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It’s All About Content

Sleeker. Bolder. More responsive. In a word - immersive.

A more immersive reading experience? We’re glad you asked. A cleaner layout and typographic design keeps your focus on the content. The “infinite scroll,” simplified navigation and Google search make finding interesting articles easier. And no matter your screen size – PC, tablet or phone – the site is optimized to ensure the same great experience.

The benefits of the site are mostly self-evident. But a few features are worth highlighting to help get you started:

Article Pages

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Current Section: Displays the issue, topic, author or section you are currently viewing.

Content Ribbon: Lists all of the articles in the current section. Easily browse the articles and click on any tile to load that article into the infinite scroll.

Infinite Scroll: Read each article from top to bottom without having to click to continue. The next article loads automatically so you can continuously read/browse an entire issue or section – similar to how you read a print magazine.

Full Screen: Click the arrow to hide the content ribbon and create a clutter-free article reading experience. Also handy for smaller screens or tablets.

More Ways to Explore

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Nav Bar: Click the gray bar to reveal several filters, sections and topics that tailor articles to your interests. 

Authors/Topics: Reading an article you like? Click on the author’s name to see all of their content or click on one of the topics to load that section.

Google Search: Still not finding what you want? The search bar slides out to help you find it.

Responsive Design (Mobile Optimized) 

The site utilizes a responsive design. That means the layout automatically adjusts to different screen sizes. You can see the technology in action by adjusting the size of your browser window. It’s pretty cool.

But responsive design is more than just a neat trick. It ensures that our new site looks great and works well on all screen sizes. Call us a website or, if you like, a web app – the site combines the benefits of the free and open web with the elegance of an application.

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More to Come

But we are not done yet. The site enables us to integrate new content types into our stories. Over the next year, you will see more charts, graphs, infographics, videos, photos, etc.

Be sure to sign-up for one of our newsletters to stay abreast of all these developments as well as the latest articles and content we publish.

In the meantime, we would love to hear your feedback about the new site or anything else we do. Write to us at riskletters@lrp.com.

Risk Scenario

The Plague of Baltimore

A hospital group grows by acquiring medical talent. But growth comes with unanticipated risks.
By: | January 7, 2014 • 8 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

A Disturbing Email

Carley Fitzpatrick flipped the line and the blueberry-colored, 7-inch, Texas-rigged rubber worm sank, almost motionless, next to the sunken tree that projected from the near bank of Lake Rita.

Scenario_PlagueOfBaltimore

She inhaled and exhaled deeply, balancing herself on the wooden seat of the canoe. Must be calm, she reminded herself, must be very calm and settled to do this right.

Carley looked away from her target, to where the sun was banking down below the green crest of trees on the ridge above the lake.

She twitched her rod tip once; paused for several seconds and then twitched it again. Then came the long, strong pull that signified a largemouth bass had sucked in the artificial worm.

She hooked him, netted him, took a brief admiring glance and put him back in the water unharmed.

Paddling back to her SUV, Carley remembered that she wanted to check back in with the office before going home. As the COO of Blue Mountain Regional Medical Center in York County, she was a key player in the hospital group’s expansion plans, putting in extra hours as it built itself into a larger system.

With the outdoorsy Central Pennsylvania lifestyle as a draw, Blue Mountain was successful in drawing talent from Washington, D.C., Philadelphia, Baltimore and Harrisburg. Making the switch from freeways and subways to the countryside dotted with horse farms and wineries was not that hard a sell.

With health care reform on the march, there were a number of smaller, more urban practices that were more than willing to have their assets and liabilities acquired by a hospital system. Health care reform just created too many uncertainties.

Back at the office, Carley opened a disturbing email from the office of Blue Mountain’s general counsel.

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Scenario Partner

The email said that 12 hospitalists in a Baltimore practice that Blue Mountain had acquired six months ago were now defendants in a class-action lawsuit stemming from a hospital-acquired infection outbreak at a Baltimore teaching hospital.

The outbreak had been dubbed “The Plague of Baltimore” by the local press.

“Sending this to you as an FYI, we’re not too concerned about it at this point,” Blue Mountain’s youngish general counsel had typed to Carley in the email.

