Nursing homes and long-term care (LTC) facilities face rising liability costs in the coming years unless they can find alternatives to litigation. According to a national study that surveyed 35 U.S. providers operating an aggregate 240,000 LTC beds, the overall national LTC loss rate is expected to increase by 5 percent annually, driven by a 3 percent rise in litigation claim frequency.
These findings were the result of the recently-released Aon/AHCA 2015 Long Term Care General Liability and Professional Liability Actuarial Analysis [1], which indicates that LTC costs are projected to rise from $2,030 per occupied bed in 2015 to $2,150 in 2016. The analysis also suggests that adopting arbitration, as an alternative to litigation, may be an effective way to lower costs, as arbitration agreements tend to have a 7 percent lower cost. Therefore, by means of a very rough, back-of-an-envelope calculation, moving to arbitration instead of litigation may offset one-and-a-half years of LTC loss rate increases.
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