AHA Insurance Resource Inc. has teamed up with two insurance companies to develop specialty products for the hospital and healthcare industry.
In the first alliance, AHA-IRI has formed an alliance with Liberty Mutual Group of Boston to explore disability issues for hospitals as employers and purchasers of disability insurance.
The second venture is a partnership with Fortis Healthcare of Woodbury, Minn., to offer stop-loss insurance for hospitals and physicians that are negotiating capitated managed-care contracts.
AHA-IRI is a for-profit subsidiary of the American Hospital Association. It designs and develops insurance and financial products for the benefit of AHA members and the healthcare industry by aligning with a commercial insurance carrier and lending AHA sponsorship to an individual product. AHA-IRI does a "due diligence" review of the product and tests it prior to releasing it on the market under the AHA's imprimatur.
In the case of Liberty Mutual, there is no product yet. First, Liberty Mutual and AHA-IRI will research what the market's needs are for disability insurance. Then they'll develop a product for the AHA endorsement. As a first step, the strategic alliance will hold focus groups and interviews with chief financial officers and human resources executives at hospitals.
Dixie Arthur, AHA-IRI's president, said, "Total disability-related costs represent 6% to 12% of payroll for the average business in America." For healthcare providers, it's imperative to embrace managed disability to keep claims and expenses under control. If a managed-care disability program can get employees into work rehabilitation and get them back to work sooner, the hospital will save money and the worker will have more income.
Hospital employees can injure themselves lifting and turning patients, and they experience high levels of stress and burnout. Typically, hospitals have higher rates of workplace injury than white-collar environments such as banks.
The stop-loss product developed with Fortis Healthcare is intended to cover potential catastrophic losses for providers such as hospitals, physician hospital organizations, independent practice associations, physician groups and integrated networks that are entering into capitated arrangements with managed-care companies.
Such insurance goes by different names: provider reinsurance, excess insurance, stop-loss insurance. Typically, providers may set aside 5% to 10% of capitated revenues to buy reinsurance to cover claims that exceed the level of risk that the providers are willing to bear. For instance, a primary-care group that has a full-risk capitation contract with an HMO needs to insure itself against the expenses incurred by the very rare patient who may need a heart transplant.