2006 Medical Professional Liability Symposium Chicago, Illinois ~ March 14 & 15, 2006 Miscellaneous Healthcare Facilities Risk Mixing and Matching

Miscellaneous Healthcare Facilities Moderator:Paul Greve Willis Healthcare Practice Panelists:Rob Jurgel AIG/Lexington Fran O’Connell Shand Morahan Leslie Miller National Specialty Underwriters Bruce Balck Arch Insurance Group

Miscellaneous Healthcare Facilities Defined By exception: a broad range of healthcare entities that are not hospitals or LTC facilities New types of miscellaneous healthcare facility entities are created every year

Miscellaneous Healthcare Facilities Examples Alcohol and Drug Rehab Ctrs Ambulatory Surgery Ctrs Ambulance Services Blood Banks Clinical Testing Labs Diagnostic Imaging Ctrs Dialysis Ctrs Drug Testing Services Home Health Care Home Infusion Therapy Hospices Lithotripsy Facility MedSpas Mobile Radiology Units Nurse Registries Outpatient Clinics Pain Management Ctrs Pharmacy Public Health Clinics Public Health Departments Urgent Care Ctrs Visiting Nurse Assoc

Miscellaneous Healthcare Facilities Why the Move to MHFs? Aging Population Utilization Increasing Increase in Chronic Illness  By 2010, 70M will have 2 or more chronic illnesses For Certain MHFs, e.g. ASCs, Physicians Can Achieve:  More Volume  Better Reimbursement  Convenience  Lower Costs Competition Between Hospitals and Physician-Owned Specialty Services Will Continue Growth in Alternative Therapies Will Continue  MedSpas  Biofeedback  Acupuncture

2006 Medical Professional Liability Symposium Chicago, Illinois ~ March 14 & 15, 2006 Healthcare Facilities Risk Mixing and Matching Rob Jurgel Product Line Officer AIG Healthcare

Miscellaneous Facilities – Industry Anatomy $750M Insurance Marketplace 50+ Diverse Classes 50,000+ Prospects 20+ Insurance Carriers 5,000+ Brokers

Distribution – 5 Channels National Brokers Retailers – 2 nd & 3 rd Tier Wholesalers MGAs Associations

Product / Coverage Issues Basic Forms – 3 Types Limit Structure – Dual or Single Aggregates Coverage Trigger – Incident Sensitive vs. Demand Sexual / Physical Abuse Coverage Practitioner Coverage – Drs & CRNAs Value Added Features – RM, Claims, Crisis Management

Key Underwriting Issues Know the Class Understand the Exposure  Differences between Classes  Differences within Classes (Risk Modifiers)  Practitioner Coverage (Drs & CRNAs)  Venue Differences  Loss Experience  Quality of Risk Management (Assessments)

Perception: Everybody Makes Money in MF? True / False PBM Losses $42M – Changed Formulary to Increase Financial Incentives $23M – Rebating Issues $12M – Resold Returned Drugs Pharmacy Losses $21M – Adult Version of Drug – Brain Injury $ 4M – Detained Shoplifter – Death $ 3M – Wrong Medication EMT Losses $10M – Asthma Attack - Driver Lost Key to Drug Box $ 5M – Delayed Response, Cardiac Arrest $ 4M – Improper movement, spinal cord injury Surgi-Center Losses $20M – Loss of Vision (Highly Paid Professional) $ 4M – Anesthesia - Coma $ 3M – Cardiac Arrest

Everybody makes money (continued)… Hospice Losses $8M – Negligent Care in Nursing Home $3M – Negligent Care $3M – Hired and Non-owned Auto (accident) Medical Lab $6M – Failure to Detect Cervical Cancer $3M – Failure to Detect Down Syndrome (4 claims) $2M – Failure to Detect Cancer (8 claims) Behavioral Health $5M – Improper Restraint - death $5M - Failure to Monitor resident – elopement – murder $3M - Failure to monitor – suicide Dialysis Losses $8M – Exsanguinations (bleed out) $2M - Exsanguinations (bleed out) $1M - Fall / injury

The Big Secret of Underwriting MF Business Successfully? Charge 25% less than the expiring carrier? Offer a low premium but make it up on volume? Charge the Correct Rate for the Exposure!

