By Phillip Langston, MSHA, MBA
In the past year, most physicians have been so busy with all the complications and changes in approach to care that resulted from the pandemic that they haven’t had time to examine aspects of their practice that aren’t part of the daily work. If you haven’t performed a recent review of the potential threats to your practices’ financial health, I recommend doing that, starting with your commercial insurance plan.
Partnering with an experienced agent who specializes in the healthcare arena can provide you with multiple carrier options to compare while helping you negotiate more favorable terms than some companies will offer to clients who work directly with the carrier only. Let’s take a look at a few of the items my team is focused on for our healthcare clients and the emerging threats that are continuing to impact more medical businesses.
Employment Practices Liability (EPLI)
Employment Practices Liability coverage is probably one of the most crucial components of your entire risk management program. Employment Practices Liability provides access to resources, both financial and legal, in the event of incidents involving the hiring/retention/advancement/discipline of employees in your organization. Healthcare is a people-resource enterprise and your staff members are a central component of the care delivered to your patients. Consider what we have seen with COVID: furloughs, staff reassignments, callbacks, layoffs, reduced hours/benefits, and even some hiring additional staff for testing and vaccine distribution. All of these factors point back to decisions by your senior leadership and can bring allegations of unfair hiring practices or preferential treatment of employees to name a couple of expected scenarios.
The EPLI insurance industry is already seeing these types of issues and is preparing for an avalanche of more claims regarding these employment decisions. We are already seeing 15 to 25 percent premium increases on these renewals due to the average total claim costs for these EPLI cases, which range from $250,000 to $1,000,000. Review these options with your agent for your current EPLI coverage and how it is currently structured within your policy. We often see minimal coverage amounts of $50,000 to $75,000 as a token limit added to the General Liability policy. With the awards and damages continuing to rise from employment-related claim’s much higher limits ($1,000,000 or greater depending on your organization’s size), we recommend providing significant resources to address and resolve these type of matters.
Cyber Liability
Cyber attacks on businesses have tripled over the last year as every organization has grappled with protecting their workforce’s health while maintaining as much productivity as possible. It’s likely that some of your employees have been working remotely or accessing critical data away from your office, maybe even through their own personal devices. This complicates the ability to maintain the highest level of IT security needed in our industry, and striking a balance between ease of access and security is often compromised for convenience.
When we think of cyber attacks, we usually imagine the hacker who worms his way into our data system and extracts thousands of patient records to sell to the highest bidder on the dark web. This scenario still exists but most cyber attacks currently are aimed at disabling your computer network and extorting money from your organization to return to normal IT operations. Ransom attacks and ‘bricking’ are now occurring at rate of two-to-one and many businesses are forced to pay the hackers to release their network from being held hostage. Your IT vendor partner is a key component of warding off cyber intrusion through ransomware, but we still see most of these lockdowns occurring when someone innocently clicks on links from emails or responds to what seems like a legitimate request to enter username/password information.
Backups are crucial to manage and test on a frequent basis, but all of this creates additional expense as well as the need to bring in legal experts to defend your organization. A Cyber policy with $1,000,000 limits provided through one of the leading carriers in this ever-emerging field will add the protection and specialized resources you need to overcome these attacks. It might not be a question of ‘if’ but rather ‘when’ you will be the victim of a cyber/data attack so ensure you are adequately protected. Google ‘recent cyber attacks’ and you will see the names of some large corporate giants that have been impacted even though they have substantial resources to fend off cyber thieves.
Professional Liability (including Medical Malpractice)
Coverage discussions for medical businesses always seem to involve Medical Professional Liability coverage or Malpractice coverage. When you dive into the details of these policies you will often find a very narrow definition and provision of coverage for those acts specifically related to medical care delivery and assessment, with less coverage for some of the other risks doctors can face. For example, we often see just a bit of coverage for medical license investigations, some cyber coverage and minimal general liability coverage without any response to the broader concerns outside the practice of medicine.
It’s an important distinction to recognize when your owners are also the lead medical providers for the business and to determine in what capacity they are acting for each decision made. As a member of the management team, you should understand exactly how your professional actions and decisions for the group are protected by the coverage you have in place. Directors & Officers policies will respond and address a variety of issues protecting the business entity and the leadership in contracting and the general day to day management of the business entity but will not address anything related to the provision of care.
In today’s aggressive legal environment we have seen a strong surge in the number of claims filed against medical providers for negligence and/or missed diagnosis of patient’s conditions. Many of the medical malpractice policies in the market today contain very strict language centered around the timely reporting of all types of claims and will not provide coverage unless these thresholds are met. It’s important to understand how your specific policy is designed to address these timely reporting mandates. Each carrier is different and the market continues to experience sharp increases in premiums even for those providers who have never had any claims filed against them. We will continue to see these higher premium rates for the foreseeable future as the verdict amounts awarded for medical malpractice cases continue to expand with now almost six percent of all awards in excess of $1000,000, the greatest percentage ever recorded.
With all of the steep claims increases being experienced across the medical professional liability space, we are seeing consolidation of the available carriers willing to continue to offer coverage with some entirely pulling out of the market altogether and those who are willing to provide coverage aggressively tightening their underwriting requirements and being more selective in choosing which groups to extend offers of coverage to. This is not to say you are limited to only a handful of options and there may be a specialty carrier who provides the broadest coverage language at the best terms and conditions. This decision is definitely not all about the premium price any longer and your agent will help guide you through the many factors to consider in evaluating your options.
Taking time to review your current coverage plan takes some focused effort and diligence to set it as a priority, as the insurance world can be very confusing. But making the time to walk through different scenarios will help to clarify exactly how your policies will respond to different crises before they are thrust upon you. Ask for help. You may find that you are well prepared with only a few minor adjustments needed. Or you may find that for several renewals now, you have perpetuated a strategy that would not fully provide the coverage that is needed to maintain an aggressive defense for the increasing risks of operating a healthcare delivery organization. Either way, it’s time well spent in much the same way we continue to change the oil and rotate the tires on our vehicles that we use every day.
Thank you for all you do to ensure that your patients are provided the healthcare services they need to lead more fulfilling lives and please let me know if our team can ever assist you on your journey.
Phillip Langston brings more than 20 years of healthcare management experience to his role as the Healthcare Practice Leader for Assured Partners of Alabama. His focus is to partner with various medical enterprises to provide creative solutions to comprehensive risk management strategies to positively impact patient care outcomes.
He can be reached at phillip.langston@assuredpartners.com
205-919-9094
