Tailored Solutions That Drive Success
A large and heavily Cat-exposed nursing home and assisted living organization was facing steep premium increases after Superstorm Sandy. But Brian Andrews was able to secure a rate reduction despite its exposures. To make it happen, he secured construction and year-built data for each of the facilities, and performed natural catastrophe modeling for the facilities in order to calculate short-term and long-term loss estimates from the exposures. This enabled the company to negotiate a reduction in its necessary coverage limit. Andrews was able to delete the top layer of the program, which not only reduced excess premiums but increased carrier completion for the lower layers as well.
“We have 19 carriers in our layered program,” said Charles Gutshall, CEO of Work Comp Strategic Solutions, “and that’s where having a broker, an expert in that area, makes a huge difference, as to knowing how to put that puzzle together.”
Among other positive outcomes Andrews has been able to help clients realize this year, he was faced with a unique situation: a health care provider that transformed itself into an integrated health care delivery system in the space of 18 months. Stepping in to fill the shoes of a broker that had just retired, he helped the organization restructure its program dramatically on a tight timeline.
“He did an excellent job coordinating the whole effort,” said Tony Cosentino, director of risk management at Highmark. “He was able to save the hospital system significant money, while improving coverage terms, limits and deductibles across the board.”
New Challenges, New Solutions
While there are provisions of the new health care law designed to protect health plans that enter the marketplace, some regional plans may suffer financial hardship in spite of these risk mitigation efforts.
Aon’s Rick Chiocchi, national practice leader, Managed Care, sought to develop a secondary reinsurance program to fill in the gaps, but reinsurers backed away from the idea at first. Chiocchi persisted, eventually pairing up with Partner Re to develop a set of secondary reinsurance programs. These included a specific excess program to cap catastrophic losses that exceed the government’s limited $250,000 cover. The design of this second level of protection is to only address true catastrophic clinical expenses common to high cost medical events.
The program also factors in unknowns about the government reinsurance program’s initial funding, including a “put” option for purchase at a low premium. The option pays if the government cannot, while a dividend is granted against the premium in the case the government upholds its end of the bargain.
“Rick has been instrumental in helping me navigate through the crazy world of health care benefits and health care reinsurance,” said Christopher Bosser, director of corporate and captive insurance for the University of Pittsburgh Medical Center.
Bosser also lauds Chiocchi’s superior service. “At year one or two, everybody will give you that kind of customer service. The million-dollar question is, after three, four years, is it still there? It’s refreshing to have someone in the broker community you can count on day in, day out.”
Proving the Value of Risk Management
Ken Felton was repeatedly asked: “Do you have a way to determine the appropriate staffing levels for our risk management program?” He didn’t have a solid answer. So he set out to find one.
Felton drew upon his nursing director experience and developed a theoretical framework looking at specific risk management activities, collecting time data from hospital risk management staff in order to quantify the time required to support those activities. Felton beta tested his workload quantification model with one hospital to great success. There are now more than 20 hospitals in the database. This data provided a quantifiable model for hospital risk managers to make changes in department structure, improve efficiencies and justify requests for resources. Risk managers agree the tool is priceless.
“From a risk management standpoint, it’s hard for us to get resources because we’re not revenue producing,” said Curt Caruso, system director of risk management for Via Christi Health Inc. “But using this tool, and with his support, we were able to get the full six FTEs that we requested approved. Within a year, we’re already up and running and full-staffed, supporting 4,000 or 5,000 employees, plus all of the patients and families, from a risk standpoint.”
Another risk manager, Trisha Farmer, director of risk management for Connecticut Children’s Medical Center, participated in Felton’s staffing survey and determined that her team was right on track. When her company brought in a productivity consultant soon after, Farmer’s team had no reason to sweat. “We were able to show them, ‘This is exactly what we’re doing,’ so it was really beneficial.”
After staying with the same broker for 37 years, a large specialty children’s hospital made a switch — tapping Don Martin and his team to take on the program. The contract administrator expected changes. But he didn’t expect dramatic savings in the first year.
Thanks to an exhaustive review of the program, Martin and his team uncovered numerous opportunities for improving coverage, as well as a few alarming gaps. First and foremost, the existing property policy didn’t include coverage for business interruption — an oversight that could have caused the organization significant harm.
Martin and his team recommended enhancements that would protect the organization’s assets in the event of a significant loss and interruption of business. They also recommended changes in deductibles on the organization’s general liability and workers’ comp policies.
All told, the team reduced the client’s cost by almost 19 percent while significantly enhancing its coverage. “I’ve been extremely pleased with what they’ve brought to the table,” said the client. “It makes you say, ‘Why didn’t we do this sooner?’ ”
Longtime clients of Martin’s are even more effusive. “He is a right-hand to me,” said the vice president of risk management for a home health and hospice care client. “We have a pretty small risk management staff so I lean on them heavily. We speak almost every day.”
“Don Martin is just one of the best guys I’ve worked with, and I’ve been doing this a while — this is not my first rodeo,” said the CFO of another home health client. “He answers things like he’s in the next room; he jumps right on top of things and he never lets me down.”
In the rapidly changing health care landscape, increasing numbers of physicians are opting to join with large hospital systems in order to avoid being overwhelmed by the costs of maintaining their own practices — a huge piece of which is the cost of professional liability insurance. In Chicago, however, a large group of physicians sought ideas to help them remain independent.
One member thought of Lee Newmark, so he brought the broker in to help brainstorm. Newmark explained to the group that they could get more buying leverage by creating a purchasing group to allow them to buy medical professional liability insurance together, saving them a significant amount of money as well as securing better terms and conditions. As a group, Newmark could also offer them dedicated risk management services.
Nearly all of the physicians agreed to explore the purchasing group option, and Newmark was able to reduce their collective premium dramatically. Not only have most of the group members been able to remain independent, they’re now looking to purchase other lines of insurance through the purchasing group. Newmark and his team also conduct numerous risk management seminars for the members to help them understand how to minimize their exposures.
“If anyone can give the insurance industry a different perspective, it’s Lee Newmark,” said a member of the purchasing group, echoing the sentiments of several of Newmark’s clients.
“He’s an outstanding professional, extraordinarily smart. He’s just our guy. I think he’s a rising star in our area. I would highly recommend him to anyone — including family.”
Taking the Pain Away
Judith Pearson’s dental client had a risk management challenge that was worthy of large doses of Novocaine.
The client was going through a workers’ compensation renewal as a corporation and had to get one policy for the parent company and 350 separate policies for the individual dental offices.
“It was a nightmare,” the client recalled.
“We had about a month to get it done. We got it completed at a great rate. That was a huge thing off my plate,” the client said.
“She’s my go-to person,” the client added. “Even if she’s not administering a line of coverage I have a question on, I can go to her with it and she’ll answer me.”
For a skilled nursing company, Pearson’s ability to save the company money on its professional liability program and get it better protection led to the company giving Marsh the rest of its business. Pearson provided the client with a host of primary and excess carriers to meet with the client and hear their story firsthand.
“Judy will do anything for us,” a client said. “Judy really understands our business and what we need.”
Pearson had a six-year relationship with a diagnostic imaging company that was being acquired. The acquiring company selected Pearson and her Marsh colleagues to put together a professional liability company with significantly higher limits coupled with lower premiums. After lengthy negotiations with carriers, Pearson delivered exactly what the customer wanted.