Optimizing Insurance Coverage for Multi-Location Dental Practices

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Expanding a dental practice to multiple locations is a significant achievement, reflecting great customer service, determination, and smart business practices. However, crafting an insurance program for a multi-location dental practice or a dental service organization (DSO) introduces complex challenges that require strategic planning, particularly when it comes to insurance coverage.

The additional locations of a multi-location practice add new dimensions of risk, compliance requirements, and operational intricacies. Because organizational structures and business strategies vary from one dental practice to another, there are many ways to structure a comprehensive insurance Aprogram. To effectively safeguard their operations, multi-location dental practices and DSOs need tailored insurance programs that are comprehensive, scalable, and easy to manage. This guide dives deep into the considerations and strategies necessary to optimize insurance coverage for dental practices operating across multiple sites.

Understanding multi-location coverage needs

A single-location dental practice secures three basic insurance policies, including individual professional liability (PL or malpractice) insurance, business owner’s policy (BOP), and workers’ compensation (WC). In this setup, the practice entity is named an additional insured on the PL policy, extending coverage to the practice owner and staff. The BOP can be written to include employment practice liability (EPL) coverage and data breach/cyber liability coverage. With these policy add-ons, the single-location dental practice is covered.

When opening a second location under a new legal entity name, it can be easy to assume securing coverage is as simple as replicating the process from the first office. However, what worked for a single location is rarely sufficient for a multi-location practice, as the risks and responsibilities increase with every new site.

Challenges of adding locations

Every additional location represents a new layer of complexity. Key factors to address include:

Workforce expansion: Employing more associates, office staff, and support personnel increases the potential for employment-related claims, such as disputes over wages or workplace conduct.
Higher patient volume: More patients mean greater exposure to potential malpractice claims or patient data breaches.
Service variation across locations: If certain sites offer specialized services like orthodontics or oral surgery, they carry unique risks that must be addressed.
Legal entity structure: Many multi-location practices establish separate legal entities for each site, which creates a need for consistent yet location-specific coverage.

Without an understanding of these issues and a streamlined insurance strategy to address them, office expansion can lead to coverage gaps, duplicated policies, higher insurance costs, and disorganized risk management practices. All of which will become a burden on the leadership team overtime-if not immediately.

Consolidation as a solution

Rather than gradually bundling insurance together as new office locations are opened, multi-location practices should consider consolidating their insurance into a master program which centralizes the various coverages into a single program, ensuring uniform protection across all sites while reducing administrative complexity. A single master policy can be customized for different locations, making it possible to address varying patient volumes, staff sizes, and service offerings without multiple overlapping policies.

A mid-sized dental group operating five locations could, for example, consolidate its professional liability, cyber liability, and employment practices liability insurance into one scalable package policy for each coverage type. This eliminates redundancies and simplifies renewals, claims processing, and compliance checks.

Navigating regulatory variations

Operating multiple locations also means navigating various regulatory requirements that involve everything from workers’ compensation to malpractice liability. These regulations can vary significantly, and staying compliant is critical for avoiding fines, lawsuits, or reputational harm.

Workers’ compensation

Each state has its own rules regarding workers’ compensation coverage. Some states, like Nevada, require workers’ compensation for even a single employee, while others have different thresholds. Understanding these regulations is essential to ensure compliance while avoiding over-insuring.

For instance, consider a dental group with locations in both Texas and California. Texas allows corporate employers some flexibility to opt out of workers’ compensation, while California mandates strict coverage requirements for all employees. A tailored master policy should account for these differences to ensure seamless compliance across state lines.

Localized insurance needs

Other local factors such as climate, geography, and urban density can also significantly influence insurance planning. For example, practices operating in coastal areas may prioritize flood and windstorm coverage, while those in metropolitan areas might focus on higher liability limits to address potential damages or slip-and-fall claims.

Additionally, state data privacy laws can dictate cyber liability needs. California’s stringent Consumer Privacy Act (CCPA), for example, requires businesses to employ robust protections for patient data. To provide adequate coverage, a cyber liability policy must reflect these local regulations.

