Skip to main content

«  View All Posts

Research & Analysis


June 24th, 2015 | 4 min. read

By Jonathan Waterman

[This is Part 1 of a 3-Part series of posts that will explore Medical Professional Liability for Long Term Care Facilities.]

The Congressional Budget Office (CBO) published a report in June 2013 which noted that if certain trends in the aging population continues, “…the number of elderly people with functional or cognitive limitations, and thus the need for assistance, will increase sharply in coming decades.”  Long term care services will grow in number to accommodate this trend. This creates opportunities for focused insurance agents to grow their books.

The purpose of this article is to provide retail insurance agents with a basic landscape of the residential long term care facility market.  The non-residential types of long-term care services (such as home health care and adult day care) also need MPL insurance.  However, this series of articles will focus just on the residential facilities and the nuances related to purchasing medical professional liability insurance.


Long term care services (also referred to as ‘services for the aging’) can be provided in three basic ways:

  • At a person’s home;
  • In a ‘day’ or ‘outpatient’ setting;
  • Or, in a residential facility.

All of these service providers need medical professional liability (MPL) insurance due to the inherent risks of providing care for elderly people with functional or cognitive needs.

Elderly populations, in this context, are generally defined as people 65 and older. However, some services and facilities will lower that age limit to 55 and older.


There are varying ways to categorize the different types of long term residential care facilities.  Each state categorizes them under many different names, which can be confusing when trying to identify similar facilities in different geographic areas.  However, all will provide 24-hour residency service to an elderly population.  But, each facility is further defined and identified by the scope of medical services provided to its residents.

It’s important to know the categories most commonly used by the carriers that insure these facilities.  Below is a breakdown of the five categories most commonly used among many MPL underwriters.  Note that these are also listed under two general headings that will be explained later in this article.

These 5 categories are listed in order from the highest acuity to the lowest, with examples of care provided:


  • Sub-Acute:
    • Ventilator care, wound treatment, post-operative rehab
  • Skilled Nursing:
    • Medication by injection, oxygen therapy, tube feeding
  • Intermediate Care
    • Oral medications, light rehab, preventive turning/positioning


  • Assisted Living
    • Assistance with medications, protected environment, meals
  • Independent Living
    • Self-sufficient residents, no health care provided

Each type of facility can vary in size, which is usually measured by the total number of licensed beds available to accommodate long term residents.


As you can see above, those five types of facilities are groupe under two headings: Nursing Homes and Residential Care.  These terms coincide with two of the key sources of statistical data published annually: CMS’ Nursing Home Compendium and CDC’s Long Term Care Services Overview.


The CMS Nursing Home Data Compendium provides specific stats about the nursing home sector.  Most of those facilities accept Medicare payments, so they report their individual statistics to CMS every year. The 2013 edition is found here.

Here are some key statistics from the CMS Nursing Home Data Compendium, 2013 edition:

  • 15,643 nursing homes participated in CMS programs at the end of 2012
  • Occupancy has declined gradually but steadily from 85.6% in 2003 to 83% in 2012
  • Non-profit and government facilities are declining while for-profits are increasing in number
  • For-profit facilities now constitute 69% of all nursing homes and 71% of all nursing home beds
  • Facilities with 50-99 and 100-199 beds together constitute more than 80% of the market
  • 5% of all facilities in 2012 were free of any surveyed health deficiencies
  • Over 1.4 million residents (2.8% of the over-65 population) were living in U.S. nursing homes by the end of 2012

The Compendium data also provides the number of facilities and related data by state.


The CDC Long-Term Care Services Overview looks at the overall marketplace of long-term care services for the aging.  This includes nursing homes, home health, adult day care, and assisted living facilities.  The CDC’s data and definition for ‘assisted living’ helps identify key statistics for the grouping of facilities that underwriters refer to as ‘residential care’. The 2013 edition is found here.

Here are some key assisted living statistics from the CDC Long Term Care Services Overview, 2013 edition:

  • 22,200 assisted living and similar residential care communities in 2012
  • 4% of assisted living facilities are For-Profit (20.4% Non-Profit, & 1.2% Government/Other)
  • 851,400 licensed assisted living beds nationally in 2012
  • 713,300 residents in residential care communities each day in 2012
  • 4% of residential care communities are found in Western states (30.6% in South, 22.9% in Midwest, & 10.1% in Northeast).
  • Assisted living facilities average 38 licensed beds


There’s a lot to know about long term care facilities and how to insure their medical professional risks.  In many ways, it’s a sub-grouping of insureds that need insurance agents who understand the fundamentals of MPL insurance.  This is also an industry that will likely grow at a robust rate in the coming years.  So, if you’re an agent already focused in this area or want to be more focused in the future, be sure to have access to all the information you need to be successful.

[In my next article, I’ll address current trends related to MPL insurance for long term care facilities.]

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.