“I’m not so sure that we shouldn’t be worried about it,” Carley said to herself under her breath as the sky outside her office window darkened into nightfall.

“Can you follow up with me on this or direct me to a copy of the lawsuit?” she wrote back to the general counsel.

Carley had been around long enough to know that Baltimore, along with some other East Coast cities like Philadelphia, fell into the category of  legal venue where judge and jury verdicts in personal injury cases could balloon far beyond what might be considered reasonable reparation.

The general counsel may have been good on paper at Dickinson Law, but he just might have a lot left to learn here in the real world.

Carley made a mental note to keep the “Baltimore 12” on her radar.

Poll Question

With the health care practices that you have acquired, how well versed are you on the prior acts exposures these physicians may carry with them?

View Results

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Look Back in Anguish

With the fate of the “Baltimore 12” never leaving her consciousness for long, Carley called a meeting with Blue Mountain’s director of risk management and insurance, Nathan Haines.

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“I just want to be sure,” she said, explaining why she was asking Nate to review with her, yet again, the hospital’s professional liability coverage.

“No problem,” Nate said.

“We’ve got a $5 million self-insured retention and a $10 million excess tower on top of that,” Nate said.

“Which means what again?” Carley said.

“Let’s just say one of our doctors gets sued for medical malpractice and the jury finds against him for $1 million,” Nate said. “We’re self-insured for $5 million, we pay that $1 million out of our pockets.”

“Okay,” Carley said. “But what if …”

Nate knew where she was going.

“If we saw a loss of $6 million,” he said, finishing her thought, “which would be highly unusual, we’d pay $5 million out of pocket and the insurance company would pay $1 million,” Nate said.

“Why so much retention?” said Carley.

“Eh, it’s kind of a balancing act,” said Nate. “You’re trying to offset premium costs by taking some of the risk on.”

“I’d hate to be a risk manager,” Carley said to herself as she left the meeting with Nate.

———

When the “Baltimore 12” case went to trial, the full brunt of what Blue Mountain was facing became more evident.

It turned out that two deaths were linked to the hospital infection outbreak in Baltimore. One of the fatalities was David Brandt, the COO of a well-capitalized, up-and-coming tech firm with naval engineering connections based in Annapolis. Brandt had gone into the Baltimore hospital for knee surgery and hadn’t come out.

The other victim was Anna French, a striking attorney and mother of three who underwent an emergency appendectomy, acquired an infection and died a lingering, painful death.

The framed photographic portrait of a smiling Anna with her equally photogenic husband and children taken on the oak-leaf-speckled lawn of their family home in October was all the jury needs to see.

Three jury members, two of them male, wept openly. The pain and suffering amount decided on was in the tens of millions.

The lifetime income loss of the deceased COO came in at the very high end as well. Aggregate pain and suffering and loss of income determination from the juries in those two cases alone totaled $45 million.

Poll Question

Does your insurance program cover prior acts of the physician practices acquired by your group?

View Results

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Woulda’, Coulda’, Shoulda’

When Blue Mountain acquired the assets and liabilities of the Baltimore 12, trout fishing and sipping Cabernet Franc next to the fields it was grown in weren’t the only draws.

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To lure that talent, Blue Mountain had agreed to cover the physicians’ prior acts as part of their employment benefits.

Talking to Nathan Haines, Carley got yet another insurance lesson.

“We’ve got $20 million in liability in connection with these 12 hospitalists from Baltimore,” Nathan told Carley and the CFO, Fred Rutter, in a closed door meeting on a cold January morning.

“That’s pain and suffering, loss of income and attorneys’ fees,” Nathan said.

The room was silent for a minute.

“What about an appeal?” Fred said just to say something.

“From what the attorneys for the carrier tell us, that would be throwing good money after bad,” Nathan replied.

“Should I go on?”

“Sure,” Fred said.

“The physicians are covered under our limits,” Nathan said. “When we hired them, we didn’t negotiate the option that they have individual limits, so their liabilities hit our entire program,” Nathan said.

“Which means?” said Carley.

“Which means that we are looking at $10 million in uncovered liability, with the carrier picking up the other $10 million,” Nathan said.