2006 Medical Professional Liability Symposium Chicago, Illinois ~ March 14 & 15, 2006 Healthcare Facilities Risk Mixing and Matching Fran O’Connell Vice President Shand Morahan & Company

Healthcare Facilities Risk Mixing and Matching What else Is influencing the Healthcare Marketplace?

Advertising/Media Nip & Tuck, don’t break a sweat results A Pill to improve your lifestyle

Who is being treated? Consumer as Patient Consumer’s Concerns  Cost  Quality  Time/Choice  Service

What do Telemedicine, Matchmakers have in common? 1.They’re scary 2.They’re coming and here to stay 3.Alternative delivery system for drug and/or medical services

New Medical Risks Telemedicine/e-Health Anti-Aging Bariatric Surgery Pain Management New Specialties/Expansion of roles Providers who are “bare”

Other Exposures “Creeping” into MPL Risks “Investigational” Drug Therapies IT Exposures  Record, transmit and interpret data Multiple State or Country Operations Life Sciences  Molecular medicine  Implantable Privacy Issues

Coverage Considerations Claims Made Professional Liability Claims Made Professional and General Liability Claims Made Professional and Occurrence General Liability Deductibles/SIRs Defense  Inside Limit  Outside Limits Prior Acts Coverage trigger options Consent to Settle Territory

Claims Yes, we get CLAIMS

Surgicenter Claims Surgicenter becomes deep pocket Eye Surgeries  Failure to screen (optometrist)  Failure to calibrate (technician) Emergency Procedures

Medi-Spa Claims Laser Hair removal Burns Micro-pigmentation Infections No Informed Consent Allergic Reactions

2006 Medical Professional Liability Symposium Chicago, Illinois ~ March 14 & 15, 2006 Healthcare Facilities Risk Mixing and Matching Leslie Miller Senior Vice President National Specialty Underwriters

A Rose By Any Other Name Ancillary Healthcare Spec (specified) Med Miscellaneous Medical

Defined By What It Is Not NOT a provider NOT a hospital NOT long term care

Miscellaneous Healthcare Adult Day Care Centers Ambulance Companies (excludes auto liability) Banks Cancer Centers (Radiation Oncology) Clinics Community Health Centers Correctional Medicine Dialysis Centers Family Planning Home Health Agencies Hospice Care Imaging Centers Labs Lithotripsy Long-Term Care Medical Spas Mental Health Nurse Staffing Perfusion/Auto transfusion Pharmacies Product Liability (medical products only) Public Health Dept. Schools Social Services Sleep Centers (Apnea) Social Services Staffing Surgery Centers Therapy Trauma Rehab

Why All of the Fuss? Surgical Centers – more than 5,500 ASC’s Imaging Centers – more than 2,800 facilities Home Health Care – more than 11,000 agencies Medical Labs – more than 5,000 laboratories

Markets AceAdmiralAIG ArchCNAColony DarwinEvanstonGenStar HudsonInterstateJames River Lloyd’s of London NASOne Beacon RSUI United National Zurich

Surgery Center Surgery Center located in Midwest Performs bariatrics Performs plastic $1M / $3M limits Prior acts

A Rated Market Quotes Carrier A: $184,000$20,000 deductibleCarrier A: $184,000$20,000 deductible Carrier B: $210,000$25,000 deductibleCarrier B: $210,000$25,000 deductible Carrier C: $514,867$25,000 deductibleCarrier C: $514,867$25,000 deductible

Social Services Social Services located in Florida Child Welfare Services Package PL/GL $1M / $3M Claims Made Year 3

