Captive questions sparked by healthcare acquisition frenzy


The current acquisition frenzy in the healthcare captive sector means that decisions must be made about whether new additions will be brought into the captive arena or covered commercially.

That is the opinion of a panel at the Cayman Captive Forum which discussed the impact of the Affordable Care Act on the healthcare captive sector.

As medical facility groups prepare to take new patients into the system, there has been an acquisition frenzy for physicians.

“We are seeing huge competition in New Jersey to get physicians and as a risk manager, I need to understand the risks of their practice and their claims,” said Alyssa Verderami, director of risk management at Saint Peter Healthcare Systems.

“It is really a case of asking the right questions and covering it in our employment agreement because you need to protect your captive,” she said.

Looking beyond healthcare risk, the panel also considered how a successful captive could be used to cover non-traditional risks.

Saint Peter is considering bringing directors and officers (D&O) and regulation risk into the captive, while Health Quest is also looking at cyber risk. But Melanie Lakin from the Hudson Valley group, warned about using the captive as a simple solution.

“If you have a problem in an area, such as employment liability then fix it first with your HR department, because it might be an education issue. Don’t just put it into your captive, because your captive is only as good as the risk you are putting into it.”

Industry concerns on ObamaCare regarding uninsured patients have not materialised to any great extent, however there is still a degree of caution about how the landscape may look after the US election.

“Both sides have indicated that they want some kind of change so we are getting prepared in case our captive needs to react,” said Lakin.

The biggest difficulties arising for Health Quest have been issues with the electronic medical record system, she said, which has not been producing consistent reports.

This leads to problems when getting experts on the stand in front of juries, because they don’t understand why the medical records should look any different, added Lakin.

Mergers & Acquisitions, Cayman Captive Forum, Melanie Lakin, US