Liability costs rising 4% annually for long-term care

Gov. Mark Parkinson

Long-term care's medical liability costs have been growing 4% annually, according to a new analysis.

Aon Global Risk Consulting analyzed approximately 19,500 claims from 37 long-term care providers and found that claim severity and loss rates have grown 4% each year since 2009. The frequency of the claims has stayed stable over the past four years, however. The American Health Care Association and National Center for Assisted Living sponsored the study.

Liability costs have risen from just more than $1,000 per bed in 2005 to what is expected to be $1,540 per bed by 2013, analysts say. Claim severity, meanwhile, is projected to reach $175,000 per claim by 2013.

“This analysis shows costs exploding in states without meaningful, effective medical liability reform,” AHCA President and CEO Mark Parkinson said in a statement.

Provider chain Extendicare announced it was leaving Kentucky last month because of what it called a negative litigation environment for long-term care providers. The Aon report subsequently found that Kentucky “has the highest loss rate in this study at $5,350 per bed while Texas has the lowest at $330 per bed.”

Report authors also observed, “Arbitration continues to be an effective cost limiting tool.” Out of 1,449 closed claims, those settled under valid agreements were 21% less costly.

The report can be downloaded here.