Allied Health Care: Sound Specialization in a Changing Market

Home health care and related businesses such as specialty surgical centers aren’t anything new; most have been around since before the advent of modern hospitals in the 18th century. Today, however, economics, a rapidly aging population and personal preference for at-home care are converging to drive unprecedented growth in the allied health area. Approximately 7.6 million people receive home care and hospice because of acute illness, long-term health conditions, permanent disability or terminal illness, according to the National Assn. for Home Care & Hospice. Almost 80 percent of people who need long-term care live at home or in community settings, according to the National Center on Caregiving. AA&B spoke with Monica Clark, vice president, health care and social services of THOMCO, Kennesaw, Ga., about the changing face of the American health care system and how allied health care can address the needs of shifting demographics–and how agents and brokers can grow along with it. AA&B: Have you seen an increase in allied health business over the past several years? Clark: We have seen a tremendous increase in most allied health entities over the past decade, and every expectation is that the field will continue to grow. Home health care is projected to grow more than 50 percent over the next 10 years. Studies show that people like to be in their own homes when they receive health care, and that they recuperate better in familiar surroundings. Home health care also can be more cost effective. The growth scenario also holds true for durable medical equipment, specialty surgical centers, urgent care facilities and other allied health businesses. It’s all part of a national trend, although these services are more prevalent in urban settings.

PARTICIPANT: Monica D. Clark, CIC, AU, is vice president of health care and social services at THOMCO. She has worked for the company for 18 years and manages a division that writes close to $30 million in national premiums.

AA&B: How did your firm enter the allied health business? Clark: Lloyd’s of London came to us in December with a program that used to be with a different program administrator; they wanted us to take over the management of the business. The program was already well established, with 25 to 30 different types of businesses–home health, adult daycare, non-emergency ambulance and durable medical equipment providers. We officially launched the program in February and expect it to grow to the original volume size of $17 million within 3 to 5 years. AA&B: What coverages are specific to these customers? Clark: General and professional liability, hired and nonowned auto, sexual abuse, property and D&O. Buyers also should look into HIPAA compliance protection and cyber liability, either built into standard coverage forms or as stand-alone policies. AA&B: What do agents who want to specialize in this business need to know? Clark: They should get to know the types of entities they can write. I have seen producers who specialize in this; not only do they know the coverage and how to place it, but they can assist with risk management and claims. They also can get on the board of directors, join associations and go to trade shows. Many make allied health a specialty. We accept business from any of our producers but in general, niche players are most successful. It takes about a year or so to build an allied health book of business. After that, a lot of business will come from referrals. An agent must knock on doors and figure out what’s expected from the insured’s standpoint, as well as how to meet other clients. Agents also should consider partnering with MGAs or program administrators that they have a good relationship with so they get the proper services. AA&B: What should agents know about coverage availability and policy language? Clark: Several major carriers write this business, but from a general and professional liability standpoint, coverage is written traditionally on a claims made basis on nonadmitted paper. You can find some admitted papers in occurrence form for businesses like adult daycare and home health care. Aside from the coverages mentioned above, agents also should ask carriers for coverages such as defense outside limit and punitive damages. Ask for the bells and whistles, such as HIPAA compliance protection.Risk management also is a service that’s highly welcomed by clients. Ask your carriers if they can help with this. AA&B: Are allied health businesses more prone to lawsuits? Clark: Some business segments seem to be targeted, so professional liability coverage is important. Because it is a professional field, people hold them up to certain standards. However, our program is long term and even figuring in for possible litigation, the loss ratio is typically under 20 percent. AA&B: What’s the best way to look for new business? Clark: Partner with the professional associations representing each business segment, such as the National Assn. for Home Care and Hospice (NAHC), and the National Private Duty Assn. (NPDA). We are not currently doing this because our program is new, but we plan to do so over the next 24 months. AA&B: What are the primary benefits for agents specializing in this niche? Clark: It’s a business that will continue to grow along with the demographics of an aging population. And like other health care businesses, it’s somewhat recession-proof; people looking for jobs are going back to school and looking for employment in the health care fields. AA&B: Have legislative changes related to Medicare or programs changed the outlook for allied health coverages? Clark: It’s important to monitor changes or additions to reimbursement structures or regulatory requirements that may trigger changes in certain types of services being provided by our insureds. THOMCO will also monitor the changes to see if it necessitates coverage enhancements.