In the United States, the healthcare industry is one of the largest drivers of the economy.1 Since the 1960s, growth in the healthcare industry has outpaced the overall economy. In 2024, nearly $5.3 trillion was spent on healthcare, accounting for 18% of the gross domestic product.2 Almost one out of every five dollars spent in the United States now flows through the healthcare industry.
As the healthcare sector has grown, the medical professional liability insurance sector has grown apace to support the risk transfer needs of healthcare providers. According to National Association of Insurance Commissioners (NAIC) data, the medical professional liability of the insurance industry is valued at approximately $14 billion. The NAIC divides healthcare premium into four main buckets: Physicians, Hospitals, Other Healthcare Professionals, and Other Facilities. The Medical Professional Liability Association (MPL Association) has previously examined the Allied Professionals (aka Other Healthcare Professionals) space; in this article we focus on the Other Facilities sector of the medical professional liability industry.
The Other Facilities sector is a catch-all bucket from an NAIC reporting standpoint. The types of facilities included in this category change as patient demand, reimbursement structures, and technology evolve. Healthcare organizations commonly included within the Other Facilities segment include:
- Urgent care clinics
- Community health clinics
- Medical spas and wellness centers
- Outpatient dialysis centers
- Ambulatory surgery centers
- Imaging centers
- Medical laboratories
- Pharmacies
- Mental health providers
- Home healthcare
- Allied healthcare staffing
Even this list is not exhaustive. The types of providers that may fall under the umbrella of Other Facilities are too broad to capture in any discrete list. Due to the wide variety of healthcare organizations that fall under the general umbrella of Other Facilities, the examination of growth trends, the evaluation of risk profiles and risk transfer, and the consideration of underwriting and coverage can vary significantly from risk to risk.
This article examines the forces driving the growth of the Other Facilities segment of the medical professional liability market. These factors include the evolution of reimbursement models, advancements in technology-enabled care, and changing consumer preferences. All of these factors are accelerating the migration of healthcare services from inpatient facilities to outpatient settings. We will also examine the current state of the Other Facilities insurance segment with a focus on premium and growth trends, analyze the evolving risk characteristics of insurance purchasers, and discuss developments in coverage for Other Facilities risk.
Evolution of Healthcare Delivery
Prior to the 1960s, healthcare in the United States grew at a relatively slow and stable pace. However, the passage of the Medicare and Medicaid Act in 1965, and the subsequent increase in federal spending on healthcare services, caused a seismic shift in healthcare reimbursements and healthcare facility growth. At a time when the majority of care was provided on an inpatient basis, the number of licensed beds in community hospitals increased from 639,000 in 1960 to 848,000 in 1970 with occupancy rates growing from 64% to 73% over the same period.3
Although the Medicare and Medicaid Act contributed to a surge in healthcare utilization, it was only one piece of the healthcare puzzle. During the 1960s and 1970s, investments in medical research, hospitals, and healthcare workforce training led to the emergence of high-technology academic centers that adopted and disseminated new clinical technologies, which contributed to the growth in national healthcare expenditures.4 According to the Centers for Medicare and Medicaid Services, between 1960 and 1970, total national healthcare expenditures increased 173%. During the same period, out-of-pocket costs increased 90%, while health insurance expenditures (including private insurance, Medicare and Medicaid) increased a staggering 328%. This trend did not abate and in the 1980s, national health care expenditures grew at a combined annual growth rate of 13.1%.5
This unrelenting rise in costs, coupled with advancements in medicine, led to a change in thinking in the medical community. People came to realize that it was cheaper and often better for the patient to receive care as an outpatient. Consequently, the delivery of healthcare is markedly different in 2026 than it was in 1970. While patients once were treated exclusively by doctors, they now receive care from advanced practice professionals such as nurse practitioners and physician assistants. Similarly, where care was provided largely in community hospitals, patients now receive care in a plethora of specialized facilities.
The growth of these facilities represents one of the most significant structural changes in healthcare delivery over the past half century and provides the foundation for the continued expansion of the Other Facilities segment.
