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HUB International 2021 Outlook

Healthcare Industry

 

Transforming Uncertainty into Opportunity

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Charting a New Course

The healthcare industry faces intense disruption as it battles the pandemic, implements new service models, and anticipates an as-yet undetermined liability for COVID-related deaths

The healthcare industry, at the epicentre of the COVID-19 pandemic, faces a lengthy rebuilding period that will likely extend beyond 2021.

Some sectors are more challenged than others to get through this period.

So many uncertainties stemming from the pandemic create new risks and new questions. How can and should telemedicine stretch to fill existing and potential service gaps? Will the shortage of medical professionals lead to worrisome shortcuts – with the potential for errors – which may leave the public at risk?

“The uncertainty in every facet of healthcare is posing uncertainty for insurers as well.”

Then there’s the especially precarious position of the senior care sector, accounting for more than 80% of the coronavirus-related deaths in Canada. There may be some cover in provinces like Ontario, where “shield” laws were adopted against COVID-related lawsuits over lapses in care, but it will be unusual to find a liability policy that doesn’t exclude the novel coronavirus and other communicable diseases moving forward.

The uncertainty in every facet of healthcare is posing uncertainty for insurers as well. COVID has impacted many lines of insurance for healthcare professionals – professional liability, general liability, management liability. Even before the pandemic, premiums were escalating and availability was tightening, pretty much across the board, even as underwriters scrutinized risks more closely. The disruption, though, makes risk management an essential component of 2021 business strategies. More important than ever is the right broker partnership to help guide organizations through.

Among the most significant trends and issues influencing the healthcare industry and its risk posture in 2021 and beyond are the following:

“The disruption, though, makes risk management an essential component of 2021 business strategies.”

“Telemedicine will likely have staying power, after growing more in the last six months than it did over the last ten years.”

1. Telemedicine proves a lifeline for primary care practices.

Primary care practices were among those facing significant risk of closing during the pandemic as in-person visits were reduced.

Telemedicine will likely have staying power, after growing more in the last six months than it did over the last ten years. Not only did it prove itself in the pandemic to be essential for primary care visits, but it is also a viable option to specialty practices, hospitals and senior care, too. At the same time, it creates new risks. Any organization that has added telemedicine services should immediately update its risk management policies and procedures accordingly – clinical and otherwise – including documented standards of care for telemedicine. These protocols must be evaluated against the conditions or circumstances of the technology’s use for each provider: Is a telehealth consult by itself sufficient? The issue is whether a healthcare professional can adequately judge through a camera lens whether, for example, the patient has an ordinary skin lesion or a melanoma, and when a face-to-face exam is the best practice. Guidelines establishing telehealth’s limitations will protect against overreach.

Cyber risk remains a significant concern. So is other billing fraud. Of the $36.1 billion paid by private insurers in health care claims, the Canadian Life and Health Insurance Association estimates that 2-10% of those claims – from $600 million to $3.6 billion – are likely fraudulent. Cyber risk means telemedicine platforms must be technologically sound, with secure internet connections well-protected by firewalls and other measures like passwords and employee training. Procedures also must be developed for properly identifying patients (like date of birth or portion of a health card number). Continued reliance on third-party electronic medical record management and the massive amount of data stored in the cloud ensures healthcare data breaches will continue in 2021. The liability makes it an imperative to work with your broker on buying proper cyber limits and getting educated on how insurance supports your group’s cyber risk management efforts.

COVID-19 Impact

Cyber risk remains a significant concern and it means that telemedicine platforms must be technologically sound, with secure internet connections, well-protected by firewalls and other measures like passwords and employee training.

“Fearful of of contracting the virus and the lack of personal protective equipment (PPE) made it difficult to provide adequate care for residents.”

2. Staffing shortages leave long-term care facilities at risk.

Ironically, the staffing shortage in long-term care facilities in Ontario was well documented already at the end of 2019, but the early days of the coronavirus pandemic led to a shortage that was even more severe. Staff members, including nurses and personal support workers, stopped coming to work for a variety of reasons: they had contracted the virus; they were afraid of contracting the virus; they were afraid of working without appropriate personal protective equipment (PPE). Those issues, coupled with government subsidies for those who couldn’t return to work, made it difficult to provide adequate care for residents.

More than half of long-term care homes experienced at least one case of COVID by July 2020. Many had outbreaks and even deaths. Employees, under great strain, were experiencing mental health issues and workplace violence. And when the province was finally able to provide PPE to these facilities, it also requested that they sign a waiver releasing the province from any risk for providing the PPE. The facilities had to take on the risk themselves. Many organizations, in similar situations, will need to make sure they have the right liability coverage, both to protect the employees and the residents. Working with a broker familiar with specialized healthcare facilities will be invaluable in protecting your facility from too much exposure.

“Those with strong broker relationships will be in the best position to weather this period and are cautioned to start early on renewals”

3. The straits of the senior care sector.

While 4 out of 5 COVID deaths occurred in senior care settings, many facilities did, in fact, protect their residents and staved off disaster. What made the difference? Their ability to stock up on personal protective equipment and masks for employees and residents. Stringent screening of everyone walking in the door. Education on best mitigation practices. And most importantly, strict adherence to infection prevention protocols.

The right procedures and controls to prevent infections can make the difference in disease transmission. It’s a lesson that didn’t come soon enough for much of the industry but should be incorporated into clinical risk management improvements moving forward. Senior care will be pressured well into 2021, facing as-yet undetermined liability over COVID deaths. Many organizations will find coverage difficult to get – even at higher premiums and with exclusions for COVID. Those with strong broker relationships will be in the best position to weather this period and are cautioned to start early on renewals. This will help reduce exposures, give your broker a better story to tell in marketing your practice with insurers.

Then there’s the especially precarious position of the senior care sector, accounting for more than 80% of the coronavirus-related deaths in Canada.

“The uncertainties create opportunities to get creative. They also create risks.”

Success in 2021

In 2021, the healthcare industry will be challenged by the ongoing battle against COVID and will need to find ways to effectively counter its impacts – along with other forces that have been driving change: Managing patient care and expectations – and standards – for quality and safety. Finding creative yet careful ways to meet the increasingly pressing need for medical professionals. The uncertainties create opportunities to get creative. They also create risks. Balancing both will be the challenge. A good broker will prove to be an invaluable partner in the process, ensuring your story is positioned positively with insurance carriers, your coverage is right-sized, and costs are tightly managed – in 2021 and beyond.

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