Since health care is one of the fastest-growing segments of the U.S. economy, there is continuous serious pressure to control costs. One extremely important area for controlling costs is managing the various and diverse forms of risk
encountered in the health care delivery
system.
“The risks faced by hospitals and health
care organizations are continuously changing at an incredibly fast pace,” says Philip
Reischman, CPCU, ARe and president of
Gallagher Healthcare, a division of Arthur
J. Gallagher & Co. in Houston. “While
insurance pricing has recently stabilized,
health care providers continue to find
themselves exposed to new risks arising
from technology, new treatment protocols
and the increasing demand on the part of
consumers for a perfect outcome. In this
environment, it is important for providers
to consider all possible avenues for risk
management and mitigating losses while
providing quality patient care.”
Smart Business talked to Reischman
about some of the insurance challenges and
solutions facing the health care industry.
What areas of risk management should
health care providers be cognizant of?
Medical malpractice is the most volatile
and expensive risk to which health care
providers are exposed. This risk can be
partially addressed through proactive
measures to improve the quality of care
and enhance communication with patients
and their families, so expectations can be
managed. The cost of medical malpractice
claims can be financed in the worldwide
insurance and reinsurance marketplace.
Health care organizations also face
claims arising from the management of
their businesses, such as claims against
directors and officers for financial mismanagement or claims from employees
arising out of the work environment.
Finally, health care providers have the
same property and casualty risks as many
other businesses and should procure insurance for their business property, general
liability, auto liability, workers’ compensation and other exposures.
What special concerns should business managers and executives be aware of?
In the health care industry, business managers and executives are experiencing dramatic changes in the legal, regulatory, economic and social climate in which they
operate. Society is expecting high-quality
health care without regard to a person’s
ability to pay. Thus there is increased
scrutiny of all types of health care organizations by various stakeholders that can
lead to increased litigation or regulatory
actions against them. Organizations are
mitigating these risks through the development of corporate compliance programs
and ongoing training and education of all
employees.
How does commercial auto risk for health
care providers differ from other industries?
Procuring auto liability coverage can be
more challenging due to such loss-sensitive
exposures as those associated with patient
transport or hired and non-owned liability.
Whether they are ‘911’ providers, home
health agencies or executive fleet managers, they need comprehensive commercial auto liability programs combined with
comprehensive loss-control support.
How does employee dishonesty exposure differ in the health care industry?
While other industries experience mergers, acquisitions, downsizing and other
forms of restructuring, the rapid growth of
the health care industry exacerbates these
areas even more.
Regulatory uncertainty has increased the
challenge of maintaining a strong system of
internal controls. Likewise, the expansion
of technology has drastically changed the
speed with which fraud can occur.
Health care companies face unique fidelity exposures beyond the theft of money,
securities and cash on hand. Larger thefts
created by white-collar criminals involve
elaborate check kiting or duplicate accounting schemes that are often perpetrated by long-term employees. Employee dishonesty losses can encompass inventory
fraud and manipulation, drug theft,
accounts payable and receivable scams,
computer theft and vendor collusion.
Given these unique and potentially catastrophic crime exposures, it is important to
look beyond traditional ‘package’ crime
policies and evaluate sophisticated loss-analysis and valuation tools.
What are some of the keys to managing risk?
Obtain expert help in developing internal
procedures, programs and service tools to
address the risks. Determine what risks
you can cover internally and which need
insurance coverage. Consider self-insurance and purchased insurance options.
Review not only costs, but stability, financial security, experience and reputation.
Determine what services should be outsourced and which are best handled internally. When claims are made, make sure
that you obtain the services of professionals who will proactively manage the claims
and litigation process in a manner that has
the best potential of reflecting positively on
your business.
PHILIP REISCHMAN, CPCU, ARe, is president of Gallagher
Healthcare, a division of Arthur J. Gallagher & Co. Reach him at
(713) 935-8872 or [email protected].