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The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has released the next report in its Industry Profile series. This series examines an industry sector in California’s workers’ compensation system and provides insights into key characteristics and cost drivers in the industry. The latest report gives a comprehensive overview of the healthcare industry in California.

The healthcare industry is a significant and growing part of California’s economy and one of the largest sectors in the workers’ compensation system. Its workers’ compensation exposure covers a wide variety of occupations, ranging from physicians to nurses to home health aides with disparate average wages and levels of workers’ compensation risks.

In California’s Standard Classification System, there are a number of classifications that encompass healthcare operations. In this report, the healthcare industry is categorized into five segments that provide medical care: Physician Practices, Dental Offices, Hospitals, Nursing Facilities and Home Health Care. These segments are defined based on the locations of the services provided.

The Physician Practices and Dental Offices segments provide outpatient medical services and comprise the majority of workers’ compensation policies for the industry. The Hospitals segment includes both inpatient and outpatient services. The Nursing Facilities and Home Health Care segments may provide less medical care but more physical assistance in short-term and long-term patient care than other segments.

Key findings in the WCIRB Industry Profile: Healthcare report include:

– – The healthcare industry is one of the largest in California, with over 48,000 workers’ compensation policies, and has operations in five distinct healthcare segments that provide medical care (Physician Practices, Dental Offices, Hospitals, Nursing Facilities and Home Health Care). These segments generate 6% of all California workers’ compensation insurance premiums.
– – The advisory pure premium rates approved by the Insurance Commissioner for the healthcare industry are on average about 20% below the statewide average, driven by Physician Practices and Hospitals.
– – Within the healthcare industry, the pure premium rates for Physician Practices and Dental Offices are relatively low, while those for Home Health Care and Nursing Facilities are higher. The differences in pure premium rates by segments are mainly driven by differences in average wage levels (Chart 8) and claim frequency – potentially related to higher risk exposure from hands-on physical assistance provided to patients.
– – Hospitals experienced the largest reduction in payroll and the highest increase in indemnity claim frequency of all healthcare segments during the pandemic.
– – Dental Offices have a much higher share of Cumulative Trauma claims than other healthcare segments, potentially driven by repetitive movements and long duration of dental procedures.
– – Dental Offices have the highest share of claims involving cut, puncture and scrape injuries,likely resulting from the use of dental instruments.
– – Nursing Facilities and Home Health Care have higher shares of claims involving strain, struck and fall injuries than Physician Practices, likely due to the higher level of physical assistance provided in those segments.
– – Home Health Care has the largest share of claims involving motor vehicle injuries as care providers often drive patients to doctor appointments and perform other driving duties for their patients.
– – Overall, the healthcare industry has a lower-than-average claim severity, driven by the higher share of medical-only claims and the lower share of permanent disability claims.

The full report is available in the Research section of the WCIRB website.