Executive Decisions with Mike Creighton
Malpractice rates for nursing homes continue to escalate. Operators are wondering if there's any end in sight. Mike Creighton, an Executive Vice President in the Commercial Insurance Division for Seattle-based Kibble & Prentice, offers some answers.
Q. Why are malpractice premiums rising so fast for nursing homes?
A. The recent dramatic increase is partially a result of the overall increase in commercial insurance premiums. More specifically, the nursing home industry has experienced an upward trend in the frequency or number of claims being presented, and the severity of the increase is due to skyrocketing payouts in verdicts and legal settlements. The reasons behind these larger payouts are debatable, but some of the factors most commonly cited are: the publicity of medical errors, "social inflation" (lottery, athletic contracts, media), disgruntled healthcare staff, a more sophisticated plaintiff's bar and juror views of legal process. Increasing premiums are also the result of strict underwriting and actuarial discipline that is causing underwriters to rate for "all facility" activity, and not just bed counts.
Q. Do you think this upward trend is likely to continue in the near future?
A. Yes, but at a slower rate. It appears that all the recent increases in premiums are catching up with the company payouts, and tort reform appears to be working in some areas. But the marketplace continues to constrict, jury awards are still escalating and insurance company appetites vary by region.
Q. What should operators be doing right now to help keep premium rates as low as possible?
A. Manage exposures and provide quality care. Quality care leads to good surveys -- and good surveys reduce premiums and reduce fuel for future plaintiff suits. Don't over promise in your marketing materials. Use quotes rather than statements. Conduct employee "exit interviews" to prevent disgruntled staff from becoming your next plaintiff's witnesses. Establish a Risk Management Committee. Use it to monitor your facility in various ways such as, asking whether the current acuity level of your facility matches your staff training and capability, reviewing all resident complaints, and examining if resident assessments match care plans.