Hospices, Nursing Homes, and Risk Management

I received an e-mail from a reader today which brought me back to a subject that has plagued me in the past and is sure to show up again in the future. Here is her question:

...I need some information in regards to hospice in the nursing home and the ongoing problem of liability coverage. Our hospice contracts with nursing homes state that a nursing home must carry 1million liability and 3 million aggregate in insurance. I am noticing a trend where nursing homes can no longer pay for this coverage or insurance at all. I am an old nursing home social worker that has grown our nursing home census enormously over the past few year primarily through my love and passion for long term care and my passion for hospice to be available to all. With this lack of appropriate insurance trend taking place my company is arguing over whether we should risk being in these facilities that do not have the appropriate coverage. Now I am a social worker by trade and you probably know where I stand, this should be a non issue, everyone should have hospice. However, we are public traded and very sensitive to compliance issues. Any words of wisdom, advise, how are other hospices handling this etc...

Here is my reply:

Oh, I wish there was an easy answer for you. I'm sure we both feel the same way about this issue, but as a hospice administrator I also totally understand the corporate side of this problem. Let me make a couple of points and ask you a question. They won't answer your question, because I don't really have an answer.

1. The dollar figure in the contract that you have with the nursing home is totally subjective. There is no law that deals with this issue, and you could totally leave the entire subject out of contract as far as Medicare is concerned. Thus, the company can do any contract they want to do.

2. It has been my experience that Nursing Homes that don't have the levels of coverage you mentioned (it is the same level that my company expects) don't have it for a reason. A good nursing home can and does have this level of coverage. Nursing homes that have been "rated up" because of past problems or lawsuits are the ones who can't get or can't afford this level of coverage. You need to ask yourself if it is worth risking your company's future by working in a sub-standard facility.

My example is a nursing home in my area. They have settled out of court on two wrongful death suits in three years. No private insurance company will offer them coverage. I understand that they have $250,000 coverage through the state 'pool', and I'm sure they are paying out the nose for that coverage.

Now here is the question. Do you continue to take patients in that facility? Your answer and my gut answer is to say yes! If someone needs hospice then we should provide it. That is who we are and what we do. My gut says that people in a substandard facility need us more than most because they are not getting the care they should be getting from their nursing home. But let me take you one step further into the dilemma. I'd love to hear your answer.

If we continue to serve patients in that building and something goes wrong, we could be named in the next lawsuit. They settled the last one out of court for (I believe) $950,000. While our insurance would pay for that one, we would probably lose our insurance and the next one would put us out of business. Thus, the question for me is this: Is serving the patients in this one nursing home worth the (small) risk of not being around to serve any patients at all?

I'll leave the question open here. Which comes first, the patient who needs you today or the hundreds of patients who will need you in the future?