In recent years, correctional healthcare and locum tenens staffing risks have become well known pain points when it comes to obtaining optimal insurance coverage. However, there are several other challenging classes that generate frustration and are making their way into the wholesale channel. The frustration these risks often produce can be mitigated by partnering with a wholesale broker able to provide retail agents and insureds with knowledgeable guidance and the right marketplace approach.

PHYSICIANS WORKING IN NURSING HOMES

Pain Point: As of 2020, there were 15,300 licensed nursing homes in the U.S., accounting for nearly 1.6 million licensed beds.¹ Unfortunately, the COVID pandemic accelerated a decrease in available healthcare staffing for these facilities, and nursing homes are increasingly turning to staffing agencies to fill gaps as well as utilizing non-employed physicians.⁵ Why does the marketplace typically view this class negatively with many carriers refusing to write nursing home business? The short answer – claim frequency and severity. The average cost of professional liability claims in the assisted living setting is $267,174. That number drops slightly to $245,559 in skilled nursing facilities.⁴ In addition, of losses experienced by nursing homes, medical malpractice claims have the highest median severity of senior care losses, at $1.2 million.³ The potential for high liability exists because most long-term care (LTC) nursing home residents die in the facility, creating the opportunity for wrongful death claims.² Defendants in such lawsuits are unlikely to see a sympathetic jury in the courtroom as more than four in 10 U.S. adults grade nursing homes negatively for overall quality of care. Overall, nursing home quality of care ratings average out to a “D+” grade.⁶ With an aging U.S. population, there is no sign that nursing homes will decrease in size. Therefore, physicians will continue to provide fill-in services for nursing homes, and insurance coverage must be found.

Solution: A knowledgeable wholesale broker can assist with the placement of these accounts by leveraging awareness of market appetite and proactively providing retail agents and insureds with the additional questions that carriers want answered to expedite the process. A broker can also work to secure coverage with an eye toward handling of mid-term requests or evolving risk profiles. An informed broker will be able to pinpoint potential policy structure pitfalls that require amendment, such as when an individual physician is seeking coverage, but care will actually be provided by a team of mid-level providers supervised by the physician. Such a scenario necessitates a different policy structure.

KETAMINE CLINICS

Pain Point: Ketamine clinics have seen post-pandemic growth. The market’s growth can be attributed to the increase in mental health awareness, the ongoing opioid crisis, and an increasing number of ketamine clinics across the U.S.⁸ A Kaiser Family Foundation survey found that 39.3% of U.S. adults reported symptoms of anxiety or depression as of February 2021, a significant spike from pre-pandemic levels.⁹ In 2022, approximately 19.86% of U.S. adults - nearly 50 million people - reported some form of mental illness.¹³ This focus on mental health issues has driven the need for effective and rapid treatment. Ketamine is viewed by some as a beneficial treatment modality for mental health patients with maladies ranging from anxiety to depression and post-traumatic stress disorder. As a result, ketamine-related startups raised $236 million between July 2021 and July 2022.¹⁰

However, ketamine treatment for mental health issues is relatively new and carriers have concerns around potential serious side effects.¹² Physicians can prescribe other forms of ketamine, but the Food and Drug Administration (FDA) has not approved it for mental health treatment, which means that individual practitioners often develop their own treatment protocols. This results in wide variability among providers, with some favoring gradual, low-dosage treatments while others advocate larger doses that may induce hallucinations.¹² This lack of regulation for all forms of ketamine treatment as well as FDA warnings linked to off-label usage has led to heightened risks, including severe psychiatric reactions. Ketamine use can also lead to other health complications such as hypertension and respiratory dysfunction.¹¹ These factors have created a limited marketplace where risks are closely underwritten by the carriers willing to offer coverage.

Solution: Knowledge of the available marketplace for these risks and the specific sets of questions this exposure can create are key to finding the right placement. Wholesale brokers can support the coverage process by reviewing submission material and pinpointing areas that require a more detailed explanation. For instance, treatment referral requirements and an outline of the emergency equipment kept on hand is often needed. These answers can help present the risk in the best possible light and facilitate quoting by as many markets as possible.

COMMON ELECTRICAL CONCERNS FOR UNDERWRITING:

Pain Point: The U.S. medical spa industry has more than tripled in size since 2012, rising to a value of $17.5 billion in 2022.¹⁴ Traditionally, revenue growth has been based on laser hair removal, tattoo removal, and facial injectables.¹⁴ However, over the last few years these businesses have attempted to drive up revenue by expanding their services to include procedures that are often viewed as more hazardous by insurance carriers. Such procedures include platelet-rich plasma (PRP) facials, intravenous (IV) hydration therapy, hormone replacement, GLP-1 medications, and procedures involving stem cells or exosomes.

Med spas are evolving beyond simple cosmetic procedures to tap into the anti-aging market as aging Baby Boomers and Millennials fuel continued growth. In 2022, Americans underwent 9.2 million surgical and non-surgical procedures including Botox injections, dermal fillers, laser hair removal, chemical peels, microdermabrasion, and skin rejuvenation.¹⁴

The anti-aging market can be quite lucrative. For instance, the hormone replacement marketplace valued at $21.97 billion in 2023 is anticipated to surpass $39.¹⁴ billion by 2032.¹⁹ The GLP-1 marketplace is also expected to balloon to a valuation of $100 billion by 2030.²⁰ This expansion of services and increase in revenue is not without concern from the carrier perspective. Cosmetic procedures are often perceived to place patients at increased risk for adverse events because state regulations vary considerably and there is a higher risk of medical professional liability claims among non-physician providers.¹⁵

