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 Liability Costs For Skilled Nursing Centers Projected To Rise In 2017

An analysis released by the American Health Care Association (AHCA) and Aon Global Risk Consulting shows the cost of liability continues to increase for the long term and post-acute care profession.
According to the report, the overall loss rate is expected to grow by 6 percent annually, with claim frequency driving the increase at an expected 4 percent growth rate.
Published annually for the last 14 years, the 2016 edition of the Aon/AHCA Long Term Care General Liability and Professional Liability Actuarial Analysis provides estimates of loss rates, or the cost of liability to skilled nursing care centers on a per-bed basis. The projected national 2017 loss rate, which is a combination of claim severity and frequency, is expected to increase to $2,350 per occupied bed. This means that a nursing center with 100 occupied beds can expect approximately $235,000 in liability expenses in 2017.
In addition to the national projection, 17 states were profiled individually in the report. This year’s data show that three states in particular are projected to have higher-than-average loss rates per occupied bed in the coming year. Kentucky’s projected loss rate is $7,500 per occupied bed, with Florida coming in at $7,400 per occupied bed and West Virginia at $7,360 per occupied bed. This contrasts sharply with an anticipated $480 loss rate per occupied bed in Minnesota and $500 in Massachusetts.
“Overall, what we are seeing on a state level—increasing loss rates, claim frequency, and claim severity—mirrors what we are seeing at the national level,” said Christian Coleianne, associate director and actuary from Aon Global Risk Consulting. “The findings in this analysis help providers understand where their risks and costs are to properly fund those costs.”
To perform the analysis, approximately 18,300 individual non-zero claims from 31 long term care providers were aggregated. These providers operate approximately 224,000 long term care beds, consisting of skilled nursing facility beds and a number of independent living, assisted living, and rehabilitation beds. They represent approximately 17 percent of the beds in the United States, and six of the 10 largest operators in the country.
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