Drivers of Growth in the Other Facilities Segment
The rapid expansion of the Other Facilities sector is not the result of a single trend but rather reflects decades of change in healthcare delivery, reimbursement, technology, and consumer expectations. The growth drivers in the Other Facilities space are as varied as the classes of providers that fall within the segment. However, there are few common grow drivers across the sector:
Advances in Technology. Medical technology has advanced rapidly in recent decades. The range of care in an ambulatory care setting has been propelled by advances in minimally invasive surgical techniques, patient monitoring, artificial intelligence (AI) enabled care pathways, and telehealth. These advances have increased the number of procedures that can safely and effectively be provided in an ambulatory setting and have spurred the growth of the Other Facilities segment.
As an example, in 2016 only 1.2% of knee replacements were performed on an outpatient basis, either in hospital outpatient departments or in ambulatory surgery centers.6 Advances in surgical technique, improvements in anesthesia and pain control, implementation of electronic health records integrated infection surveillance, improvements in surgical hardware and ultimately, changes to Centers for Medicare and Medicaid (CMS) reimbursement regulations, have made it feasible to move joint replacement surgeries from hospitals to ASCs.7 By 2023, 94% of Medicare enrollees and 92% of commercially insured patients underwent knee replacement surgery in an outpatient setting.8
Similarly, advancements in remote patient monitoring and investment in community-based care have enabled the growth of Hospital at Home programs, effectively shifting inpatient, hospital-based care to home healthcare settings. Under the Hospital at Home framework, qualifying patients with defined health conditions such as congestive heart failure, COPD, and pneumonia, may be assessed by emergency room personnel treating a patient’s acute episode, then transferred home for continued treatment in lieu of hospital admission. Upon transfer to Hospital at Home care, the patient’s home is equipped with home monitoring and telemedicine equipment. The patient has a daily telemedicine visit with a treating physician in addition to in-home visits by a nurse or community paramedic.
Hospital at Home care is fundamentally different from home healthcare and uses a combination of technologies and community-based care. It shifts hospital-level care for acute, episodic medical care to a home setting with the goals of lowering costs, relieving bed capacity pressure, and improving clinical outcomes and patient satisfaction. Without technology-enabled remote access to healthcare providers, patients now receiving acute care services in their homes would require inpatient care. Importantly, Hospital at Home illustrates how care that once required inpatient stays can be moved out of the four walls of the hospital and be effectively provided in an ambulatory setting; as more services move from an inpatient to an outpatient setting, we will continue to see expansion in the Other Facilities segment.
Consumer Preferences. The technological advances which make the shift from hospital-based care to outpatient care possible would have little impact on the growth of the Other Facilities segment without increasing consumer demand for ambulatory care. Patient satisfaction surveys consistently demonstrate patient preference for home-based recovery, outpatient services, and community-based care options. Some of the factors driving this preference are convenience, expense control, improved efficiency, and faster access to healthcare providers. Outpatient care utilization is increasing.
Urgent care clinics provide a case study on how convenience and cost control can drive growth within the Other Facilities space. Between 2014 and 2023, the number of urgent care facilities operating in the United States nearly doubled, from 7,220 centers in 2014 to 14,382 centers in 2023.9 Data from the US Centers for Disease Control estimates that 26.5% of adults have sought care from an urgent care clinic. Among younger consumers, this number rises to 36%.10 Patient surveys suggest that people turn to urgent care clinics because of shorter waiting times, the ability to access care on a walk-in or after-hours basis, and reduced costs.
