability claims. Below are some of the reasons for the recent increase in these claims.
A Continuously Shifting Healthcare Industry Landscape
The healthcare industry is constantly changing and shifting, shaped in part by economics and politics. Healthcare providers of all sizes and types are under increasing pressure to deliver high quality care for the lowest cost possible. Decreasing reimbursements make it difficult for many long term care facilities who serve a large amount of Medicare patients. In the meantime, the carriers who insure the facilities have to offer coverage that meets the providers’ expanding liabilities while facing similar economic constraints, which they eventually have to address – usually through higher premiums for healthcare facilities insurance programs.
More Frequent Severe Liability Claims
The frequency of healthcare professional liability claims in general has remained fairly static, however the severity of these claims has been rising dramatically. The average payout for medical professional liability claims has reached an all-time high, with some of the highest settlements reaching more than $100 million in damages. Savvy plaintiff’s attorneys, litigation funding and even the advancements in medical technology are all contributing factors that are helping to drive up the costs of claims.
Batch claims are also on the rise. These types of claims are more severe, and they result from separate but similar incidents that injure multiple patients and are attributable to the same act, error, or omission or to related acts, errors, or omissions. These increasing severity trends are putting more pressure on the insurance market, yet capacity is still widely available and even growing. The biggest impact of increased severity, however is on insurance terms and conditions in high focus areas such as opioids, sexual abuse, and cyber liability.
About Highland Risk Services
At Highland Risk, we use our expertise and experience to provide insurance information and programs to those who serve long-term care and senior living facilities. Since 2007, we’ve been offering insurance and risk management plans designed to help our agents give their clients the ability to achieve continued growth while simultaneously protecting against loss, containing costs and increasing profitability. With offices to serve you in Chicago, Illinois and Phoenix, Arizona, we do everything we can to make your experience with us as professional and transparent as possible. To learn more, contact us at (877) 890-9301.