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Leo Carroll is senior vice president of health care professional liability at Berkshire Hathaway Specialty Insurance in New York. He spoke with Business Insurance Associate Editor Sheena Harrison about the emerging risks that health care organizations are managing as the medical industry consolidates and works to implement the Patient Protection and Affordable Care Act. Edited excerpts follow.
Q: What are the emerging risks that you see health care organizations dealing with right now, and how is Berkshire Hathaway assisting them with those issues?
A: Health care organizations continue on the journey of managing compliance to the Affordable Care Act and look to their insurance partners for efficiency and support in risk management. At the moment, the most urgent concern among health care providers is Ebola. Our customers include some of the high-profile organizations designated by the U.S. Centers for Disease Control to receive and treat Ebola patients. Berkshire Hathaway Specialty Insurance provides support through its flexible approach to risk management support in which customers can engage regional or national experts to assist with very specific needs.
Q: Has the consolidation of health care organizations in recent years had any effect on how those organizations insure or manage their medical professional liability risks?
A: Yes, without a doubt. There is a combination of factors at play. First, the financial pressures facing most health care organizations create a need for efficiency and value, which triggers a race for scale and anticipated efficiency. Even the most successful organizations are implementing major cost savings programs in order to counterbalance diminishing reimbursements from the government. Simultaneously, as part of the ACA, there is an influx of newly insured patients. Balancing these dynamics is not easy for our customers, many of whom self-insure and retain a large part of their risk. The migration of physicians to employment by institutions has increased this risk as a consequence of consolidation, and presents challenges around moving physicians from the commercial market to self-insured retentions, captives or other structures.
Q: How do you expect the ACA to affect medical malpractice exposures for health care organizations in the near term?
A: In the most basic sense, with millions of newly insured people entering the health care system, there is a strong possibility for an uptick in medical incidents, but no dramatic change is being seen presently. Part of the increased liability, or a change in exposure, could be driven by the type and number of caregivers who are managing higher volumes and make mistakes. Another aspect of new medical consumers is that some may seek care for serious and advanced medical conditions for the first time, which could be difficult to treat. However, the counterbalancing aspect is the focus on wellness. Medical providers are looking at managing the health and wellness of entire populations, rather than solely focusing on individuals. There is more emphasis on not only keeping people healthy, but there are also financial penalties for medical errors and readmissions under certain circumstances.