Wall Street Journal Examines Malpractice Insurance ‘Crisis’ for Nursing Homes

The Wall Street Journal on Thursday examined the malpractice insurance "crisis" in the nursing home industry. The cost of malpractice coverage for nursing homes has increased by an average of 51% in recent years, according to a survey sponsored by the American Health Care Association scheduled for release Thursday. The survey of 108 nursing home operators, conducted by Chicago-based insurance brokerage company Aon, also found that the liability cost per bed, which includes malpractice insurance and litigation costs, increased to $2,290 in 2003 from $1,730 in 1999. In addition, the survey found that states with large populations of nursing home residents, such as Florida, Arkansas, Texas and California, experienced higher increases. The malpractice insurance problems for the nursing home industry have resulted in part from a higher number of consumer lawsuits for allegations that range from wrongful death to inadequate care. According to the survey, the number of lawsuits against nursing homes increased to 15.3 per 1,000 beds in 2003 from 13.8 per 1,000 beds in 2002. In response to increased malpractice and litigation costs, many nursing homes have reduced or eliminated their liability insurance, and some nursing homes have begun to exit certain markets. Some states, such as Texas and Mississippi, in recent years have passed tort reform laws to that include caps on damages in lawsuits against nursing homes to help address the issue (Petersen, Wall Street Journal, 6/3).