Business Insurance

Managing risks in aging services requires a strategic approach

By Bruce W. Dmytrow, BS, MBA, CPHRM, Vice President, CNA Specialty


U.S. census trends reveal that growth in the over age 65 population will create long-term demand for aging services, including independent living, assisted living, specialized memory care and skilled nursing facilities. To meet this need, it will be increasingly important for aging services organizations to manage the risks of serving the elderly in a strategic manner.

Today, about 50 million U.S. residents are over the age of 65. According to the U.S. Census Bureau, by 2060, that segment is projected to exceed 98 million and will represent about 25% of the entire U.S. population.

Aging services communities are confronted with a number of challenges, including shifts in reimbursement models driven by the Centers for Medicare & Medicaid Services, staffing retention issues and industry consolidation. Traditional liability risks arising from the provision of care, property damage and automobile exposures all must be timely and effectively managed. But in addition to these traditional risks, emerging exposures, such as cyber liability which is all too common in the news cycle today, are also being encountered. To respond to these challenges, aging services communities must manage their risks strategically, from an enterprise-wide perspective, utilizing knowledge and expertise from internal and external business partners.

For many years, the most frequent claim allegation asserted against aging services communities has been resident falls, according to the CNA Aging Services 2016 Claim Report. In addition to the direct costs, falls also are a leading factor in readmissions to acute-care hospitals, which can influence a facility’s reimbursement from Medicare.

CNA data reveal that resident falls represented 42.7% of 2,617 closed claims, generating $208.4 million in claim payments. The second most frequent type of claim was pressure ulcers, at 18.6%, followed by improper care excluding falls, at 14.7%. Lower in frequency but high in severity were: delay in seeking medical treatment, 3.2%; failure to follow a physician’s order, 1.8%; and elopement, representing 1.8%.

Elopement, in which a resident wanders from a secured environment, most commonly occurs in assisted living facilities and in approximately 85% of the cases involves a cognitively impaired resident. The injury most frequently associated with elopement is death, at 45.7% of such claims, followed by fractures, at 34.8%. In CNA’s claim data set, the overall average total paid (indemnity plus expense) of an elopement claim was $325,561.

By comparison, the overall average total paid of a fall-related claim was $186,589 – but at far greater frequency than other types of claims. The most common outcomes of fall-related claims are: death, representing 48.4% of cases; permanent partial disability, at 27.6%; and temporary partial disability, at 21.0%. Preventing and managing fall risks is critical to keeping residents safe and reducing financial and operational pressures for the aging services community.

The 2016 Claim Report includes case studies focusing on aging services facilities that have been successful at reducing claims from falls, pressure ulcers and other events. Some common practices in risk management programs for falls include:

  • Sustaining leadership involvement and support for planning and maintaining a fall-reduction program.

  • Viewing falls as a problem with numerous causes and using a holistic risk assessment process.

  • Collaborating on clinical decisions to provide individualized, integrated care plans for each resident.

  • Implementing universal fall precautions for all residents, not just those residents deemed at greater risk.

  • Analyzing the results of specific interventions, with continuous monitoring of the effectiveness of fall-reduction measures.

Emerging risks such as cyber liability and violence in the workplace represent additional challenges that require careful analysis, planning and response, using both cyber security and physical security measures. Cyber liability is a particular concern for all healthcare facilities, which must comply with The Health Information Technology for Economic and Clinical Health (HITECH) Act and the Health Insurance Portability and Accountability Act. These laws require facilities to secure data from unauthorized access, use or release, and to maintain confidentiality of personal health information. Data breach, however, is only one form of cyber exposure. Ransomware attacks, which usually seek a minimal ransom payment, disrupt networks and prevent users from accessing systems. For all healthcare organizations, including aging services communities, ransomware attacks pose a serious threat to the ability to deliver care to residents.

The aging services industry is confronted with numerous risks that affect residents and business operations. Collaboration with expert resources, both internal and external, provides an effective means of understanding these risks in order to institute risk prevention and risk mitigation strategies.

The CNA 2016 Claim Report is the ninth report on the aging services industry. CNA has been providing insurance and risk management services to the aging services community for more than 50 years.

Bruce W. Dmytrow

Bruce W. Dmytrow is Vice President, Aging Services and National Programs, Healthcare