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HEALTHCARE INDUSTRY<br />ISSUES AND TRENDS AND THE IMPACT ON <br />THE MEDICAL MALPRACTICE SECTOR<br />By<br />Tom Wander,...
HEALTHCARE COSTS CONTINUE UPWARD SPIRAL: A RECESSION RESISTANT INDUSTRY<br />$2.5 trillion in 2009 or $8,160 per resident ...
U.S SPENDS MORE PER CAPITA ON HEALTHCARE THAN ANY OTHER COUNTRY AND HAS ONE OF THE FASTEST SPENDING GROWTH RATES<br />Sour...
GDP% IS 50% TO 100% MORE THAN OTHER DEVELOPED COUNTRIES<br />Source: U.S. Bureau of Labor <br />
IMPACT OF RECESSION<br />30% decline in elective procedures<br />Continued cuts in Medicaid funding<br />Can’t access cred...
BECOMING A PHYSICIAN: LONG AND EXPENSIVE<br /><ul><li>129 medical schools enrolled 76,000 medical students and graduated 1...
Females represented 48% of the enrolled students and 49% of graduates in 2008. In 2003 females represented 44% of all grad...
Becoming a doctor:
4 years undergraduate
4 years of medical school
3 to 8 years internship and residency
Start earning at age 29 to 34 but with an average debt of $140,000</li></li></ul><li>BECOMING A PHYSICIAN: LONG AND EXPENS...
Cost / Debt reduces diversity of physician work force
Encourages moonlighting  fatigue  medical errors
Shortage of MDs in rural or underserved areas, and surgeon shortage in Midwest and Northeast
Compensation is not attractive compared to other opportunities</li></li></ul><li>END OF LIFE ISSUES: MORAL AND ETHICAL CON...
OTHER FACTORS IMPACTING ACCESS, QUALITY AND/OR COST<br />Aging population <br />Registered Nurse shortage ($40 to $48 per ...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
 No Data       &lt;10%            10%–14%	  15%–19%         20%–24%          25%–29%             ≥30%<br />Obesity Trends*...
REVOLUTION OR REFORMATION <br />Continued expansion of “never events” and lost revenues<br />Expansion of electronic medic...
MED MAL SECTOR:FULLY RECOVERED ANDPROFITABLE<br />
98% OF MEDMAL COMPANIES RATED “SECURE”<br />Source: AM Best<br />
ASSETS DROPPED DUE TO IMPAIRMENTS<br />Source: Towers Perrin<br />36<br />
PREMUIMS DOWN 11% FROM PEAK IN 2005<br />Direct Premiums Written<br />Source: Towers Perrin<br />37<br />
SURPLUS HAS DOUBLED IN THE PAST SIX YEARS<br />Source: Towers Perrin<br />38<br />
MED MAL COMPANIES HAVE DELEVERAGED 40% SINCE 2004<br />Source: Towers Perrin<br />39<br />
INVESTMENTS HAVE SHIFTED TO HIGHER QUALITY<br />2004<br />2008<br />
CLAIM RESULTS HAVE BEEN OUTSTANDING<br />Source: Towers Perrin<br />41<br />
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Healthcare Industry Issues and Trends and the Impact on the Medical Malpractice Sector

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Presentation by Tom Wander at April 24, 2009, University of Wisconsin Risk Management and Insurance Alumni Meeting

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Transcript of "Healthcare Industry Issues and Trends and the Impact on the Medical Malpractice Sector"