———

In the months after that conversation, Blue Mountain Regional Medical Center went from an organization that was expanding and pervaded by a sense of optimism to an organization in retreat.

The aftermath of the “Baltimore 12” jury verdict was that Blue Mountain was going to have to scrap to find a professional liability insurance carrier for the coming year. It was also going to have to take an even higher retention than it had previously.

It was also looking at its additional newly acquired practices with a jaundiced eye.

Attempts to renegotiate professional liability indemnity arrangements after the fact were, to say the least, a point of contention with the doctors’ groups.

As she drove to work one morning the following May, Carley cast a doleful eye out the window to Lake Rita.

She would have liked to be jigging for crappies on the lake, instead of putting in her seventh straight 11-hour day.

The future of Blue Mountain Regional was highly uncertain, having looked so bright just a year or so ago.

“Maybe I should start looking for a job in Baltimore,” Carley said to herself as she drove into the parking lot at work.

Poll Question

Are you aware that you can establish individual liability limits for the physicians in your organization?

View Results

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Summary

A hospital group seeks to grow by attracting medical practices from around the Middle Atlantic region. But its plans backfire when its insurance coverage is misaligned with the professional liability exposures that some of the acquired physicians bring into the company.

1. Know what you are buying: The Blue Mountain Regional Medical Center erred by not fully understanding the professional liability risks carried by the physicians in the practices it was acquiring.

2. Tailor your coverage: As a hospital group looking to expand by acquiring regional practices, Blue Mountain needed to tailor its coverage to better mitigate potential professional liability risks that were being brought on board. Covering all prior acts with no individual limits was clearly not the way to go here.

3. Risk management needs to drive the bus: Blue Mountain clearly did not have risk management integrated into its acquisition and growth strategies. Risk management should have had more of a voice in what coverage physicians were being offered as a part of their benefits packages.

4. Know your legal venues: The risk to the hospital group in this scenario was compounded by the legal venue the professional liability was being adjudicated in. Professionals being brought in from a legal venue that has a reputation for outsized settlements should be examined with extra care.

5. Beware of the unknowns: The Affordable Care Act has placed health care risk management in flux like never before. Any growth or profit strategy that does not take this vast uncertainty into account is in all likelihood a flawed strategy.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.
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Sponsored: Rising Medical Solutions

Beware of Medical Hyper-Inflation!

Workers’ comp medical costs are spiking in hidden pockets across the country.
By: | August 4, 2014 • 5 min read
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Historically, medical inflation rates nationwide have been fairly consistent. However, data is now showing that medical inflation is not a “one size fits all” phenomenon, with hyperinflation spikes occurring in some locations…but not others.

This geographical conundrum means hyperinflation can occur as narrowly as two hospitals having dramatically different charges on the same street in Anytown, USA. So, uncovering these anomalies is akin to finding the proverbial needle in a haystack.

“In recent years, workers’ compensation saw claim frequency decline, while severity rates went up. This basically means that increased job safety has offset increased medical costs,” explained Jason Beans, CEO of Rising Medical Solutions, a national medical cost management firm. “So, whenever a client’s average cost-per-claim went up, it was almost always caused by catastrophic, outlier-type claims.”

But beginning in 2013 and extending into 2014, Beans said, things changed. “I’ve never seen anything like it in my 20-plus years in this industry.”

SponsoredContent_Rising“Our analytics made it very clear that small pockets around the country are experiencing what could only be described as medical cost hyperinflation. The big spikes in some clients’ claim costs were driven by a broader rise in medical costs, rather than catastrophic claims or severity issues.”
– Jason Beans, CEO, Rising Medical Solutions

Data dive uncovers surprising findings

On a national level, most experts describe medical costs increasing at a moderate annual rate. But, as often is the case, sometimes a macro perspective glosses over a very different situation at a more micro level.

“Our analytics made it very clear that small pockets around the country are experiencing what could only be described as medical cost hyperinflation,” explained Beans. “The big spikes in some clients’ claim costs were driven by a broader rise in medical costs, rather than catastrophic claims or severity issues.”

