LRGH leaves JUA as 4 hospitals form new insurer


Laconia-based LRGHealthcare, Concord Hospital, Elliot Health Systems of Manchester and Wentworth-Douglass Hospital of Dover have joined together to form Granite Shield Insurance Exchange, a reciprocal captive insurance company licensed in Vermont that will insure the institutions and their employees against general and professional liability.With the establishment of Granite Shield, LRGH ends its longstanding relationship with the New Hampshire Medical Malpractice Joint Underwriting Association, or JUA. With annual premiums of more than $1 million, LRGH was the only hospital and largest policyholder in the JUA.LRGH led the coalition of policyholders that successfully challenged the effort of the Governor Lynch's administration to transfer the JUA's surplus of $110 million to the general fund in order to balance the state budget.In forming Granite Shield, the hospitals invested equity capital in the enterprise and will pay annual premiums based on their claims experience and risk exposure.Granite Shield will provide both primary coverage and excess insurance for the hospitals as well as physicians, nurses, administrators and support staff. Captive insurance companies are established by parent firms or groups as subsidiaries to underwrite the risks associated with their operations. They are "captive" in the sense that the policyholders own their insurance carrier. Granite Shield Insurance Exchange is among 911 captive insurance companies domiciled in Vermont -- the most of any state and exceeded only by Bermuda and the Cayman Islands.Mitchell Jean, director of risk management at LRGH, stressed that the decision to leave the JUA for Granite Shield had "absolutely nothing to do with our experience with the JUA. I loved working with them," he continued. "They had great claim and underwriting services."Instead, Granite Shield represents the first fruit of more than a year of growing collaboration among the four hospitals, along with the Southern New Hampshire Medical Center of Nashua.Henry Lipman, executive vice president and chief financial officer of LRGH, said that because proliferation of medical sub-specialties requires large population bases, hospitals have forged clinical relationships. For example, LRGH shares cardiology services with Concord Hospital and oncology services with several hospitals.In anticipation of federal health care reform, the four hospitals began exploring ways to leverage their aggregate resources to enhance the quality of services and achieve operating efficiencies while maintaining their independent identities.The hospitals engaged Marsh Risk Consulting, which after a comprehensive actuarial study recommended the group form a captive insurance company. Marsh will administer Granite Shield and another national firm specializing in malpractice will be contracted to manage claims.Lipman estimated the corporation will trim its annual premiums by between $600,000 and $700,000, and actuaries project that aggressive risk management and sound claims experience will ultimately yield refunds in addition to savings. -- MICHAEL KITCH/LACONIA DAILY SUN
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