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The Rough Notes Company Inc.



July 26
08:46 2018


Healthcare industry response to physician shortage opens opportunities for agents and brokers

Today, more than half of the practicing primary care MDs are over 50 years of age and will be retiring soon. At the same time, the healthcare industry is coping with a large influx of people to treat due to the Affordable Care Act. As a result of these factors, one study projects a shortage of more than 90,000 physicians by 2020—less than two years from now.

To alleviate the shortage, the health-care industry is exploring innovative solutions that offer a chance for nimble small and medium-sized medical providers to form and thrive in an industry that is undergoing significant consolidation.

These smaller practices represent a rich source of prospective clients for independent agents and regional brokers to pursue, but only if they offer value based on an understanding of the nuances of the healthcare business and the evolving risks and solutions arising from these trends.

The answer: APCs

A key trend driving changes in the risk profile of healthcare entities is the increased use of advanced practice clinicians (APCs) to address the looming physician shortage and better manage costs. This trend is giving rise to cost-effective APC-staffed retail medical clinics that reduce demand on local emergency departments and provide prompt, convenient medical care. In addition, APCs are being used in the telemedicine space, increasing access to healthcare for many in rural and underserved areas.

Greater use of APCs can help reduce the liability risk posed by overworked physicians. Such risks include errors due to exhaustion, longer patient wait times, the inability to quickly address worsening medical conditions, and the lack of time to provide preventative medical care.

Yet APCs bring their own risks. Frequent allegations against APCs include failure to diagnose, failure to refer to a supervising physician, practicing beyond the accepted scope of practice, and failure to abide by the elements of a collaborative or standard of care agreement. Moreover, these allegations are almost always accompanied by the allegation of a failure to supervise directed against the physician or healthcare entity.

[T]he healthcare industry is exploring innovative solutions that offer a chance for nimble small and medium-sized medical providers to form and thrive in an industry that is undergoing significant consolidation.

In one lawsuit, for example, a jury awarded $217 million to a man who became paraplegic due to the alleged misdiagnosis of a stroke in a Florida emergency department. Based on an examination and tests performed by an APC, the supervising doctor prescribed a pain reliever for sinusitis and ordered the patient to be discharged instead of treating the patient for a stroke. The next day, the man returned with irreversible brain damage. A deposition revealed the employee to be an unlicensed physician assistant. The lawsuit named not only the assistant but the doctor and hospital as well.

Minimizing risks

Best practices for healthcare entities fall into three main areas: compliance, training, and error response.

Compliance is the most important. The required levels of supervision and prescriptive authority applicable in state statutes and regulations vary greatly from state to state, sometimes even between different counties in a given state. For an example of state differences, in Oregon regulations have been adjusted to allow MDs to supervise more than two APCs, but only in designated high-need areas. In Texas, regulators have adjusted the on-site supervision requirements to allow APCs to practice without direct supervision, but again, only in designated high-need areas.

Given the complexity of regulations by state, a healthcare entity must have someone who is tracking changes and ensuring procedures are in place to comply with them. Larger firms will likely be able to support this function internally, while smaller firms may need to rely on outside services.

A robust training program goes hand in hand with compliance. The program should have a regular cadence and be documented. Policies and procedures regarding credentialing and training should be crafted and adhered to. Mid-level techs should be encouraged to maintain proper habits around continuing education.

Finally, an emerging area of best practice involves what to do when an alleged error occurs. Healthcare entities are experimenting with ways to find the right balance between proactively admitting responsibility and offering some form of remediation versus fighting or deflecting responsibility to limit liability exposure. The definition of “right” depends not just on the amount of potential liability damages but also on company reputation and the moral obligation to respond when a true error causes harm. This is a best practice area to keep watching.

Addressing coverage

Considering the regulatory complexity in healthcare, there is an increased demand for clear and concise contracts. When towers are involved, there is also an increased desire for terms and conditions to be consistent across the layers.

At the same time, more complexity in the variety of care models being used has placed greater importance on the ability of the carrier to craft flexible and customized solutions. The ability, creativity and expertise to manuscript coverage can be a distinct benefit in serving the insured.

Scope of work should be specified for each APC, and coverage should be limited to the scope of work specified by the insured, as many APCs engage in healthcare activities outside their employment. Coverage applications should identify all APCs by name and specialty.

Coverage also is evolving to better address cyber liability, since the healthcare industry has been leading all others in the number of data breaches. Instead of trying to address cyber risk within medical malpractice liability, the best carriers are evolving toward providing a dedicated solution for cyber liability that works in concert with the overall insurance program.

Agents and brokers should use carriers that have specialized expertise in the healthcare sector. These specialists will most likely be aware of the latest regulatory changes and best practices for ensuring solid credentialing and supervision policies.

They will also have specialized products to address the evolving trends in healthcare, including recognition of the use of APCs. At the core of this suite should be a dedicated product for medical malpractice that offers the flexibility to customize coverage. The willingness to manuscript coverage is a good sign that the carrier is confident in its expertise. Ideally, the medical malpractice product can be complemented by a broad range of other products to provide an end-to-end solution. These can include general liability, cyber, property, workers compensation, auto, inland marine (for expensive mobile medical equipment), and in some cases aviation.

Finally, as with any relationship, consider the responsiveness and expertise of the underwriting and claims teams. The underwriter’s ability to ask questions producers haven’t thought of, to customize coverage and present a range of options, and to explain his or her decisions all signal experience. On the claims side, it can take a decade or more to build up the necessary expertise; having a team with a clinical background in a healthcare setting can prove especially helpful. These teams will also have relationships with specialist law firms—not just in healthcare generally, but in specific disciplines such as oncology or perinatology. The ability to bring in the right outside experts can make or break the resolution of a claim.

The author

Bridget Zaremba is assistant vice president and healthcare claims leader for QBE North America. She can be reached at


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