The cost considerations that patients consistently rank as an important consideration in where they choose to seek care are supported by industry data. In 2021, the average cost of a hospital based emergency room visit was $1,716 while the average cost of an urgent care clinic visit was $178.11 We often see patients voting with their feet in the healthcare space and the growth in the number of urgent care facilities and total number of patients served across all outpatient clinics suggests that patients are turning to the urgent care clinics as a matter of care preference. Consumer satisfaction surveys back up this analysis. In 2022, the net promoter score, which measures customer satisfaction, across urgent care facilities was 76% compared with a composite net promoter score of 64% for all healthcare facilities.12
Layered over these considerations on general patient preference for outpatient-based care is the increasing acceptance of telemedicine. Spurred by social changes during COVID-19 lockdowns, a greater number of patients express a preference for telemedicine-based care in non-emergency situations. According to a RAND American Life Panel survey, 66.5% of participants preferred a telemedicine visit over an in-person visit; however, this rate of preference varied significantly when demographic considerations such as age, sex, race, education level, and household location were taken into account.13
Similarly, the American Hospital Association surveyed consumer sentiment on telemedicine and found that patient preference for telemedicine-based care is driven by convenience, the ability to access care more quickly than a comparable in-patient visit, and patient assessment that their condition is one that can be covered by a telemedicine encounter.14
Patient Empowerment and Patient Centric Care Models. The patient empowerment movement and the associated shared clinical decision-making framework are closely tied to consumer preferences for ambulatory care, propelling growth in the Other Facilities segment. Shared clinical decision making is defined as a collaborative process where patients and providers evaluate clinical evidence together in light of the patient’s treatment goals, values, and preferences to make a shared decision on a course of care.15 While the shift from provider-centric to patient-centric care has been going on for decades, increased access to health information and improved health literacy has spurred the patient empowerment movement. While many deride “Dr. Google” patients, studies show that empowered patients who actively engage in shared clinical decision-making are more satisfied with the care they receive and are more likely to adhere. This, in turn, reduces costs and unnecessary follow-up care.16
In the context of Other Facilities growth, empowered patients are more likely to proactively manage their care, schedule follow-up visits, utilize primary care, urgent care and mental healthcare services, and seek out general wellness services in addition to care for acute episodes. Additionally, empowered patients are more likely to opt for a care setting that best fits their needs in terms of cost and convenience. As a practical matter, these patients are more likely to opt for an ambulatory facility over an inpatient facility.
Rise of the Staffing Model. The U.S. healthcare system faces a chronic shortage of providers. This is not a new issue but has been exacerbated in recent years by provider burnout and an aging healthcare provider workforce. Current estimates suggest the U.S. will face a shortage of 86,000 physicians and 108,960 nurses by 2038. Increasingly, hospitals and other medical facilities are turning to healthcare staffing companies to meet these shortfalls.17 Healthcare staffing is a $40 billion industry with nurse staffing, allied healthcare staffing (imaging, therapy and other outpatient services staffing), and locum tenens, who are temporary providers, staffing driving revenues. Healthcare staffing companies, which fall under the umbrella of Other Facilities, are one of the fastest growing subsegments of the group.
State of the Other Facilities Insurance Market
As the Other Facilities sector has expanded dramatically the demand for risk transfer vehicles and insurance has increased significantly. We will next analyze the state of the Other Facilities market, both from the perspective of the insurance purchasers and the carriers in the market.
In the NAIC annual statement for property/casualty insurance companies, carriers must allocate premium and loss information for medical professional liability (MPL) into four sectors: physicians, hospitals, other professionals, and Other Facilities. This information is shown in Supplement A to Schedule T and companies are required to report certain data including direct premium written by sector for the latest calendar year. Using the direct premium written (DPW) for all companies that reported writing MPL from 2016 to 2025, we assembled the percentage breakdown of DPW in Figure 1.
Prepared by: MPL Association. Source: S&P Capital IQ Pro.
(Note – the focus of this article is on non-hospital healthcare facilities; however, in the annual statements, the premiums for the Other Facilities sector also includes experience for “older adult” facilities such as nursing homes, long-term care, and senior living facilities. Based on discussions with individuals at companies that write older adult business, for purposes of this article we assume 40% of the DPW is for older adult facilities and the other 60% is for the Other Facilities that are the subject of this article.)
Figure 2 shows industry DPW for the Other Facilities sector for the years 2006 to 2025, which reveals that from 2006 to 2016, DPW grew at a somewhat anemic combined annual growth rate of 3.2%. Starting about 2016, the Affordable Care Act stimulated the growth of non-hospital facilities, spurring the shift from fee-for-service inpatient care to value-based care and outpatient services. Consequently, from 2016 to 2025, DPW grew at an astounding rate of nearly 15%, making Other Facilities the fastest growing sector of the MPL market.
