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    Avoiding the telehealth risk gap

    Jennifer Schoenthal & Kyle Laudadio

    The COVID-19 crisis has accelerated many existing trends in society from the shift to home working to an increased appetite to patronize local and independent businesses. But few, if any, of these trends can match the potential benefits promised by telemedicine. 

    Predictably, usage of telehealth services for digital health diagnoses and treatment has surged during the various lockdowns imposed across the world. According to the Centers for Disease Control and Prevention, during the first three months of 2020, the number of telehealth visits increased by 50% but all the signs point to this being a long-term trend, rather than a specific response to the pandemic. 

    A 2017 study found that digital healthcare was already the preferred approach for millennials with 74% saying they would prefer a remote consultation over face to face. For this generation of healthcare users, the future is almost certainly digital. With digital healthcare more normalized since the pandemic, growth is substantial among a wider group of users.  With McKinsey also estimating that 20% – or $250bn – of current US healthcare spend could be virtualized, the stage is set for a fundamental shift in the way we engage with our healthcare professionals. 

    Before there is a rush into this brave and profitable new future, operating in the telehealth sector, either as a healthcare or tech provider, comes with considerable and, to a large extent, unrecognized risks. 

    The experience of Dexcom is a case in point. The provider of glucose monitoring systems for diabetics, which alerts users via smartphone to changes in their blood sugar levels, hit the headlines for the wrong reasons late last year after the app experienced a system outage. 

    The result of the outage was that patients and carers were left in the dark as to the state of their blood sugar levels, which could have resulted in extremely serious and life-threating situations. 

    Thankfully, there were no reported illnesses or deaths associated with the outage, but the incident highlights the risk of expensive and perhaps debilitating bodily injury claims that can arise if technology used in digital healthcare fails.  

    As in this Dexcom case, many new entrants that are attracted to and who are helping to revolutionize the healthcare sector are, first and foremost, technology companies. They don’t bill themselves as a healthcare provider but their monitoring role means they are exposed to many of the risks that a traditional healthcare company would carry on top of their traditional tech risks. 

    The reality for any provider of telehealth – whether they emerge from the healthcare or the tech sectors – is that in delivering healthcare digitally, they are adopting the risk profiles of both sectors, be that medical malpractice or general, cyber or tech liability. Or more likely, a combination of all four. 

    And when you factor in the huge expense associated with medical malpractice and cyber risks, it makes for a potent and potentially crippling combination with serious reputational consequences if an incident is mismanaged. 

    Which is why a new approach to insuring this sector is required. The standard approach of stitching together existing medical malpractice and cyber policies in the hope they will respond adequately to a new risk landscape, is understandable but it’s simply not fit for purpose. 

    Not only does such an approach risk a doubling up of coverage and cost, it almost certainly leaves gaps in the coverage, leaving providers exposed. Any operator in this field, even if they are far removed from the medical end of the delivery spectrum, can face the risk of bodily injury claims and without adequate cover, unprotected claims of that nature can severely damage or cripple even the largest of firms. 

    Despite facing this potent combination of risks, much of the conversation in telehealth has been focused upon whether or not practitioners and patients will be comfortable with the approach. 

    Debating whether or not people and practitioners will adopt digital healthcare misses the point. Our experience of lockdown has shown that the majority of practitioners and patients are comfortable with digital healthcare, but that acceptance will be for nothing if current and emerging providers cannot operate in a way that protects them from all the risks they face, not just the ones they assume exist. 

    The COVID crisis has taught us that we can’t take anything for granted; that fundamental change to everyday life can happen overnight. But it has also shown us that there are better, faster and even cheaper ways to do many things, including healthcare. 

    As society shifts to an ever more digital daily life, we cannot assume that our responses to living in an analogue world will work in a new, fast-developing digital world. If insurance is to continue to play a crucial role in a post-COVID society, we must be prepared to look at new issues in new ways and create products that answer the problems of today and tomorrow, rather than yesterday. 

    References

    October 2020 Centers for Disease Control and Prevention https://www.cdc.gov/mmwr/volumes/69/wr/mm6943a3.htm

    November 2017 Media Logic https://www.medialogic.com/blog/healthcare-marketing/6-key-statistics-millennials-telemedicine/?_sm_au_=iVVZ4VkL4DR947cP6C3svKQ7Nq4C4

    2020 McKinsey https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality

    December 2019 New York Times https://www.nytimes.com/2019/12/02/well/live/Dexcom-G6-diabetes-monitor-outage.html

    About the author:

    Jennifer underwrites a wide range of risks found within the miscellaneous healthcare sector including categories such as healthcare staffing, home health, behavioral health, chemical detox, tissue/blood banks, organ procurement organizations, contract research organizations (CROs), correctional healthcare, medi-spas, occupational health, dialysis clinics, ground and air ambulances. Jennifer is the lead underwriter and manager of the Beazley Virtual Care product, a pioneering insurance policy that covers all organizations involved in the provision of telemedicine/telehealth. Prior to joining Beazley Jennifer worked for a Program Manager, who is a Lloyd's of London coverholder, developing programs for Allied Health, Products Liability and Medical Spas. She has over 20 years market experience with 12 of those years focusing on Professional Liability.

    Jennifer Schoenthal

    About the author:

    Kyle joined Beazley in January 2017 as an underwriter on our Private Enterprise team, specializing in Miscellaneous Medical risks. Prior to working with us, he previously underwrote small non-profit business at United States Liability Insurance and mid-market/large healthcare accounts at AIG. Kyle received his bachelor’s degree in Finance from Saint Joseph’s University in Philadelphia where he was also a member of their Division 1 Track & Field Team.

    Kyle Laudadio
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