LTC liability costs to rise by 5% for 3rd straight year

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Long-term care facilities can expect their annual loss rate to increase by 5% over the course of 2016, according to a new report released Thursday by the American Health Care Association and Aon Global Risk Consulting.

This is the third year in a row that the loss rate — the annual amount per occupied bed it costs to defend, settle or litigate claims — has increased by 5%. The loss rates have been steadily increasing since 2010, the report found.

That increase will bump the annual loss rate for long-term care facilities from $2,030 to $2,150 per occupied bed. That means a facility with 100 occupied beds should be prepared to pay upwards of $215,000 in liability expenses in 2016.

Consolidation in the healthcare industry, uncertainty surrounding healthcare reform and solicitation campaigns from plaintiff's attorneys all factor into the increase, the report's authors wrote.

They also projected a 3% increase in the risk that a facility will face a claim in 2016.

The report noted that claims against long-term care facilities that were resolved under arbitration agreements had a 7% lower cost and were finalized three months earlier than claims resolved without arbitration. The report's findings “validate” the AHCA's positive attitude toward arbitration, said Mark Parkinson, the group's president and CEO.

“Arbitration is an important way to help protect the legal rights of patients and their families while providing a faster resolution of disputes,” Parkinson said in a statement. “It also reduces costs for patients and their families, the nursing center, and the healthcare system.”

The report included profiles of 18 individual states' annual loss rate. Kentucky topped the list for the second year in a row, with a projected average rate of $9,820 per occupied bed. Texas, which the authors noted has enacted substantive tort reforms, clocks in at a projected $410 per bed.

The report's findings were determined from nearly 17,600 individual claims from 35 long-term care providers across the country, representing a total of 240,000 beds. That sample represents 17% of the long-term care beds in the United States, and six of the 10 largest providers in the country, report authors noted.