Liability costs rising for long term care facilities


Liability costs for long term care providers are expected to increase by five percent and claims frequency is also expected to rise.

This is according to an analysis by the American Health Care Association (AHCA) and Aon Global Risk Consulting, the risk consulting business of Aon.

The 2014 Long Term Care General Liability and Professional Liability Actuarial Analysis provides estimates of loss rates, or the cost of liability to the beds that care providers operate.

The projected national 2015 loss rate, which is a combination of claim severity and frequency, is $2,030 per occupied bed. This means that an operator with 100 beds can expect $203,000 in liability expenses in 2015.

“The need for long term and post-acute care is growing, and increasing liability costs impede our ability to serve those we care for and their families,” said Mark Parkinson, AHCA president and chief executive officer. “This report underscores the importance of delivering solutions so we can continue to provide the highest quality care and improve lives.”

“Once again, we continue to see claims frequency rates grow nationally. Kentucky remains the highest cost state in our annual study, with a projected loss rate of $9,220 per occupied bed. This implies that a nursing home operating 100 beds in the state should set aside $922,000 annually for liability costs. This contrasts sharply with Texas, where the same operator should only expect to fund $32,000 annually,” added Christian Coleianne, associate director and actuary from Aon Global Risk Consulting, who produced the report.

Kentucky’s state constitution prohibits limits on tort recoveries and there are no statutes concerning qualification of expert witnesses, certificates of merit, pre-trial alternative dispute resolution or limits on attorney’s fees. Texas, on the other hand, experienced dramatic loss rate reductions following constitutionally enacted tort reform in 2003. These reductions in loss rates have been sustained in the years following the legislation.

Seventeen states participated in this annual report, which also highlights an aggregate country-wide projection.

North America, AHCA, Aon Global Risk Consulting, Mark Parkinson, Christian Coleianne