By Shawn McLaughlin and Glenn Day

As we close in on the end of the decade, a combination of trends are coming together to intensify pressure on the healthcare industry.

Consolidation and technology remain the big game changers, and understanding the resulting risks will be key to succeeding as this environment continues to evolve. One of the prices it will likely exact is higher malpractice insurance rates as insurers, having chased a shrinking client base for years, start increasing their rates to cover mounting losses.

Here’s an overview of three major trends to watch in 2019:

  1. The push for consolidation and change.
    Every facet of the sector seems to be undergoing some form of consolidation. You see hospitals and physician groups merging and/or being acquired, with private equity and venture capitalists playing bigger roles. At the same time, the base of healthcare professionals is shrinking and reshaping, especially with worsening physician burnout. The result is that allied health providers including nurse practitioners, Certified Registered Nurse Anesthetists, Certified Nurse Midwives and Physician Assistants are taking on more prevalent healthcare provider primary roles – in 2019 and beyond. The setting for their work in this environment reflects the ongoing and growing shifts into a convenient and outpatient care setting with continued growth in urgent care centers, fast-growing worksite clinics or clinics in convenient care areas like pharmacies, or through channels like telemedicine.

    On the long-term care front, home health services, augmented by telemedicine, will increasingly be a solution for the growing population of aging baby boomers, for whom there aren’t enough affordable nursing home beds. The senior care sector is also continuing to evolve to find lower cost facilities to generate more profit in areas like assisted living centers. There is a continued trend for facilities to provide the scope of independent living, assisted living and skilled care in an all-in-one-one environment. This sector is also seeing consolidation as well as private investment in independent and assisted living facilities.
    Inherently, the evolution of healthcare delivery can be a good thing if the outcome is lower healthcare costs. But the risks and liabilities will percolate as the industry is challenged to continue offering high quality care while dealing with a shortage of skilled care providers to fill the gaps.

  2. Technology – both boon and bane
    These days, everyone points to telemedicine when they talk about hot healthcare technologies, and why not? At one-quarter of the health IT market, it’s expected to hit the $20 billion mark in 2019…yet another manifestation of the way technology has benefitted patient care, diagnostics and healthcare management in general.

    But it’s hard to avoid technology’s dark side, and the risks moving forward are only growing for a sector that was late in investing in digital security. Start with electronic medical records, where sloppy practices, workarounds and short-cuts can leave openings for malpractice actions if the safeguards aren’t followed or understood by providers. Another area of concern is that health systems and physician offices may lack the resources to protect themselves from or manage cyber breaches. That represents a big vulnerability, especially when protected health information is considered to be more valuable than Social Security or credit card numbers on the dark web. Health data breaches have jumped by 70 percent over the last seven years, or 75 percent of the 132 million affected records breached by hackers. And there is a cost, in lost productivity, costs to provide forensic investigation, legal and notification costs and potentially in patient lawsuits or fines for HIPAA violations.

  3. Paying the piper with higher malpractice premiums
    Nine straight years of a competitive and soft malpractice premium environment, two years of underwriting losses and declining reserve strength will put pressure on insurers to start biting the bullet to push up premiums on medical malpractice insurance. They need to cover medical trend costs, which are pushing up severity of claim verdicts and settlements. The bottom line: Healthcare professionals in a number of states can expect carriers to try to pass through healthy premium increases in 2019 and beyond.

The healthcare environment will continue to pose any number of challenges as we advance into a new decade. Managing through it effectively starts with understanding the scope of the risks. Developing a plan to chart out your response will be instrumental.

Whether you’re anticipating your risks in a changing market, evaluating options to manage your cyber exposures or looking to plan to help offset likely premium increases, HUB International’s healthcare experts are ready to help.