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Medical Professional Versus Directors and Officers Liability for Health Care Providers

By March 20, 2023No Comments
Group Health Insurance

The 2021 Health Care Insurance Benchmark Report published by the Assurex Global Partnership examined the insurance behaviors of over 1,000 health care clients of its partner agencies.  The survey identified some interesting behaviors in the areas of medical professional lability coverage, particularly when compared with Directors and Officers Liability coverage. 75% of the health care providers in the survey were organized as nonprofits. The survey broke the health care industry into three general areas. 

Acute care providers treat patients with active but short-term needs due to a severe injury or episode of illness, an urgent medical condition, or during recovery from surgery.  Acute care incorporated some of the largest entities in the survey, which were much more likely to utilize sophisticated alternative financing techniques, including captive insurance companies.  Acute care organizations purchase significantly higher medical professional liability limits than either long term or outpatient care providers. 

Long term care providers meet both the medical and non-medical needs of people with a chronic illness or disability who cannot care for themselves for long periods of time, typically in a residential setting.  While long term care providers made use of alternative risk financing techniques, they did so at a much lower rate than acute care providers.  Furthermore, the limits of medical professional liability insurance purchased were much more modest than those of acute care providers.

Outpatient care providers treat patients whose needs do not require hospitalization, such as an exam, treatment visit, or emergency service where the patient leaves the facility the same day they arrive.  Outpatient providers were typically smaller than either acute or long term care providers, and they tended to be less likely to use alternative risk financing techniques.  The medical professional liability insurance limits purchased by outpatient organizations were significantly less than those of acute care providers, though nominally greater than those of long term providers.

Not surprisingly, the rate per $1 million of medical professional liability limit is a direct function of the organization’s size, i.e., the larger the provider, the more expensive their medical liability coverage costs. However, the data did not reveal a direct relationship between the size of an organization and the medical professional liability limit purchased.  It appears that factors other than the size of an organization influence the amount of medical professional liability insurance purchased.

We found the comparison of the purchasing decision of Directors and Officers Liability coverage versus Medical Professional Liability coverage interesting.  More than four times as many health care providers in the survey reported purchasing medical professional liability than reported purchasing directors and officers liability coverage.  Furthermore, there appears to be a more direct relationship between organization size and the amount of D&O limit purchased.  As organizations increase in size directors and officers (D&O) liability limits and deductibles increase as well, contrary to what we found with medical professional coverage. 

The 2021 Health Care Benchmark Report examines the buying behaviors of health care providers in much greater detail than what this blog post summarizes.  Further information and a Key Findings document are available from the health care risk management and insurance specialists at your local Assurex Global Partner.  

The knowledgeable and trusted insurance experts at ECM Solutions have the knowledge and skills to help you through the decision-making process. Contact Amber Pendlay 980-960-2527 to discuss how we can help.

Author Amber Pendlay

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