In February 2023, the owner of Aqua Laser Studio in Jupiter, Florida, made a critical error by failing to check an employee’s credentials. The mistake led to criminal action and the closure of her business. Local news reported that the owner hired a cosmetician for cosmetic injections without knowing the individual lacked a medical license. A former employee notified the police, and an undercover investigator arrested the unlicensed employee and the business owner at the clinic.
When police told the owner that her employee was operating without a license, she replied, “He doesn’t have a license?”
Most healthcare practice owners learn how to become business owners on the job. And everyone makes some mistakes along the way. Most aren’t as costly as those of the Jupiter clinic owner, but avoiding those that can expose you to more risk is your responsibility as the business owner.
Following are ways to ensure your insurance coverage continues protecting you from liabilities as you consider ways to expand and grow your healthcare practice in 2024.
If you own a business
Whether your practice operates in a brick-and-mortar space, a mobile clinic or on telehealth, every business should have a business owner policy to provide basic coverage. This combines several essential coverages into a single policy, such as property insurance, general liability insurance and business interruption insurance.
If you change your address or add a location
Under some insurance policies, neglecting to update your address can affect your coverage. If you move from offering services in your home to renting an office or becoming a mobile clinic, you need to make sure you notify your insurance broker of the change.
You also need to add new locations to your coverage because some companies limit your coverage based on location.
If you use your car for your business
If your car is integral to your services, you should consider getting a commercial auto policy. This is because your auto insurance may not cover you if you use your car for business purposes. If you’re a sole proprietor, you might only need a personal auto insurance policy, so check with your insurance broker.
If you make a change to your employees
Having employees means you need a workers’ compensation policy. Not only is this a good idea to protect your risk, but it’s mandatory in many states.
Be sure to inform your insurance broker if you change the number of employees in your practice. Your policy must reflect the number of employees in your practice to provide coverage.
Finally, if you replace someone on your administrative team who has managed your insurance coverage in the past, be sure that you are still receiving insurance notifications. It’s your responsibility to ensure your insurance doesn’t lapse because of a clerical oversight.
If you use the internet
While you’re not likely to find any practice operating today without using the internet, there are multitudes operating without cyber insurance. “If you’re taking payment electronically or have a patient portal, you have exposures there. Cyber breaches are pretty high in the healthcare environment,” says William Sullivan, executive vice president of CM&F Group.
If you offer a new service line
When you decide to offer a new service as a revenue generator in 2024, be sure your policy will cover it. Consider the following example. A family practice clinic owner begins to offer Botox in the office as a cash-based service. Coverage may only cover general wellness and sick visits and not cosmetic procedures like Botox. Even if the practice owner hires someone in the office to offer Botox within the scope of their practice, it may not be covered under the current policy.
If the business gets sued and the owner hasn’t informed their insurance company that they extended into aesthetic cosmetic services, there’s an opportunity for the insurance company to decline coverage. “You’re dealing with an entirely different realm of professional services, which increases the exposure rate in your medical malpractice insurance. That’s a change in the risk profile,” says Sullivan.
If you buy new equipment
Just like if you buy a new Rolex, you’ll need to add it to your homeowner’s policy. The same is true if you make a new capital expenditure. Your business owner policy covers your equipment, but you should inform your insurance broker if you make a significant purchase.
If you unintentionally operate outside of your scope of practice
Sometimes, a common procedure might unintentionally fall outside your scope of practice. For example, a physician associate practice owner may offer wound care incision and drainage. In some states, this is considered an advanced scope of practice procedure. It requires a certain amount of training and direct supervision hours that have to remain up to date.
If your state requires 25 hours of direct supervision over two years, and you only have a record of 15 hours, you may be operating outside your scope of practice. “The primary person who’s under obligation to know what your license allows is you,” says Sullivan.
As rewarding and lucrative as it can be to own a healthcare practice, it’s not without risks. The best way to manage your liability is to partner with an insurance broker who works with you to meet your insurance needs and help you avoid costly mistakes.
