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How to Maximize

the Benefits of a Soft Market Let’s Connect:

Before the Next Cycle SFHEF Spotlight

BY WESLY GUITEAU, EXECUTIVE
ASSOCIATE, RISK STRATEGIES SFHEF's
COMPANY
Member
The past 10 years have marked one of
the longest periods of soft market condi- Spotlight
tions the insurance industry has ever
seen. A confluence of factors have con-
tributed to this: September
1. Lower claims frequency and severity
2. Abundance of capital 2017
3. Tort reform
4. Better and proactive risk manage-
ment Dr. Luckner C.
With a focus primarily on medical
malpractice, which account for the Christina Stabile Denord, MD, PhD,
largest share of the insurance cost to 1. Seek optimal cost efficiency and a
healthcare providers, this article will dis- client centric contract now. If you have DHA, MBA, MPH,
cuss strategies to take advantage of the not already done so, use your next
soft market and outline best practices renewal to seek further premium relief, LHRM, CPM
that can shield providers from the next lower your self-insured retention,
hard market. remove unnecessary exclusions and Dr. Luckner C. Denord, MD, PhD, DHA, MBA, MPH, LHRM, CPM, is a
Let’s start with a closer look at four improve key provisions such as batch Baldrige Executive Fellow and Certified LEAN/ Six Sigma Master Black Belt.
micro-economic factors impacting the language. This provision allows you to He is the Executive VP, Chief Strategy and Quality Officer at Jessie Trice
market. combine all related claims into a single Community Health Center, Inc. in Miami.
All studies seem to suggest claims fre- claim, thereby limiting your retention He has 20 years of experience in quality management, performance improve-
quency and severity are lagging indica- obligation to one payment. ment, programs design, training and implementation. Specialties include
tors of insurance market health, which 2. Partner with carriers for the long Quality, Risk Management, Performance Improvement, Compliance and
explains why many carriers tend to term. A long term partner should meet Transforming Healthcare.
increase reserves from time to time. the following criteria:
Capital is mobile and always seeking a. A. M. Best rating of A or better
favorable returns. Capital can help to b. A dedicated health care platform
stabilize the market, as is currently the with experience underwriters and long
case, but can precipitate a hard market track record in the health care industry
when deployed elsewhere. Tort reform c. Additional risk management and
on the other hand, can have a more last- loss control services
ing effect at the state level, but tends to 3. Partner with a broker that:
fall to political pressure as political cli- a. Has broad expertise with your
mates change. The on-going effort to industry, not just a transactional broker
repeal the ACA is a current reminder of riding the coattail of a soft market
how fleeting change can be. b. Can bring additional risk manage-
This leaves one consistent factor, risk ment techniques to bear when needed
management, which is, coincidentally, c. Has established relationships in the
the only tool providers have control over market place and can advocate for your
and possibly the single most effective interests at the highest level
way of managing your total cost of risk. d. Can map out the right balance
Years of analysis have shown that adher- between risk transfer, risk mitigation
ence to national best practices and and risk management.
proactive risk management deliver sig- Having limited resources to fund a
nificant reductions in the total cost of sophisticated risk management program
risk. Furthermore, these reductions are does not mean that you cannot reach out
sustained over a longer period of time for help. According to Christina Stabile
and are less likely to be susceptible to of Risk Strategies, “The truth is, for every
wild swings when the market hardens. large Integrated Delivery Network, there
Conversely, providers with limited are dozens of community and rural hos-
resources, inadequate patient safety pro- pitals that are struggling to take care of
tocols and an ad hoc approach to risk the poor.” Many carriers have resources
management were very susceptible to and willingness to subsidize key patient
wide premium cost swings as the market safety initiatives as part of their efforts to
hardens. While they do receive good protect their capital. Good risk manage-
rates during soft market conditions, ment can be part of any operation.
mostly by occasionally switching carri-
ers, they typically pay it back many times Please contact your local expert:
over when the market hardens. Christina Stabile, Healthcare Sales
With these facts in mind, here are Executive, Kahn-Carlin, A Risk Strategies
three key steps that providers, especially Company, at cstabile@kahn-carlin.com or
smaller institutions, can take to position (305) 648-7500
for the next insurance market cycle. or visit www.risk-strategies.com.

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editorial@southfloridahospitalnews.com

South Florida Hospital News southfloridahospitalnews.com September 2017 15