Prepared by: MPL Association. Source: S&P Capital IQ Pro.
An array of carriers offer insurance products in the Other Facilities sector, ranging from commercial, multi-line carriers to physician-owned mutual companies expanding their product offerings to risk retention groups. The Other Facilities segment has proven to be a consistently attractive market segment for many carriers. While meaningful loss data is not available in the annual statements, anecdotally, ultimate loss and LAE ratios in the segment have outperformed other segments and the variety of insurable risk classes in the segment allow for portfolio diversification within the segment.
One commonality among the companies participating in the Other Facilities segment is the placement of coverage in the non-admitted or excess and surplus lines market. Given the constant evolution of treatment modalities, expanding models of care, and shifts in loss cost development, the freedom of rate and form that excess and surplus market provides is a necessity for long-term, sustainable participation in the Other Facilities segment. Professional Liability coverage often is offered on a claims-made basis, although there is limited availability of Occurrence-based Professional Liability coverage for some classes of business. General Liability coverage is usually offered on either a Claims-Made or an Occurrence basis.
The buyers of Other Facilities insurance coverage range from small providers such as a single-location medical spa to large companies with a national, or even international, footprint (e.g. national/international dialysis companies, multistate surgical centers, and staffing companies). As such, their insurance needs in terms of coverages, limits, retentions, risk tolerance, total cost of risk, and risk transfer vary greatly. The variety of carriers in the Other Facilities space naturally lends itself to carriers picking subsegments where they feel they can write most effectively and to which they can lend the greatest value. Insurance brokers play a key role in matching the buyers’ insurance needs with carrier expertise and risk appetite.
Expanding Coverage and Evolving Risk
As the Other Facilities insurance market has expanded and care has migrated to outpatient settings, carriers have evolved their coverages to meet insureds’ shifting demands. Historically, coverage in this segment was limited to Professional Liability and General Liability. As the sector has matured and more carriers have entered the market, carriers have expanded their product offerings to not only address the needs of the insureds, but also to create a competitive edge. Specialist insurance expertise is particularly valuable in this sector.
It is now commonplace for coverage to include limits of insurance for sexual misconduct liability, hired and non-owned auto liability, employee benefits liability, stop-gap employer’s liability, and billing errors and omissions liability. Additional Insured coverage, especially when granted under a policy’s professional liability insuring agreement was available on a very limited basis as recently as ten years ago. Today, many carriers offer scheduled and blanket additional insured coverage including waiver of subrogation and primary and non-contributory wordings.
While these additional coverages are readily available to buyers, there are questions about whether the premium charged for these enhancements is keeping pace with the expansion of risk. Some coverage extensions like employee benefits liability and additional insureds coverage granted under a policy’s general liability insuring agreements have proven to be effectively underwritten and managed over the course of market cycles. Other coverage extensions do not have the same historical rate adequacy. Broader industry trends around commercial auto losses and sexual misconduct liability settlements have raised questions about whether these coverage expansions are appropriately added to Medical Professional Liability insurance coverage, and if so, whether limit deployment underwriting standards are adequately controlled.
Coverage for sexual misconduct and hired and non-owned auto is currently postured similarly to the approach many carriers took to cyber liability coverage in the early 2000s. At that time, many carriers offered cyber liability coverage as an endorsement to Medical Professional Liability policies, often without charging additional premium for the coverage. As more cyber events exposed new risks and the value of protected health information became clearer, many carriers examined their aggregate limit exposure to the risk and pulled back on including cyber coverage. Across the industry, there was a realization that cyber coverage was more effectively addressed in either a stand-alone policy specifically designed and underwritten to address cyber liability exposures or in a separate tower of insurance included in a medical professional package policy structured in a way that does not erode the coverage available for professional liability claims. Current trends in auto liability and headline verdicts in sexual misconduct lawsuits may cause a similar reevaluation in the market of the appropriateness of treating the liability posed as an endorsed coverage enhancement or pricing it as an adjunct to the core professional liability exposure.
