When it comes to making sure your company is adequately insured, there are many factors to weigh and risks to assess. Here are three main topics home health providers should keep in mind.
1. Nursing Shortage & Staff Turnover
The impact of the nursing shortage has reared its ugly head in a major way.
Statistics show that employment is rapidly growing for home health aides, but it remains a low-wage paying job, with an average hourly rate nationwide of $11.17, according to @Work. Hence, there is a revolving door as aides seek other employment with better wages, benefits and opportunities for advancement.
While staff turnover is a source of worry for home health agencies, it is also a key area of concern for insurance carriers. It dramatically affects the bottom line of the agency relative to liability insurance premiums. High staff turnover can be indicative of:
- Inadequate training and onboarding processes
- Poor patient care and support
- Insufficient documentation of patient records and plans of care
- An increased propensity for errors
- Patient and/or family complaints
- Frequent incident reports
- Staff and/or patient injuries
- The use of untrained and/or unqualified staff to perform the duties of the nurse and or home health aide
- An inability to grow business and secure new clients
- An overwhelming workload
- Poor morale
- Weak recruitment and retention strategies
As a result, an agency exposes itself to potential general liability, professional liability, workers’ compensation and other insurance claims. Therefore, the cost of the agency’s insurance program increases because operations and risk management processes and procedures are subpar.
2. Securing Liability Insurance
Securing liability insurance coverage will require more time, patience and financial investment in 2020 than it has in the past. In recent years, insurance providers have implemented more stringent underwriting requirements and standards to ensure a higher level of profitability. They are also making a proactive effort to be more selective about the risks they take, what lines of coverage they will provide and where they will offer their product. Additionally, carriers across the board have increased their rates by as much as 20%; some have withdrawn from the health care market altogether and others have eliminated certain lines of coverage due to the gravity and frequency of losses.
All is not lost, however, when it comes to securing the best insurance premium for home health care agencies. Below are a few tips that will aid in the process:
a. Provide all requested information on applications and supplemental forms. Incomplete applications and forms require back-and-forth communication, which wastes time, creates confusion and causes frustration.
b. If something does not apply to your company on an application form, don’t leave it blank. Instead, write “Not Applicable” or “N/A” in the space. This ensures that the underwriter will not have to reach out to the agent or broker to gather this information, extending the underwriting process.
c. Include a thorough narrative about your agency and its operations, including the types of services you provide and how. Additionally, include the company’s website address, social media accounts and readily available marketing and advertising samples. Any information you provide helps the underwriter get a better understanding of your operations so that it is rated properly.
d. Submit complete loss runs for the last five years, at a minimum. If the business is new, provide a copy of the owner’s curriculum vitae.
e. Mitigate potential claims by implementing and practicing first-rate risk management to remain claims-free. If your agency has prior claims, include a short narrative about them, including who was involved, what happened, when and where it happened, how it was resolved and whether the employee or independent contractor involved is still with the agency.
f. Be patient. Commercial underwriting for the home health care industry typically takes three to seven business days. Providing insufficient information or incomplete applications, forms and supplementals will increase the amount of time needed to properly underwrite your submission.
3. Securing Patient Data
Also on the minds of most home health care agency owners and managers is the possibility of a cyberattack or data breach—and rightfully so. Chubb, a global provider of commercial and personal property insurance, reported that 38% of the cyber claims it received a decade ago were from the health care industry. Moreover, according to the HIPAA Journal, from January to May 2019, more than 6.2 million medical records in the United States were exposed and 77% of all data breaches in 2019 were caused by health care providers. The top three causes of these attacks and breaches were human error, hackers and privilege misuse or abuse, according to the security firm Radware.
The massive amount of information that home health care agencies obtain, store and transmit for patients and vendors is growing daily, especially with the implementation of electronic visit verification. This essentially makes agencies sitting ducks for hackers and other cyber criminals attempting to sell or hold protected health information hostage in exchange for a ransom.
Forty-three percent of small- to medium-sized business are prone to being attacked, Verizon estimates—and only 20% of those businesses affected by a cyberattack or data breach have the finances necessary to recover. On average, the cost to recover from a cyberattack is about $1.5 million, which includes legal costs, regulatory fines and penalties, notification expenses, credit monitoring, the ransom, business interruption, crisis management/public relations, data forensics, data recovery, lawsuit awards and more.
Those businesses that recover typically have a cyber liability policy included in their insurance program. Many think that their general liability policy would pay out for cyber-related risks, but that is not necessarily the case. These types of risks are typically excluded and if there is coverage, it is often inadequate.
We’ve all heard the saying, “If you fail to plan, you plan to fail.” This is so true when it comes to your agency’s insurance program. Know the risks your agency has and put the necessary plans in place. Review these three areas to get a better understanding of your agency’s potential risks. Doing more on the front end will ultimately save you money on the back end when it comes to your insurance investment.
