Long-term care providers: plenty of reasons to look over the shoulder

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James M. Berklan, McKnight's Editor
James M. Berklan, McKnight's Editor
As if sobering news weren't in deep enough supply for long-term care providers, we've been reminded again why the threat of getting sued usually lingers in the back of the mind.

Liability loss and severity rates have grown consistently — 4 % annually — over the last three years, according to the latest research. In other words, it's been a lot more expensive to run your place.

The liability costs relative to an occupied long-term care bed will be just a tad under $1,500. That's about a 50% rise since 2005. Extrapolate that over your basic 100-bed facility, and you're talking some serious drag on the bottom line.

But even more daunting is the average claim severity, which is projected to be $168,000 per incident this year. That's up from $109,000 in 2005 — more than a 50% rise.

We first reported last Friday, on these new numbers, which were officially released Monday. If you thought “no news” had meant “good news” on the liability front, well, you were wrong and you're not alone.

Although there is some relatively good news out of the report: Claim frequency has been stable since 2008, according to Aon, which performed its research at the behest of the American Health Care Association. That means some things are helping hold back the usual tidal wave of plaintiff lawsuits.

Study authors make it clear that they think Texas has done it right. Liability climates rely heavily on state laws and the judiciary. Texas has the lowest projected per-bed loss rate this year ($320 — or about one-fifth of the overall average). This stems from its 2003 constitutional reforms that put limits on awards.

Kentucky, on the other hand, has the highest projected loss rate this year ($5,120 per bed). Tort limits are prohibited by the state's constitution, which has led at least one major provider to recently throw up its hands and simply stop doing business there.

If you can't compel tort reform in your state, clearly arbitration is a route you want to consider, research indicates. Arbitrated outcomes are about 21% less costly, which might seem a bit abstract until you realize it amounts to around a $40,000 difference per agreement. Most administrators I know could put smiles on employee faces with that kind of money.

Eight of the 10 largest operators in the country (and 37 overall) were included in the Aon analysis, which covered around 16% of all long-term care beds in the United States. So while this was not all-encompassing data, it was plenty.

More than enough, in fact, for researchers to put another dark cloud over many long-term care providers' heads.

How do the skies look where you work — darker or better? Please comment below, and include why you think things are the way they are today.

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Daily Editors' Notes

McKnight's Daily Editor's Notes features commentary on the latest in long-term care news. Entries are written by Editorial Director John O'Connor on Monday and Friday; Staff Writer Tim Mullaney on Tuesday, Editor James M. Berklan on Wednesday and Senior Editor Elizabeth Newman on Thursday.

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