shutterstock-120438061b-wlo
16 April 2013 Insurance

Ensuring the fitness of healthcare providers

Healthcare providers in the US face ever greater pressure to provide increasingly complex care to a growing and aging population. This means facilities have to expand beyond skilled nursing to address increasing consumer demand for memory care, home health and adult daycare.

Long-term care facilities are struggling with reductions in government reimbursements and trying to provide high quality care at reduced cost, according to Kieran Dempsey, chief executive of healthcare underwriter Sapphire Blue, a managing general underwriter that provides general and professional liability solutions for long-term care facilities.

These pressures are being compounded by major reforms in the overall system, one of which is a far greater demand for accurate data from auditors. Consequently, there is an ever-increasing dependence on data in healthcare institutions, the use of which brings with it its own risks, according to Dempsey.

“Physicians and healthcare providers are converting to electronic medical records, and large amounts of new technology are working to bridge the gap with old legacy computer systems,” he says.

These issues, coupled with the outsourcing of data processing to cloud solutions in some organisations, are creating liability exposures from the privacy issues emanating from handing medical records back and forth.

“There is an increasing reliance on mobile devices by healthcare providers. Physicians and nurses are essentially walking around with medical records on their phones,” Dempsey says.

“This all increases the likelihood of data being lost or stolen, and significant fines being incurred.”

But there are ways to mitigate these challenges. Sapphire Blue, a subsidiary of Ryan Specialty Group, provides coverage to healthcare providers against data breaches and security issues as well as providing sub-limits for regulatory fines and penalties, and defence for regulatory issues.

“Evacuation is a typical example,” says Dempsey. “Since Hurricane Katrina there’s increasing demand from healthcare providers for coverage against the expense of evacuating a healthcare facility, as well as the liabilities that might arise during that evacuation.”

Reform is driving consolidation in the US healthcare market, where smaller health systems are being absorbed by larger ones. This transition has driven the need to address liabilities that come from acquisition or divestiture, such as extended reporting. Sapphire Blue has developed a new product that addresses these needs, by providing a separate limit for the past liabilities of an organisation being acquired by a new entity.

“It’s individually underwritten,” says Dempsey. “Whereas clients usually buy extended reporting from their carrier, our product is separately underwritten, with a separate limit, and could be far less expensive than to just buy the provisions that are stated in the current policy.”

Looking to the future, Dempsey says that the firm is also exploring what coverages it could potentially provide to accountable care organisations, which will have to estimate the cost of treating large populations. Sapphire Blue could provide a stop loss for those organisations, in order to share in some of the risks they face in pricing care.

“It’s not something that’s typically found, certainly in the professional or general liability setting,” says Dempsey. “It’s a financial product, but it’s coming from the same clients we have on the professional and general liabilities side who are starting to make enquires about these products.”

Sapphire Blue also has a number of other products in its pipeline. In 2013, it will launch several new healthcare programmes to complement its current long-term care facility (led by Beazley). It also now offers an allied healthcare programme (led by Amlin), a small hospital programme (led by Catlin) and a standalone extended reporting programme (separate policy/limit for claims made extended reporting) led by Beazley.

Dempsey says these products are in demand. “Our brokers were requesting options beyond long-term care. Also, many of our current insureds are expanding into different operations and acquiring allied healthcare companies. We want to be able to address this new healthcare exposure.”

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk