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Research & Analysis


October 15th, 2015 | 4 min. read

By Jonathan Waterman

I ran some reports recently to see how many surgery center policies we placed at Ethos for our retail clients since opening our firm in 2004.  We placed 848 ambulatory surgery centers (ASCs) policies.  Yeah, that’s a lot.  We placed over 100 just in the last year alone.  Does that make us the superheroes of surgery center placements?  No. But, it does mean that we helped a lot of retail agents look like heroes to their ASC clients!

So, what does our focus and experience with ASCs tell us about trends specific to this class of business?

We mostly work on placing the medical professional liability insurance for our retail clients’ ASCs.  And, collecting industry-wide data on potential MPL insurance trends is very difficult, if not nearly impossible.  Carriers simply aren’t going to hand out their specific data readily.  But, our own data and anecdotal evidence shows us some trends worth keeping an eye on.

Here are the ASC trends we are seeing in 2015 from our data:

  1. Surgery counts are increasing year-over-year by 10%.

Our ASC renewal book is seeing an increase projected number of expected surgical cases, year-over-year averaging about 10%.  I’ve seen various ASC industry articles that seem to show that growth is slowing for the overall industry in the last few years. Yet, we are seeing an increase in growth per account.  It’s possible that our ASC data set is simply outperforming the industry average or maybe we’ll see a downturn in growth going forward.  Either way, it’s interesting to see growth in our own book because this kind of growth seemed to virtually disappear from our book from 2009 to 2014.

  1. Pain Management cases are driving claims.

We’ve seen at least six different renewals this year affected by claims involving pain management procedures.  I’m told by a couple of my carrier partners who write ASCs that they are seeing a similar trend where pain management claims are on the rise.  Historically, ASCs have had very little notable MPL claim activity, thus making them a prime target for many carriers interested in writing profitable non-hospital medical facilities.  However, I’m being told by some carriers that their profitability on ASCs is way down because of downward-trending claims. Claims specifically from pain management procedures has been mentioned in every discussion as one of the driving factors.

  1. MPL premiums are starting to rise.

In 2015, we are seeing a general rise in ASC premiums overall. This is a reversal of a continual downward pricing trend that we observed since our firms founding in 2004.  These current increases seem to stem directly from the first two items mentioned above: growth in surgery counts and some increased claims activity. Yet, as we’ve mentioned in several other articles this year, we also believe that certain negative carrier trends among MPL carriers is creating an under toe of rate changes that aren’t always easily spotted.

  1. Cardiovascular cases are growing.

Some ASC industry pundits are expecting a rise in cardiovascular procedures at ASCs. {LINK}.  Technological developments are making it easier to perform certain procedures, like pace-maker implants. Interestingly, we’ve seen a recent uptick in our own ASC placements where certain cardiovascular procedures are growing significantly.  This isn’t necessarily unwelcomed or problematic for underwriters, but cardio procedures are a higher rated category than others, so growth in this area will increase premiums accordingly.

  1. Fewer independent physicians are creating shortages of privileged surgeons.

As the healthcare industry continues a trend of consolidation, we are hearing from our retailers and insureds that ASCs are having a tougher time finding and/or keeping a robust list of privileged physicians.  ASCs rely on independent surgeons to refer their patients for surgery at the ASC, so when surgeons consolidate their business interests with large health systems, this can often leave the local ASC out of the surgeon’s purview.

We’ll continue to keep a watchful eye on all these important developments. We remain particularly concerned about the increased negative performance trends on the carrier’s side of the market.  Carriers’ operating results may have little to do specifically with ASC accounts, but that can still affect how ASCs are insured.

So, here’s a short list of specific issues that could affect ASC clients when buying medical professional liability insurance.

  • Focus on a carrier’s ‘base rates’ rather than overall premium…is the actual rate going up, down or staying flat?
  • ASCs should provide the most realistic forward-looking projections when contemplating surgical case counts. Since underwriters use these figures to calculate premium, they shouldn’t be over or understated.
  • If an ASC is struggling with new physician recruitment for their center, this could affect the ASC’s revenue, growth and profitability.
  • Look closely at the breakdown of surgical cases counts by areas of specialty. If an ASC is growing its count of pain management and/or cardiovascular surgical cases, then expect a higher proportionate increase in premium.

If you have questions or need help with your ASC client, feel free to call Ethos’ superhero-supporting headquarters at (425) 216-2920.

Jonathan Waterman

Jonathan, the Co-Founder and Chief Operating Officer of Ethos since its inception in 2004, has had a distinguished insurance career dating back to 1992. Beginning as an underwriter specializing in medical liability insurance for PHICO Group, he progressed to roles with Frontier Insurance Group and National Specialty Underwriters, Inc., before co-founding Ethos in 2004. Jonathan's background as a med-mal underwriter and in the wholesale market uniquely positions him to drive operational excellence at Ethos, utilizing his expertise in identifying data patterns. He has contributed to industry dialogue through his blog articles and participation as a panelist at events such as PLUS. Beyond his professional pursuits, Jonathan finds joy in family, a wide range of hobbies including music and sports.