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How Understaffing Impacts Adult Care Liability Insurance Rates

By Tangram Insurance Services
March 19, 2024
How Understaffing Impacts Adult Care Liability Insurance Rates

The adult care facility sector is facing two major challenges: a staffing shortage and rising insurance costs. While these challenges seem very different, they are, in fact, related. Although there are many reasons for rising insurance costs, staffing shortages have significantly increased liability exposures, contributing to higher losses and subsequent rate increases. Here’s what you need to know.

The Extent of the Current Staffing Crisis

The senior living sector has been dealing with a staffing shortage for a while – and the problem doesn’t appear to be getting better. In a 2023 LeadingAge Workforce Snap Poll, 70% of assisted living facility providers reported significant or severe workforce shortages. Although some of these issues emerged during the COVID-19 pandemic, 64% of respondents said their workforce situation had not improved in the past year.

These shortages have a direct impact on operations. The LeadingAge poll found that care providers frequently have 20% of their positions open with no applicants. To cope with the shortages, existing staff members take on heavier workloads and organizations have to tap reserve funds to pay for expensive temporary staffing. Even those measures aren’t helping. As one poll respondent said, “It is getting really scary.”

The Impact on Day-to-Day Liability

The staffing shortage isn’t just a financial issue; it’s also a liability issue.

Consider the following scenario:

Mary works at an assisted living facility, where she’s been employed for 20 years. She’s good at her job and loves the residents. However, many of her coworkers have recently quit. There are some new employees, but they lack experience, meaning they require more help and guidance.

Mary has to do a lot more work than she used to do, and she’s exhausted. One day she notices that a handrail in a hallway is loose, but she gets sidetracked and forgets to report it. A few days later, a resident grabs the handrail for support and it detaches from the wall. The resident falls, resulting in a broken hip and a prolonged hospital stay. The resident’s family questions why the handrail was not secure and why the resident was walking without the assistance of a care provider. They decide to sue for negligence.

It’s easy to see how staffing challenges can lead to an increase in claims and lawsuits – ultimately resulting in higher insurance costs. For facilities already dealing with rising prices and stretched budgets, this couldn’t come at a worse time.

How Adult Care Facilities Can Beat the Odds

The situation may be scary, but adult care facilities can keep their risks under control by focusing on the bigger picture. There are four important ways adult care facilities can beat the odds:

  • Maintain high standards for hiring. When job applicants are few and far between, facility operators may be tempted to lower their hiring standards. However, this can backfire. Screening exists for a reason – namely, to weed out potential workers who could create a liability for your organization. Instead of lowering standards or skipping the screening process, consider new ways to attract more high-quality workers. For example, you could try placing job ads in new locations or participate in job fairs. You may also need to offer more compensation. Although this may be difficult, it is often more expensive to pay for temporary staffing, deal with high turnover, and face lawsuits caused by worker shortages.
  • Ramp up retention efforts. Your experienced employees are valuable – it makes sense to do everything possible to retain them. When workers are burned out, they may not say anything until they quit. Employers should reach out to see how employees are coping and find out what could help them. Once again, higher compensation may help –this time by retaining the quality workers you already have.
  • Provide training. Training is especially important for new hires. If they’re left on their own to figure things out, they may make expensive mistakes, get frustrated and leave the facility, or become a burden for experienced workers. In addition, current workers may need training refreshers every once in a while.
  • Document and monitor. If you are hit with a lawsuit, documentation could make or break your case. For this reason, documentation needs to be consistent. By monitoring daily operations and documentation, supervisors can address issues before they lead to more turnover or claims.

This is a hard time for adult care facilities, and a specialized insurance and risk management partner can help you better navigate the risks. Tangram provides adult care facility insurance through the Personal Care & Assisted Living Insurance Center (PCALIC). Learn more.

Article provided by Tangram Insurance Services.