For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.
Benefits May 5, 2005
Liability Claims Against Long-term Care Providers Skyrocketing
May 5, 2005 (PLANSPONSOR.com) - The frequency of
general and professional liability claims against US
long-term care providers more than doubled and the severity
more than tripled in the last nine years, a new study
found.
Reported by Fred Schneyer
An Aon study ,commissioned by the American Health Care Association, found that the number of claims per year that long-term care operators incur has more than doubled, from 6.2 per 1,000 occupied skilled nursing care beds in 1996 to 13.1 in 2004, and that the average cost per claim has increased to close to $180,000 last year up from the $133,000 in 1996, an Aon news release said.
The Long Term Care 2005 General Liability and Professional Liability Benchmark Analysis found that general liability and professional liability (GL/PL) costs for the long-term care profession have increased 182% since 1996, according to the news release. It also recorded that the annual patient care liability cost for each occupied bed in a long term care facility has grown from $430 in 1993 to $2,310 in 2004.
“Following trends initially observed in Florida and Texas, an alarming number of states are experiencing dramatic increases for GL/PL coverage,” said Theresa Bourdon, managing director and actuary at Aon, in the statement. “In fact, 14 of the 16 states analyzed experienced double-digit annual increases in their GL/PL costs over the past decade, with a majority of them experiencing loss cost trends in excess of 25 percent.”
The most notable states experiencing escalating loss costs are Arkansas, Mississippi, California, Georgia, Alabama, Arizona and Tennessee.
The study, which represents 23% of the total number of long term care beds in the United States, reveals that 2003 tort reform passed in Texas and strengthened by a constitutional amendment, appears to be having the greatest impact among the states analyzed on reducing GL/PL claim costs. GL/PL loss costs in Texas peaked at $6,720 in 2002 but have dropped substantially to $3,390 in 2004, Aon said.
The analysis is based on data from 76 long-term care providers operating around the country. The participants combined currently operate approximately 445,000 long-term care beds, consisting primarily of skilled nursing facility beds, but also including a number of independent living, assisted living, home health care and rehabilitation beds.