From a Marsh webcast series on COVID-19’s implications: a panel discussion on navigating the pandemic response cycle for the Healthcare industry in Asia.
Cristina Vigilante, Head of Sales and Industries, Marsh Asia
Ali Chaudhry, FINPRO Leader, Asia, Marsh JLT Specialty
Peter Johnson, Client Advisory Services Leader, Asia
Dennis Dalati, Claims Advocacy Leader, Asia
Rohan Muralee, Mercer Marsh Benefits Sales Leader, Asia
Ali talked about the issues faced by four sectors of the Healthcare industry:
In Asia, public health organizations have performed admirably, but still face numerous challenges in staffing and having enough beds, equipment, medicines, and isolation facilities.
With strained resources, public hospitals had been led to collaborate with the private sector, such as outsourcing maternity services or pharmaceutical deliveries.
Individual Doctors and Healthcare Professionals
Individual practitioners’ main concern is whether indemnity protection structures will continue to respond, particularly if they have been moving out of their usual areas of practice or specializations to help with COVID-19 or non-COVID-19 cases due to resource strains.
The increase in telemedicine raises questions on medical malpractice insurance response. Healthcare professionals also face increased liability risks from the pandemic, which we will discuss in more detail below.
The biggest concern has been cross-contamination, where COVID-19 may spread within wards unknowingly. As a result, most private hospitals channel COVID-19 patients to government or dedicated facilities. Agreements with government entities to take on overflow raise issues on indemnity and liability.
The demand for non-essential treatment has fallen, a major impact on the revenues of private hospitals. To mitigate this, the sector is turning to telemedicine, but that raises concerns and questions around medical malpractice and cyber risks.
Clinics Ancillary and Alternative Healthcare
This sector faces very similar issues to private hospitals but with potentially even more significant revenue falls as their services are often deemed more “non-essential”.
From a risk management and insurance perspective, several tools are available to Healthcare companies to manage costs and improve cash flow. The approaches below were shared by Peter and Dennis.
Speak with your Marsh broker if you believe you have a potential Business Interruption (BI) claim. We can help assess if the policy criteria are met and, subsequently, support the claims preparation to improve expediency.
With likely changes to revenue figures for private Healthcare providers due to reduced patient volumes, a thorough review of your BI values may qualify you for a return premium or reduction to future premiums. We recommend discussing this with your broker to determine viability.
On the other hand, as public hospitals see increased patient volumes, they will need to consider increasing declared BI values for ongoing renewals. This is likely to result in higher premiums during a time of operational constraints. We can identify your most economically efficient means to finance your risk through Risk Finance Optimization (RFO), which ultimately gives you information on which risk management programs provide the best financial returns.
It is important to note that any material changes in business activities would have to be updated to the insurers.
The use of a captive can be one solution with lots of interest from Healthcare companies, and may provide access to reinsurance markets and potentially more efficient capital.
Employee Wellbeing and Productivity
Medical claims have reduced significantly this year due to movement restrictions and lockdowns, reducing the occurrence of common ailments and sports injuries. On another note, many governments have committed to bearing the cost of COVID-19 related treatments and many insurers are supplementing existing plans with additional benefits, such as hospital cash or waived out-of-pocket expenses. Recognizing the worries about exposure to the virus, concepts like telehealth and remote drug delivery are now also offered by many insurers.
Many in the Healthcare industry are on the frontline and exposed to heightened risks during the pandemic. They will need access to regular testing, but organizations must also consider maintaining confidentiality and how data on their employees are gathered and stored.
Many organizations are now focusing on psychological support by:
- Ensuring regular, effective, and empathetic staff communication
- Providing staff with a forum to voice any concerns
- Offering financial support in the form of tools and advice, and sometimes even funds
As such, many are launching, or recommunicating, Employee Assistance Programs, or EAPs. It is also important to provide staff with access to trusted insurance top-up options for a greater level of coverage.
Having adjusted to the new normal, we expect some flexible working protocols to continue across most industries post-pandemic as there has been higher adoption of non-traditional benefits policies, per the pre-pandemic trend.
Shifting Risk Profile
Peter talked about how healthcare providers are pushed to work even harder, innovate faster, collaborate, and be resilient at an unprecedented pace for the pandemic. These operational changes have shifted the industry’s risk profile for the industry.
In this environment, Healthcare companies should prioritize these three key considerations:
Business Continuity Plan Reviews and Updates
In the short and medium-term, the focus should be on:
- Staff safety and health: Safe distancing, screening protocols, adequate Personal Protective Equipment, active sanitation equipment, etc.
- Managing resources: Scheduling adequate staff for all shifts and ensuring enough equipment.
- Managing demand: With continued deferment of elective treatments and social distancing, the shift of operations may be towards telemedicine and digital options to deliver services.
- Planning for recovery or when governments ease restrictions: adopting a phased recovery to a “new normal” of business operations, coping with the latent spread and managing a backlog of services.
Pandemic Risk Vulnerability Assessment and Forecasting Models
In the longer term, these assessments and models enable organizations to evaluate different risk mitigation strategies (e.g. supply chain), manage tail uncertainty under different scenarios (e.g. second wave outbreaks), and balance revenue interruption versus cost control decisions.
The move to increased telemedicine healthcare delivery techniques massively raises the risk of a breach of sensitive patient data. In addition to potential liability exposures, these can also lead to significant operational disruptions. With the increased risk of cyber-attacks, companies should financially quantify such new exposure changes and develop appropriate risk management strategies, which can include insurance.
Ali then shared key risk and insurance issues that have been raised by clients:
The key challenge was to secure explicit confirmation that certain work were not deemed “out of scope” and would still be covered, such as telemedicine. Given how little we understand COVID-19, there is uncertainty on what happens when experimental or untested treatments are used, especially when the clinical trial protocols are circumvented.
There are similar issues on how coverages are affected during the pandemic. Such as which should apply — public liability or medical malpractice coverage — when members of the public or patients contract the novel coronavirus while on hospital premises.
This was already a difficult segment for the commercial insurance market, and it now faces questions around coverage for practitioners volunteering to work out of their usual scope or organizations.
Directors & Officers Liability
Not yet a big focus for the industry, it may surface post-pandemic. Businesses that are publicly listed and in more distressed areas and need to be prepared for when D&Os face a range of challenges around planning and contingency management, financial and employee management, and a raft of public/investor disclosure obligations.
Cyber Risk and Insurance
COVID-19’s impacts accelerate the use of technology, which will raise cyber and system risks. Hence, cyber insurance will be much more carefully considered.
For your insurance renewals, expect:
- Potential imposition of additional exclusions from insurers, although most have since pulled back.
- Telemedicine to cause a long debate as some insurers are nervous about this.
- Aggregation concerns with insurers reducing limits as they are less able to calculate their exposures.
- A reduction in the insurance market’s appetite for new business.
Risk Management and Business Enablement
Marsh can provide immediate support through three primary activities:
- Preparedness assessment and advice as the crisis unfolds, which may include “Fit for Purpose” BCPs and deficiency identification (e.g. lack of access to PPE).
- Providing additional management capacity, including additional reviews and PMO support to navigate the crisis.
- Debriefing (lessons learned) to better prepare for the future.
Marsh’s consumer solutions team also develops insurance solutions that can be offered on a B2B2C basis across many industries, for example:
- Customer engagement programs for Healthcare companies
- Employee benefits top-up programs for employers
- PA solutions that support medical tourism and revision surgery
Click here for the full replay of this webcast.