Report: LTC liability costs to rise in 2017
A skilled nursing facility with 100 occupied beds can expect to pay roughly $235,000 in liability expenses in 2017, according to the recently issued Aon Global Risk Consulting/American Health Care Association 2016 Long Term Care General Liability and Professional Liability Actuarial Analysis.
The report represents 31 providers and 224,000 long-term care beds, including skilled nursing, assisted living, home health, rehab and independent living.
Study authors project liability costs to increase to $2,350 per bed in 2017, with long-term care loss rates increasing by 6%. That's compared to a 5% increase reported for the past three years.
The analysis included profiles of 17 states, with Kentucky and Florida landing on the high end, with projected loss rates for 2017 of $7,500 and $7,400, respectively. Minnesota had the lowest projected loss rate among the profiled states at $480.
Providers should “understand what drives the potential for high liability costs,” and manage risk accordingly, said Christian Coleianne, associate director and actuary with Aon.
The report also showed the frequency of liability claims to jump 4% in the coming year. That increase reflects a “deteriorating claims environment,” the report's authors said.
The severity of claims was also projected to increase 2% in 2017, with a forecasted severity of $218,000 per claim.
Coleianne said providers can use their organizations' incident tracking to conduct internal benchmarking.
“Increasing claims frequency for an individual provider or location can signal a need to revisit risk management best practices,” Coleianne said. “Consistent tracking of incident reports can lead to insights on the effectiveness of risk mitigation and early warnings on developing risks. This tracking can also be used to compare locations to identify better performing facilities and those facilities where additional risk management attention is needed.”