Michael Maglaras & Company specializes in physician and hospital medical professional and general liability, long-term care and assisted living, workers’ compensation, product liability, and all forms of self-insurance for employee benefit programs.
In particular, IML wanted to ask Maglaras about the trends and key challenges in MPL for those who practice in the several settings now available to seniors for vital support and care.
Inside Medical Liability: Overall, do you think that the long-term care market presents some untapped opportunities for MPL writers?
Maglaras: I do. It is, in some respects, the single most important untapped MPL opportunity in our current marketplace. The paradigm of this market is changing dramatically; every day, more than 10,000 people in America turn 65. They need access to the beginning of the full continuum of senior care. To be clear, it is an opportunity for the MPL market, but only for those willing to study the issue in detail and address this underwriting opportunity in a new way. . .particularly with regard to for-profit senior care operations in challenging jurisdictions.
IML: What new trends do you see in today’s seniors’ planning for their care needs late in life?
Maglaras: Quite simply, seniors are planning for their future much earlier in life. We all know how this used to work: an adult child would be faced with a rapidly aging parent no longer able to care for themselves effectively and safely. The adult child had to make choices about care quickly—not only in regard to quality but also about cost.
Now, senior care is largely a “pre-planned entry into a continuum,” which can begin with completely independent living and end with hospice care. The underwriting opportunity is to underwrite facilities best able to deliver consistently high-quality care, from the point of entry point into the continuum to the exit point.
IML: How does the underwriting cycle for these types of facilities operate?
Maglaras: On a short curve. With the senior care market, we are in the middle of the only visible and measurable tightening in the MPL marketplace. It doesn’t exist anywhere else. I’ve lived through three hard market cycles. I know what a hard market cycle looks like, and we’re not in one. However, the senior care insurance market is constricted and will constrict even more, over the next three years. That is why there is an opportunity for thoughtful and profitable approaches to underwriting this class.
IML: What happened to the market in the period after 2015?
Maglaras: There were too many claims and too much patient/resident neglect. Also, there was too much focus and concentration of exposures in jurisdictions where you are almost guaranteed to lose money by risking your insurance capital. The commercial insurance market suffered greatly, but the data was always there in support of course corrections. It’s even more in evidence now.
However, as we enter 2020, we see ample evidence that for-profit senior care operations in particular now recognize that, with the significant reduction in the available options in the commercial market, they must immediately embark on vigorous quality-of-care improvement measures or they will be uninsurable.
The time to enter an underwriting cycle is when insureds’ minds are focused, not when they are busy burning markets. Their minds are now focused. In some cases they’ve found that they have no options.
IML: Explain the principal differences between nursing homes and continuing care retirement communities (CCRCs)—in particular, in terms of the associated risks.
Maglaras: The differences in the risks involved, exposures, but also in the opportunities available, are profound. A traditional nursing home environment is not a skilled nursing facility. It may not have a resident medical director. It may not have care transfer protocols in place with the surrounding acute-care facilities, whereby residents who suffer sudden increases in the acuity of their condition can be effectively moved and cared for.
The underwriting opportunity in the marketplace is not with nursing homes; it’s with CCRCs. There are more than 1,900 of these in the United States. Almost all of them are tax-exempt, and many are mis- sion-driven organizations directly affiliated with religious, civic, or fraternal organizations with a high degree of commitment to quality of care and ethical conduct.
IML: What is the relationship between risk and CMS ratings for facilities?
Maglaras: CMS ratings are important, but they are not the be-all and end-all. They should serve as one underwriting determinant. But CMS ratings are not nearly as important as a close analysis of aggregate claim data, regardless of the state where the facility is located. The biggest mistake that underwriters make now is dismissing an entire jurisdiction, without looking at a specific risk which is outperforming the rest of the state.
IML: Tell us about some of the innovative solutions for managing risk that you have seen.
Maglaras: The senior care market is filled with innovation. One
superb example is the way that competent senior care CCRCs are man- aging care for those seniors “aging in place.” The longer we can keep you in your home, under competent and supervised care that is monitored while you’re there, the longer we postpone any decline in your health and your entry into the continuum of care when your health is really compromised. One good example is wearable devices: they are rapidly changing how home care is delivered. It’s remarkable and CCRCs are on the cutting edge of it. The quickest way for underwriters to learn how wearable devices and telemedicine are improving care and reducing risk is by studying the innovative technologies already in use in senior care facilities.
IML: What are the key elements in a culture of safety in long-term care?
Maglaras: No culture of safety can work if any aspect of incident reporting is punitive. The key to the rapid and effective reporting of adverse events with fewer adverse ultimate outcomes is to maintain a culture of safety that has its foundation in non-punitive early reporting. The best CCRCs, because they are heavily regulated by the states,
are actually more accomplished in this regard than most acute-care facilities.
IML: What claim strategies do you advise for adverse events in long-term care?
Maglaras: I’ve studied the national claims data for more than five years in this class of business. The absolute best source of paid-claims information in regard to senior care is the paid-claims data warehoused with ESIS ProClaim. It paints a surprising picture. But one of the things it reveals clearly is that the more rapidly adverse events are identified and reported, regardless of jurisdiction, and the sooner families and residents are involved in learning what happened, then senior care facilities can correspondingly reduce the impact of events that link with clear liability. The numbers speak volumes in this regard. The future of senior care is, simply put, the future of how we manage quality in an environment where you might enter the continuum of care at the age of 65 and literally remain inside that same continuum for 30 years.
So, from the perspective of underwriting, this is a long-term opportunity, and now is the time for underwriters to reassess their options for an entry point into this important market.