Newer procedures also generate more risk due to regulatory concerns. For example, the FDA has released advisory warnings around the use of compounded GLP-1 medications, which is the form commonly offered by med spas and wellness clinics.²¹ PRP facials offer the opportunity for the spread of infection. A New Mexico case revealed that the improper cleaning of needles led to HIV infections in PRP patients.¹⁷ Other reports point to consumers developing severe infections and/or skin deformities after receiving unauthorized injections touted to dissolve fat at med spas across the country. These injections are sold online under the names Aqualyx, Lipodissolve, Lipo Lab and Kabelline, or even offered as part of IV hydration services.¹⁶

Solution: Many of these procedures lack historical claims data that enables carriers to determine an adequate rating. The delegation of services to non-physician providers can also mean that what was once a more transactional class of business is now more heavily underwritten with drastically different carrier appetites for certain services. A knowledgeable wholesale broker can help navigate the shifting appetites and requirements of these carriers by providing agents with qualifying questions or the right applications to get to the heart of a risk. There is no reason to believe med spas won’t continue to offer new services in a quest for increased revenue, and partnering with a wholesaler can help expedite or simplify the placement process.

MULTI-STATE EXPOSURES + PCF CONCERNS

Pain Point: Organic growth, expansion by acquisition, and the utilization of technology in patient care are all common occurrences across the full spectrum of healthcare risks. Expansion into new venues or a business plan to operate in multiple states can trigger a need to find coverage in the E&S realm due to the capability of those markets to provide coverage in multiple venues. Furthermore, as businesses and individual physicians operate in, or see patients on, a telehealth basis across several venues they may face Patient Compensation Fund (PCF) regulations.

Solution: There are instances where admitted coverage is absolutely required to satisfy a PCF requirement, but there are also scenarios where E&S coverage can satisfy the underlying insurance requirement for a PCF. A wholesale broker familiar with risks operating in PCF states can assist in articulating the different underlying coverage requirements. The right wholesale partner also knows what action to take when PCF enrollment is initially considered voluntary but becomes mandatory to the risk itself because of a contractual obligation. PCF enrollment requirements can be very rigid, highly nuanced, or both simultaneously. Utilizing a wholesaler who can assist in highlighting where a business plan could trigger PCF requirements, has an awareness of the carriers able to satisfy underlying PCF requirements, and can provide solution-oriented feedback on PCF issues is a necessity when healthcare risks provide services in multiple states.²²

BOTTOM LINE

Challenging healthcare risks such as nursing homes, ketamine clinics, and med spas are becoming increasingly difficult to insure due to high claims frequency, regulatory concerns, and evolving services. When working with these risks, retail insurance agents need specialist guidance to navigate complex insurance requirements and shifting market appetites. Partnering with a knowledgeable wholesale broker can help agents secure the right coverage by simplifying submissions, expediting quotes, and addressing issues like multi-state exposures PCF regulations. Reach out to your local CRC Group producer for assistance in placing your challenging healthcare risks.

CONTRIBUTOR

• Scott Scheiblin and Chip Wienges are Brokers with CRC Group’s Denver office where they specialize in Healthcare.

END NOTES

1. Nursing Home Care, National Center for Health Statistics, November 5, 2023. 
2. Is the Doctor In? The Physician’s Role in Long-Term Care, My Elder, January 22, 2024. 
3. Medical Malpractice Is the Most Severe Loss in Senior Care Facilities, Insurica. 
4. Average Cost of Assisted Living Liability Claims Tops $267,000, Senior Housing News. 
5. Medical Malpractice Claims Trends, Starwind Specialty, February 14, 2023. 
6. Americans Give Nursing Homes D+ Grade for Quality of Care, Gallup, September 12, 2023. 
7. U.S. Ketamine Clinics Market Size & Trends, Grand View Research. 
8. Opioid Market Size, Share & Trends Analysis Report By Product, Grand View Research. 
9. U.S. Ketamine Clinics Market To Reach $6.90 Billion By 2030, Grand View Research, July 2024. 
10. With Pressure to Scale, Some Ketamine Clinics Could Be Doing Harm. Here’s What Consumers Need To Know, Forbes, May 29, 2023. 
11. Are Federal Agencies Coming for Ketamine Clinics?, MedPage Today, April 1, 2024. 
12. The ketamine economy: New mental health clinics are a ‘Wild West’ with few rules, NPR, January 30, 2024. 
13. U.S. Ketamine Clinics Market Report 2024-2030: Depression, Anxiety, PTSD, On-site Therapy, Online Therapy Size, Share, & Trends Analysis, Yahoo Finance, August 16, 2024. 
14. Exponential Growth Hits US Medical Spas - Revenues Triple Since 2012, PR Newswire, November 20, 2023. 
15. Who Is Holding the Syringe? A Survey of Truth in Advertising Among Medical Spas, National Institutes of Health, 2023. 
16. Warnings grow about risky IV drips and injections at unregulated med spas, NBC News, January 1, 2024. 
17. “Vampire facials” at an unlicensed spa infected three people with HIV, CDC finds, CBS News, April 28, 2024. 
18. What Is a Platelet-Rich Plasma (PRP) Facial?, WebmD. 
19. Hormone Replacement Therapy Market Set to Surge to US$ 39.14 Billion By 2032, With a CAGR of 6.97%, Yahoo Finance, July 12, 2024. 
20. As GLP-1 drugs boom, other healthcare companies are cashing in, Biopharma Dive, July 10, 2024.
21. Medications Containing Semaglutide Marketed for Type 2 Diabetes or Weight Loss, Food and Drug Administration. 
22. State Patient Compensation Funds: What You Need to Know, ProAssurance, August 11, 2023.