1. Understanding Medical Risk and Opportunity in a Sea of Change

2. Presenters MODERATOR: Anne Marie Towle, SVP, Senior Consultant, Willis Towers Watson SPEAKERS: Irena Kaler, Executive Director/CAO, RWJ Health Network Josh Kinney, Director of Insurance, Advocate Health Care Susan Pateras, SVP, Iron-Starr Excess Agency Ltd. Mark Tabler, COO, Innovative Physician Solutions RRG

3. Changes – Risks – Opportunities Affordable Care Act (ACA) Potential Future Medical Coverage on Claims Settlements –State specific rules prohibit use of ACA to offset medical damages (the collateral source rule) –Uncertainty by counsel & insurers on application of ACA to life care plans

4. Changes – Risks – Opportunities ACA Cont’d Physicians as Employees & Increase in Physician Extenders –Hospitals/systems have greater role in oversite, coordination, delivery of care Vicarious Liability Greater deep pocket exposure –ACA quality/value requirements add new burdens –Higher standards of care when employees of a system/hospital –Liability exposure increases commensurate with increase in number of employed physicians

5. Changes – Risks – Opportunities ACA Cont’d Reimbursement based on quality – more patient satisfaction measures and metrics – rankings, ratings and rantings –Higher patient expectations; increased dissatisfaction –Perceptions of provider negligence; social media Bundled Care Packages –Reduces reimbursement; cost controls implemented –Diagnostics driven by revenue at the system or provider level – real or perceived improper or reduced care – allegations of failure to diagnose

6. Changes – Risks – Opportunities Accountable Care Organizations New partnerships, alliances, interdependency –Coordination of care, who is responsible for the patient –Joint/several & vicarious liability –Shot-gun approach to lawsuits hits a wider target Technology, medical records, patient information –Communication between & among providers – information adequacy –Increased technology and number of providers and organizations increases risks for PII and PHI exposure

7. Changes – Risks – Opportunities Mergers & Acquisitions Between hospitals Between large physician practices Between hospitals and physician practices –Winners and losers abound Consolidation of insurance programs Amalgamation of captive programs Increased exposures; adequacy of limits Tail liability issues for physicians Potential for work comp, EPL, D&O claims increasing Anti-trust issues – increased government & regulatory scrutiny

8. Changes – Risks – Opportunities Fewer Independent Physicians Loss of insureds and income –Niche providers; RRGs, small specialty captives Increased competition for insureds Captive financial stability threatened

9. Changes – Risks – Opportunities Cyber Security & Cyber Losses Healthcare cyber losses rising –Vulnerabilities from all sides – deliberate theft, breach, ransomware, unintentional losses, employees, third party vendors –Monetary fines & penalties –Reputation & brand damage Personal mobile devices –Unencrypted, physical loss, risk of network penetration

10. Changes – Risks – Opportunities Cyber Cont’d Connected and unsecure medical devices –Risk of penetration, network access, outdated compatibility with secure technology Electronic Health Records –Mobility & accessibility –HIPAA/HITECH –E-discovery risks

11. Changes – Risks – Opportunities Tele-medicine Technology enabled; fueled by demand for 24/7 care –Enables specialists in remote locations, covers for shortages of trained providers, convenience for patients and other healthcare staff Standards of care must be maintained Provider licensing and credentialing assured PHI and PII must be secured Potential insurance policy limitations for claims filed in other jurisdictions Social Media A friend or a foe? –Emerging risks include employment liability, discrimination claims, employer vicarious liability, retaliation, cyber-bullying –Reputation damage

12. Changes – Risks – Opportunities Medical Stop Loss Driven by healthcare reform, cost containment for employers –Good for captive placement – not an “employee” benefit, however, Adequacy of actuarial funding/projections – premium sufficiency Limited pool of insureds to spread risk Catastrophic claims exceed projections Drug/Supply Shortages Consequence of healthcare reform; high costs of production –Delivery of care may be impacted – unable to deliver care or less than desirable substitutes – potential for claims of negligence –Revenue decreases due to reduction in procedures

13. Questions “Without risk, there is no reward.” -- Unknown