Senior Care Liability Costs Will Not Let Up

The cost of liability remains on the rise for the long-term care industry, including independent and assisted living providers.

Specifically, the overall national long-term care loss rate is anticipated to grow by 5% per year, with claim frequency fueling the increase. Claims frequency has an anticipated 3% growth rate.

These and other findings were reported in the Aon/AHCA 2015 Long Term Care General Liability and Professional Liability Actuarial Analysis, which is in its 13th published edition.

The projected national 2016 loss rate, which is a combination of claim frequency and severity, is expected to rise from $2,030 to $2,150 per occupied bed.

The analysis also considers the use of arbitration as an alternative to litigation. The findings reveal that claims resolved under arbitration agreements have a 7% lower cost and are finalized three months earlier than claims resolved without arbitration.

“The report validates what we have been saying about arbitration,” said Mark Parkinson, AHCA president and CEO, said in a prepared statement. “Arbitration is an important way to help protect the legal rights of patients and their families while providing a faster resolution of disputes. It also reduces costs for patients and their families, the nursing center, and the health care system.”

As Senior Housing News previously reported, several parties want the federal government to prohibit pre-dispute arbitration agreements in nursing home contracts, arousing backlash among those in the senior living industry who consider the documents essential.

Around 17,600 individual non-zero claims from long-term care facilities were aggregated for the Aon/ACHA analysis. The 35 providers represented in the national study operate about 240,000 long term care beds, consisting of skilled nursing facility beds and a number of assisted living, independent living, rehabilitation and home health care beds. They represent about 17% of the beds in the United States, and 6 of the 10 biggest operators in the nation. 

Written by Mary Kate Nelson