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Richard J. Willetts, CPCU, ARM Program Director Addiction Treatment Providers Insurance Program. ADVERSE DRUG EVENT LIABILITY AND INSURANCE CLAIM TRENDS IN OTPs. Malpractice Claims and Lawsuits are almost always settled out of court
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Addiction Treatment Providers Insurance Program
Malpractice Claims and Lawsuits are almost always settled out of court
2. Increased SEVERITY of outcomes and settlements.
Insurance pricing and availability experiences cyclical swings primarily based on the level of capital or surplus in the market that is available to pay claims.
Surplus can be depleted slowly by a general increase in overall claims and loss costs versus premiums collected, or it can be depleted rapidly by a catastrophic event(s).
“Hard Market” is characterized by decreased competition among carriers, higher rates, more stringent coverage terms and conditions.
“Soft Market” is characterized by increased competition among carriers, lower rates, and broader coverage terms and conditions.
This graph highlights the last 3 “hard market” cycles, and shows that we have been in a soft market since 2002. The 2009 results are expected to continue lower.
This graph shows the sharp drop in ROE (return on equity) for insurance carriers in 2008. The 2009 results are expected to continue to worsen. How long will carriers lose money until the overall market starts to swing from soft to hard?
OTPs are considered “sub prime” risks by insurance carriers primarily due to the increase frequency and severity trends, which cannot be offset by higher rates during a soft market.
OTPs and other sub-prime risks will be the first industries to feel the effect of the insurance market turn as some carriers abandon the segment, remaining carriers increase rates and limit coverage.
Individual OTPs have no control over the insurance market cycle, but they can and should deploy risk management strategies now to make themselves more attractive to insurance carriers when the market hardens.
By implementing RM strategies now, an OTP can secure even better pricing and terms during the remainder of the soft market. They can also expect to have a better track record of loss experience and be in best possible position to withstand the inevitable hard market.
INSURANCE CLAIM EXPERIENCE WITH OTPs AND HEALTHCARE PROVIDERS IN GENERAL, CLEARLY SHOWS THAT
PROVIDING QUALITY CLINICAL CARE
IS THE MOST EFFECTIVE WAY TO MANAGE YOUR LIABILITY EXPOSURE.
in a Healthcare Provider
(the four “C”s)
. Stay CURRENT with scientific and clinical information about methadone and best practices in OTPs.
COMMUNICATE with patients (e.g. informed consent), family members, and other healthcare providers.
A good Risk Management Culture starts at the top and permeates an organization from top to bottom.
Consider putting a key employee in charge of risk management for your OTP---provide top level support for this person.
Continuous training and reinforcement of the rules and guidelines of your organization are critical for all clinical staff.
Strive to provide top quality clinical care and pay close attention to the basic risk management tenets outlined. Make this a source of pride in your operation.
You can’t avoid risk completely,
But you can manage it.