Welcome from the Chairman and CEO
Jim Raggio, Chair and Tom Wander, CEO
Why do healthcare providers join BETA and then remain members year after year? The answer is simple: we consistently deliver high-quality services and products to our members. Delivering these consistently requires committed staff members who are connected at multiple levels to our members’ healthcare organizations. Our stable member retention - always near 100%, our unmatched history of providing huge member dividends, and our industry-leading risk management and safety programs enable BETA to walk the talk on customer focus and service. Better than any other similar organization, we help our members manage risk by devoting the necessary human and financial resources.
With the merger of the ALPHA Fund into BETA on January 3, 2017, a tremendous amount of work occurred over the remainder of the year to integrate staff, programs, systems and governance. Much was accomplished to the benefit of members and staff such that we can say confidently and proudly that the merger has been an incredible success. Today, we are larger, stronger, and better equipped to finance a broader range of risks and to assist our members develop and implement risk management programs.
BETA is growing and adding members by expanding existing programs and offering more coverages. Earned premiums of $130 million in 2017 were up 60% from 2016, primarily because of the addition of workers’ compensation premiums. We ended the year with a net position of $242.5 million, an increase of almost $17 million or 7.5% over 2016. Net income from operations was $23.7 million, up 69% from 2016, which allowed the BETA Council to declare a $13.3 million member dividend - BETA’s 26th year in a row for dividends. Total assets were $622.9 million, up over 40% from 2016. Aided by realized gains from BETA’s equity portfolio, investment income totaled $14.7 million.
In 2017, BETARMA opened 934 liability claims, closed 1,001, and had 1,165 open claims at year-end. Eighty-six percent of the 772 healthcare comprehensive liability (HCL) claims were closed with no indemnity paid, 2% more than 2016. Claims with no indemnity cost BETARMA $7 million in defense expenses, an average of $9,634 per claim, 18% less than 2016 payout levels. Of the 122 HCL claims closed with an indemnity payment, the average total cost was $263,691, consisting of $219,853 in indemnity expense and $43,838 in defense costs. Average indemnity payments decreased 4% in 2016. Overall, defense expenses represented 32% of all claim costs.
Although the nine large HCL claims (defined as $1 million and higher) represented only 1% of the number of closed claims, they accounted for 50% of incurred HCL claims costs and averaged $2 million in incurred costs. Indemnity costs represented 94% of the total.
Total incurred costs for the 92 directors and officers liability closed claims were $9,156,719, for an average of $99,530 per claim. Defense costs represented 48% of total incurred costs.
Health Providers Insurance Reciprocal, RRG (HealthPro) opened 52 physician claims and closed 53 claims at a cost of $2,178,077, 34% of which was indemnity paid.
Nighty-four percent of HealthPro physician claims closed without indemnity, but the defense expenses for those claims averaged $23,148. HealthPro opened 52 hospital claims and closed 30 claims at a cost of $4,314,730, 73% of which was indemnity paid. Eighty-three percent of HealthPro hospital claims closed without indemnity, but incurred defense expenses averaged $29,411.
For BETA’s workers’ compensation program, 1,617 claims were opened, 1,663 were closed and we ended the year with 1,803 open claims. Of the claims closed, 45% closed without an indemnity payment at an average cost of $905 per claim. Of the 943 claims closed with an indemnity payment, the total claim cost averaged $23,498 per claim, which is 0.2% less than the prior year.
At the end of 2017, a long-time BETA friend and BETA Council member, Bob Hemker, retired from Palomar Health. As Vice Chair of BETARMA and former Chair of BETAlliance, Bob was actively involved in governance and was a strong advocate of BETA and its risk management programs. Joining the BETA Council was Larry Lewis, CEO of Pioneers Memorial Healthcare District and the current Chair of BETAlliance. Thank you, Bob! Welcome, Larry!
As we grow, prosper, and – more importantly – make enhancements to our members’ patient and employee safety programs at multiple levels of their organizations, we are noticing an increase of positive energy at BETA, the likes of which we have not felt before. At BETA, it is not so much about low cost insurance as it is about a safe and transparent patient experience, a just culture for all staff and clinicians, and a quest for zero preventable injuries in all service areas. We are on a journey that is not simple or quick, but it is a journey to which we are committed with a passion that is unmatched in our industry. We have already accomplished so much, and we know that together with our members we will achieve many more successes in the years ahead.