Healthcare in correctional facilities has been rapidly evolving and progressing since its inception. Proper, adequate care for incarcerated individuals is important, and as the rest of the healthcare industry grows and advances in care are made, so too will correctional medicine.

However, unlike the healthcare industry as a whole, healthcare in correctional facilities comes with its own set of unique challenges and considerations. One such challenge is the adverse losses experienced by the insurance providers that underwrite the liability insurance policies. Because of this, many facilities are faced with policy non-renewals, unstable premiums, and increasing claim settlement amounts. Meanwhile, multiple insurance providers have left the correctional healthcare industry altogether.

As the market becomes more and more competitive and volatile, high quality correctional medical liability insurance is more important than ever. This type of policy can be the difference between a simple claim and a loss that results in a facility shutting down.

Options for Providing Healthcare

Broadly speaking, when providing healthcare to an incarcerated population, there are two main models to use. The facility can either directly employ personnel to provide care to individuals within the facility or contract their healthcare needs out to a private company which will then send its employees to the facility to provide care. There are, of course, pros and cons to each option, and the best method can depend on a number of factors specific to the correctional institution.

With that in mind, an increasing number of organizations are choosing to outsource their healthcare requirements. As such, the need for malpractice insurance for private companies and correctional institutions is also increasing. Because the industry is so niche and is rapidly changing, there are a number of things that all organizations in the correctional healthcare industry need to be mindful of when choosing an insurance carrier.

Considerations Regarding Malpractice Insurance For Correctional Facilities

When investing in malpractice insurance, there are a variety of different considerations that need to be made. Below are three of the most pressing in the correctional healthcare industry specifically.

Outsourcing Care to Reduce Liability

Outsourcing healthcare to private companies can help to reduce the liability of the correctional facility. It does this on two fronts: relieving liabilities related to employees and transferring the malpractice liability to the private company providing the care.

When hiring employees, there are many financial obligations attached such as benefits and pensions as well as work related injuries. Hiring an external company to handle healthcare staffing alleviates those obligations and leaves them in the hands of an organization that is prepared to take them on. If an incarcerated individual were to file a medical malpractice suit due to a lack of quality care, this also falls to the external company. Additionally, these outside organizations typically carry medical malpractice insurance by default to help protect themselves and their employees in the event of a lawsuit.

The Quality of Care Provided

The quality of care received by those in correctional facilities is an important factor to consider when choosing whether or not to outsource care. With the growth of contracted healthcare, we’ve seen a rise in care being provided at a fixed fee. This structure has had many voice concerns that the correctional health industry has been providing care that is less than adequate. These concerns have been somewhat supported by the increase in the number of medical malpractice claims being reported each year. Alongside the rise in claims, the settlement amounts reached in these cases have also been increasing, making malpractice insurance even more important.

Insurance Providers and Staffing

Correctional medical liability insurance, and healthcare in correctional facilities as a whole, is a niche market. Due to many of the factors we’ve discussed so far, an artificially low market value for premiums emerged and is now facing a correction. Organizations can avoid costly underwriting mistakes, contractual obligations, and the possibility of future policy non-renewals by working with an experienced broker to purchase a policy with a carrier that understands the industry. 

Similarly, companies that provide medical personnel staffing are facing exposure to the changing climate surrounding malpractice insurance. In some cases, if revenues generated reach a certain level, the staffing company may also experience policy non-renewals. Staffing companies that focus primarily on providing services to the correctional industry must be especially diligent while those looking to move into the industry will likely see a significant increase in insurance expenses that was not anticipated.

How to Choose Correctional Medical Malpractice Insurance

As the market continues to evolve and find its footing once again, privatized corporations that specialize in providing services to correctional facilities and those facilities themselves must remain focused on a few key points.

It’s imperative that the medical liability insurance carrier is an experienced provider in this industry and has a proven track record of supplying adequate protection to customers. Carriers that already partner with a number of companies and facilities similar to your own is typically a good indication of that carrier’s commitment to the industry as a whole. It also shows that they have both underwriting experience in this field and the financial strength to support their work. 

However, there are likely to be increased costs incurred going forward, and organizations need to be prepared. As previously discussed, the market surrounding correctional medical liability insurance is showing signs that it is correcting itself. This means that you can likely expect higher premiums and/or deductibles than seen in the past. An inexperienced carrier may not be prepared for these costs, leading you to receive policy non-renewal notices when you least expect it.

Companies that provide medical staffing must be especially vigilant regarding the revenues generated through correctional exposures to avoid similar problems. It’s not uncommon for a carrier to impose a limit on revenue percentages and, if a company should reach or go over that limit, issue a policy non-renewal.

All that being said, data shows that a vast majority of correctional healthcare companies are recognizing these trends and are taking the necessary steps to mitigate the issues. This combined with the experience of an established insurance broker as well as a commitment to patient safety, litigation management, and favorable contract language can begin to help associated costs come down.