Finding Long Term Success in the Other Facilities Segment
The Other Facilities segment spans a continuum of healthcare providers, care models and continually evolving treatment modalities, while confronting increasingly complex medical malpractice litigation and buyer demands for expanded coverage. In this environment, it is important for Other Facilities insurance buyers and carriers to position themselves for long-term, successful partnerships.
Purchasers benefit from carrier partners with specialized expertise in the sector. From an underwriting perspective, Other Facilities underwriters must develop deep expertise in the segment. They must intimately understand the care models, clinical risk controls, and scope of practice of the risks that they are underwriting. The majority of the risks in the segment are not large enough nor have enough discrete claims over a sufficient timeframe to lend themselves to loss or experience rating. Rather, underwriters must approach this class with disciplined risk selection managed at a portfolio level by identifying benchmark clinical risk characteristics, assessing the risk underpinning different types of treatment modalities, addressing emerging venue-related risk, and monitoring the evolution of care in the segment.
From a Claims perspective, specialized claims handling is now table stakes for carriers seeking long-term success in the Other Facilities segment. Claims adjustors must understand the medicine underlying negligence allegations, applicable standards of care, specific venue consideration, and be able to match appropriate defense counsel based on the posturing of a legal action to effectively manage litigation and optimize the resolution of claims.
Disciplined risk selection and cycle management are vital for long-term carrier sustainability in the Other Facilities sector. Identifying the risk created by specialty mix, practice setting, and scope of care is essential to successful underwriting. Currently, volatility in Other Facility subsegments like labor and delivery (L&D) and correctional medicine staffing, inpatient behavioral services, and social services suggest that risks in these segments deserve increased scrutiny of their clinical risk controls, credentialing practices, and contracting procedures alongside thoughtful deployment of insurance limits.
Unfortunately, the impact of a prolonged soft market, the long-tail nature of loss development in the space (which may make it difficult to nimbly respond to changes in loss trends), and competition in the segment can make it difficult to adhere to limit, attachment and rate discipline. There are always pressures to waver from underwriting standards. The long-tail nature of this sector makes it difficult to nimbly respond to shifts in loss costs. Carriers that set a clear vision for their portfolios, communicate this vision to internal and external stakeholders, and successfully execute this vision with appropriate discipline will find themselves well positioned for long-term sustainability and partnership with Other Facility insurance buyers.
Additionally, coverage creep is an essential consideration in the Other Facilities sector. Many carriers have expanded the coverages available under their medical professional liability policies. Common coverage extensions include additional insured coverage, hired and non-Owned auto coverage, sexual misconduct coverage, and employee benefit liability coverage. Accounting for these risks inherent in offering these coverages is an important aspect of underwriting discipline.
It’s worth noting that since the 1970s, the most common liability limits purchased by insureds in the Other Facilities space have been $1,000,000 per claim/$3,000,000 aggregate. Driven by the growth of Other Facilities providers, the entry of private equity capital, the increasingly common contractual clauses requiring additional professional and general liability limits of insurance, and social inflation impacting settlement and verdict values, many healthcare providers are seeking additional limits of insurance from their carrier partners. It is crucial to maintain discipline around limit deployment to successfully manage risk in the Other Facilities segment.
Finally, leveraging data to inform underwriting decisions is essential. The Other Facilities segment has never been as data-rich as the Physician or Hospital segments of the medical professional liability sector. Few Other Facilities accounts have their own robust claims data. Additionally, since most Other Facility business is offered on an excess and surplus lines product, there are few rate and form filings available. Unlike the National Practitioner Database for physicians, there is no dedicated, national database designed to capture claim settlement data for Other Facility providers. Building infrastructure to capture data at a granular level and then acting on that data to proactively address loss development trends is something that should be top of mind for stakeholders in the Other Facilities segment.
The Other Facilities segment is dynamic and shifts in response to market needs, technological advances, and consumer demands. The evolving nature of the industry calls for more than just well capitalized and appropriately rated carriers. To build strong, long-term partnerships, carriers must develop specialized expertise to appropriately assess risk and craft coverage to address the changing demands of the healthcare providers. Buyers, brokers, and their carrier partners must collaborate to ensure that medical professional liability coverage remains sustainable and an effective tool for risk transfer.