  1. 1. HEALTHCARE INDUSTRY<br />ISSUES AND TRENDS AND THE IMPACT ON <br />THE MEDICAL MALPRACTICE SECTOR<br />By<br />Tom Wander, BBA &apos;76, MBA &apos;78<br />Chief Executive Officer<br />BETA Healthcare Group<br />April 24, 2009<br />
  2. 2. HEALTHCARE COSTS CONTINUE UPWARD SPIRAL: A RECESSION RESISTANT INDUSTRY<br />$2.5 trillion in 2009 or $8,160 per resident up 5.5% over 2008 when the increase was 6.1%<br />17.6% of GDP, up 1% point: Largest one-year increase since tracking began in 1960<br />While expected to slow over the next 3-5 years, percentage of GDP may increase as economy slows / shrinks<br />By 2017, $4.3 trillion or 20% of GDP to $13,100 per resident <br />Healthcare spending has risen 24% faster than GDP since 1970<br />16 million or 12.5% of the American workforce employed directly in healthcare, up from 1% 50 years ago. <br />Healthcare costs are more than four times amount spent on national defense. <br />
  3. 3. U.S SPENDS MORE PER CAPITA ON HEALTHCARE THAN ANY OTHER COUNTRY AND HAS ONE OF THE FASTEST SPENDING GROWTH RATES<br />Source: U.S. Bureau of Labor <br />But the U.S. does not achieve better outcomes on many important health measures. <br />
  4. 4. GDP% IS 50% TO 100% MORE THAN OTHER DEVELOPED COUNTRIES<br />Source: U.S. Bureau of Labor <br />
  5. 5. IMPACT OF RECESSION<br />30% decline in elective procedures<br />Continued cuts in Medicaid funding<br />Can’t access credit markets to finance construction, remodeling, equipment purchases and working capital. <br />Higher percentage of uninsured patients and lower reimbursements<br />
  6. 6.
  7. 7. BECOMING A PHYSICIAN: LONG AND EXPENSIVE<br /><ul><li>129 medical schools enrolled 76,000 medical students and graduated 16,167 doctors in 2008, up 8.4% and 3.1% from 2003, respectively
  8. 8. Females represented 48% of the enrolled students and 49% of graduates in 2008. In 2003 females represented 44% of all graduates
  9. 9. Becoming a doctor:
  10. 10. 4 years undergraduate
  11. 11. 4 years of medical school
  12. 12. 3 to 8 years internship and residency
  13. 13. Start earning at age 29 to 34 but with an average debt of $140,000</li></li></ul><li>BECOMING A PHYSICIAN: LONG AND EXPENSIVE<br /><ul><li>Less likely to pursue family practice or primary care specialties
  14. 14. Cost / Debt reduces diversity of physician work force
  15. 15. Encourages moonlighting  fatigue  medical errors
  16. 16. Shortage of MDs in rural or underserved areas, and surgeon shortage in Midwest and Northeast
  17. 17. Compensation is not attractive compared to other opportunities</li></li></ul><li>END OF LIFE ISSUES: MORAL AND ETHICAL CONSIDERATIONS<br />10% of people consume 63% of healthcare services<br />21% of all healthcare costs for 1% of the population <br />30% of Medicare dollars are spent on 5% of patients who die in a given year.<br />33% of these dollars are consumed in the patients’ last 30 days of life.<br />
  18. 18. OTHER FACTORS IMPACTING ACCESS, QUALITY AND/OR COST<br />Aging population <br />Registered Nurse shortage ($40 to $48 per hour in California for first year RNs)<br />Overweight / obese people account for over 9% (in 1988) of all the healthcare spending <br />
  19. 19. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1985<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  20. 20. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1986<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  21. 21. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1987<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  22. 22. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1988<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  23. 23. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1989<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  24. 24. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1990<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  25. 25. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1991<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  26. 26. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1992<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  27. 27. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1993<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  28. 28. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1994<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  29. 29. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1995<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  30. 30. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1996<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  31. 31. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1997<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  32. 32. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1998<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  33. 33. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 1999<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  34. 34. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 2000<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  35. 35. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 2001<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  36. 36. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 2002<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  37. 37. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 2003<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  38. 38. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 2004<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  39. 39. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 2005<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  40. 40. No Data &lt;10% 10%–14% 15%–19% 20%–24% 25%–29% ≥30%<br />Obesity Trends* Among U.S. Adults 2006<br />(*BMI ≥30, or ~ 30 lbs. overweight for 5’ 4” person)<br />
  41. 41. REVOLUTION OR REFORMATION <br />Continued expansion of “never events” and lost revenues<br />Expansion of electronic medical records: Efficiency and patient safety benefits<br />Error disclaimer and apologies: Impact on claims debatable <br />Reporting of quality data  Link results with reimbursements <br />Surgical checklists<br />
  42. 42. MED MAL SECTOR:FULLY RECOVERED ANDPROFITABLE<br />
  43. 43. 98% OF MEDMAL COMPANIES RATED “SECURE”<br />Source: AM Best<br />
  44. 44. ASSETS DROPPED DUE TO IMPAIRMENTS<br />Source: Towers Perrin<br />36<br />
  45. 45. PREMUIMS DOWN 11% FROM PEAK IN 2005<br />Direct Premiums Written<br />Source: Towers Perrin<br />37<br />
  46. 46. SURPLUS HAS DOUBLED IN THE PAST SIX YEARS<br />Source: Towers Perrin<br />38<br />
  47. 47. MED MAL COMPANIES HAVE DELEVERAGED 40% SINCE 2004<br />Source: Towers Perrin<br />39<br />
  48. 48. INVESTMENTS HAVE SHIFTED TO HIGHER QUALITY<br />2004<br />2008<br />
  49. 49. CLAIM RESULTS HAVE BEEN OUTSTANDING<br />Source: Towers Perrin<br />41<br />
  50. 50. DIVIDENDS HAVE RETURNED<br />Dividends as a Percent of Premiums<br />Source: Towers Perrin<br />42<br />
  51. 51. FOUR YEARS OF PROFITABLE UNDERWRITING RESULTS<br />Source: Towers Perrin<br />43<br />
  52. 52. BROADER MED MAL RESULTS ARE SIMILAR <br />Historical MPL Combined Ratios<br />Data per AM Best’s Aggregates and Averages; 2008 and 2009 are estimated per AM Best’s Review Preview Article, February 2009<br />
  53. 53. IMPAIRED ASSETS AND RELATED LOSSES TOOK A TOLL IN 2008<br />Investment Income as a Percent of Premiums<br />Source: Towers Perrin<br />45<br />
  54. 54. RESERVE RELEASES HAVE DRIVEN RESULTS<br />One Year Loss Reserve Development<br />Source: Towers Perrin<br />46<br />
  55. 55. RESERVE REDUNDANCIES: ANYMORE LEFT?<br />Source: Towers Perrin<br />47<br />
  56. 56. CLAIMS FREQUENCY: DOWN SUBSTANTIALY<br />Source: Milliman’s results of seven MPL specialty writers (October 2008)<br />
  57. 57. Professor Dan Anderson<br />Educator<br />Researcher<br />Mentor<br />Friend<br />Congratulations on 39 years of outstanding service! <br />And, thanks for all you have done for all your students.<br />
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