A Rated Market Quotes Carrier A: $26,500$10,000 deductibleCarrier A: $26,500$10,000 deductible Carrier B: $125,000$10,000 deductibleCarrier B: $125,000$10,000 deductible Carrier C: $200,000$10,000 deductibleCarrier C: $200,000$10,000 deductible

Market Selection Class of business Venue Minimum premium requirements Glamour do’s and don’ts by carrier

Improving Your Success Rate A complete application, with a supplement to be certain that you have all of the information Understand what really goes on inside the box Know your client’s growth strategy

Pick Two

2006 Medical Professional Liability Symposium Chicago, Illinois ~ March 14 & 15, 2006 Healthcare Facilities Risk Mixing and Matching Bruce Balck Director – Risk Management Arch Insurance Group

Risk Exposures Mail-Order Pharmacy Ambulatory Surgery Dialysis Ambulance Services Home Health/Hospice

Mail-Order Pharmacy Operations:  Pharmacist involvement  Bar coding  Process of clarifying orders  Computer Screens/Verification/Photograph  Systems to track errors The Patient:  24/7 Pharmacy Support  Patient Instructions (easy to read)

Ambulatory Surgery Patient Selection (Risk Factors) Staffing competency Procedure Appropriate for setting Standards of Care  Infection Control  Monitoring modalities  Anesthesia*

Propofol – New Frontier? It’s an anesthetic Short acting sedative effect Dangers;  Loss of airway reflexes  Oxygenation  Aspiration  Bradycardia  Hypoxia

The Issue/Debate? RN’s administering in:  Diagnostic Centers  Surgical Centers  Doctor’s Offices  Emergency Rooms Patient lose their respiratory drive without warning Supporting airway until the medication “wears off” No antidote – “Tincture of Time” Airway management  Must be able to intubate

Hemodialysis Replaces normal kidney filtration Causes:  Acute: Trauma, Surgical Complications, blockage to blood vessel  Chronic: Hypertension, Diabetes

Risks of Dialysis The ‘typical’ side effects: Infection, anemia, nausea, headaches, hypotension, etc. Electrolyte imbalance Cardiac arrhythmia Air embolism “Bleed-outs”:  Pressure Alarms ‘off’  Lack of vigilance Failure to flush Dialyzer (filter) of cleaner (re-use) properly. Re-use; Infection/Verification Falls

Ambulance – Airway Management The Issue: Dislodging the ‘ET’ during transport! Primary and Secondary Verifications Document placement (ET) during and after transfer. Skill set – Practice

Dislodged Airway Grip-ETPrevents ET dislodgment for patients who must be moved and transported while intubated. Cost: $3.69

CO2 Sensor Provides a breath-by- breath indication of exhaled CO2. No airway = No CO2

Esophageal/Tracheal Airway ‘Combitube’ Inserted “blindly” and ‘seals’ the oral and nasal pharyngeal cavities. Functions in either the trachea or esophagus. Normal and abnormal airways ‘Trapped’ patients

Home Health/Hospice Background Checks Supervision Chain of Command/Communication Job performance evaluations Skill set that matches job function* (*Trend towards using more non-licensed personnel)

Home Health Nurse Negligent in Airway Management 9 Month Old ‘Vent Dependent’ with Trach Panic when trach plugged Failed to follow procedure 19 minute delay

$2.5M Award $2.5M Award The Outcome: Brain Damage – Died 28 Days later $2.5M (with an annuity) Key Elements: Training/Experience Lack of supervision

Miscellaneous Healthcare Facilities Paul Greve Willis Healthcare Practice Rob Jurgel AIG/Lexington Fran O’Connell Shand Morahan Leslie Miller National Specialty Underwriters Bruce Balck Arch Insurance Group

2006 Medical Professional Liability Symposium Chicago, Illinois ~ March 14 & 15, 2006 Miscellaneous Healthcare Facilities Risk Mixing and Matching