This conclusion is supported by several key data patterns:

  • Geographic dependency: While many payers operate at the national level, only relatively small, geographically clustered claims showed steep cost increases.
  • Median cost per claim: The median cost per claim, not just the average, increased greatly within these geographic clusters.
  • Hospital associated care: Some clusters saw a large increase in the rates and/or the number of services provided by hospital systems, including their broad array of affiliate locations.
  • Provider rates: Other clusters saw the same hospital/non-hospital based treatment ratios as prior years, but there was a material rate increase for all provider types across the board.
  • Utilization increases: Some clusters also experienced a larger number of services being performed per claim.

One of the most severe examples of hyperinflation came from a large Florida metropolitan area which experienced a combined 47 percent workers’ compensation healthcare inflation rate. Not only was there a dramatic increase in the charge per hospital bill, but utilization was also way up and there was a shift to more services being performed in a costlier hospital system setting.

“The growth of costs in this Florida market stood in stark contrast to neighboring areas where most of our clients’ claim costs were coming down or at least had flat-lined,” Beans said.

An Arizona metropolitan area, on the other hand, experienced a different root cause for their hyperinflation. Regardless of provider type, rates have significantly increased over the past year. For example, one hospital system showed dramatic increases in both charge master rates and utilization. “Even with aggressive discounting, the projected customer impact in 2014 will be an increase of $773,850 from this provider alone,” said Beans.

ACA: Unintended consequences?

So what is going on? According to Beans, a potential driver of these cost spikes could be unintended consequences of the Affordable Care Act (ACA).

First, the ACA may be a contributing factor in recent provider consolidation. While healthcare industry consolidation is not new, the ACA can prompt increased merger and acquisition efforts as hospitals seek to improve financials and healthcare delivery by forming Accountable Care Organizations (ACO). ACOs, the theory goes, can take better advantage of value-based fee arrangements in existing and new markets.

“As hospital systems grow by acquisition, more patients are being brought under hospital pricing structures – which are significantly more expensive than similar services at smaller facilities such as independent ambulatory surgery centers and doctors’ offices,” Beans said.

Unfortunately, there is little evidence that post-consolidation healthcare systems have become more efficient, only more expensive. For example, a recent PwC study reported that hospital IT infrastructure consolidation alone is projected to add 2 percent to hospital costs in 2015.

Another potential ACA consequence is group health insurers may have less incentive to keep medical costs down. An ACA provision requires that 85% of premium in the large group market must be spent on medical care and provider incentive programs, leaving 15% of premium to be allocated towards administration, sales and subsequent profits. “Fifteen percent of $5000 in medical charges is a lot less than 15% of $10,000,” said Beans. “This really limits a group health carrier’s incentive to lower medical costs.”

How do increased group health rates relate to workers’ comp? In some markets, a group health carrier may use its group health rates for their work comp network so any rate increase impacts both business types.

In the end, medical inflation is inconsistent at best, with varying levels driven by differing factors in different locations – a true “needle in the haystack” challenge.

What to do?

Managing these emerging cost threats, whether you have the capabilities internally or utilize a partner, means having the tools to pinpoint hyperinflation and make adjustments. Beans said potential solutions for payers include:

  • Using data analytics: Data availability is at an all-time high. Utilizing analytical tools to spot problem areas is critical for executing cost saving strategies quickly.
  • Moving services out of hospital systems: Programs that direct care away from the hospital setting can substantially reduce costs. For example, Rising’s surgical care program utilizes ambulatory service centers to provide predictable, bundled case rates to payers.
  • Negotiating with providers: Working directly with providers to negotiate bill reductions and prompt payment arrangements is effective in some markets.
  • Underwriting with a micro-focus: For carriers, it is vital that underwriters identify where these pockets of hyperinflation are so they can adjust rates to keep pace with inflation.

“This trend needs to be closely watched,” Beans said. “In the meantime, we will continue to use data to help payers of medical services be smarter shoppers.”

Contact Rising Medical Solutions: info@risingms.com | www.risingms.com

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Rising Medical Solutions. The editorial staff of Risk & Insurance had no role in its preparation.


Rising Medical Solutions provides medical cost containment, care management and financial management services to the workers’ compensation, auto, liability and group health markets.
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