Licensing and continuing education

Another often-overlooked aspect of multi-location expansion is the need to verify that all associates meet licensing and continuing education requirements in the states where they practice. While this is not directly related to insurance, uninsured claims could arise if an unlicensed dentist provides services. Aligning licensing procedures with risk management protocols mitigates such risks.

Engaging a specialized insurance broker

Designing an effective insurance program for a multi-location dental practice requires a comprehensive, forward-thinking approach. Managing in-house the insurance needs of a single-location dental practice might work for some, but a group dental practice and its insurance needs can quickly become overwhelming. Overseeing the growing number of insurance policies is a full-time job and can become a nightmare for the person responsible for risk management compliance and policy management.

Organizing the complexities of an insurance program for a multi-location dental practice or DSO takes experience and an in-depth understanding of coverage needs and options that the lay person may not possess. That is why it is important to consider working with a specialized insurance broker early in the process of office expansion.

A specialized insurance agent familiar with the unique risks that dental practices face can assess needs and secure coverage that is both comprehensive and cost effective. A comprehensive insurance program designed by a knowledgeable broker will include the following insurance coverages essential for protecting the diverse risks associated with multi-location growth.

Professional liability insurance

PL or malpractice insurance is a cornerstone of any dental insurance program. For a multi-location practice, individual policies for each dentist or location can create unnecessary complexity. A single, unified PL policy that encompasses all providers and locations ensures consistent coverage across the organization.

For example, if one office encounters a patient situation leading to a claim, a group-wide policy can ensure sufficient coverage for both the practice and the provider, under the same policy, sparing the practice the administrative burden of coordinating multiple carriers.

Cyber liability insurance

As custodians of sensitive patient data dental practices are prime targets for cybercrime. While many basic business owner policies include cyber liability coverage, they typically provide a small amount of coverage with embedded limits that are likely inadequate for multi-location practices.

A standalone cyber liability policy provides comprehensive coverage for data breaches, ransomware attacks, and other digital threats. It also ensures compliance with evolving regulations, such as those related to the health insurance portability and accountability act (HIPAA) and state-specific data protection laws.

Property and general liability insurance

Property policies for dental practices should not only account for standard risks, such as fire or theft, but also location-specific needs. For example, dental groups in hurricane zones may need windstorm and flood insurance, while those in earthquake-prone regions should prioritize seismic coverage.

Similarly, general liability insurance, covering incidents like slip-and-fall accidents, should include appropriate limits for all locations to prevent claims from exhausting the aggregate limits.

Employment practices liability insurance (EPLI)

Multi-location practices face heightened risks of employment-related claims. EPLI coverage protects against allegations of wrongful termination, harassment, discrimination, or wage hour disputes. A practice with several offices and dozens of employees should consider higher EPLI limits to account for increased exposure.

Umbrella liability and excess coverages

Umbrella policies provide an extra layer of liability protection that extends beyond the limits of underlying policies like professional liability or general liability. When purchasing an excess liability or umbrella policy, it is important to ensure the policy has the right limits. It is not uncommon for group dental practices to have a policy with higher limits-and therefore higher premiums-than necessary. An insurance broker will assist in assessing the necessary coverage limits.

Risk mitigation across sites

Proactive risk management strategies ensure the sustainability and efficiency of insurance programs. This is another way in which an experienced, specialized insurance broker can help. Insurance brokers often have tools and risk management programs that can be easily implemented across the sites. These programs may include any or all the following.

Standardized protocols across locations

Standardizing protocols for patient safety, data security, and employee conduct reduces variability and enhances insurability. For example, consistent patient consent procedures can lower the risk of malpractice claims, while a centralized cybersecurity strategy can protect sensitive data across all sites.

Annual insurance audits

A growing practice evolves quickly. Conducting annual insurance audits helps identify coverage gaps, eliminate redundancies, and ensures the policy stays up to date with regulatory changes and operational growth.

Customized risk assessments

Not all risks are universal. Collaborating with insurance professionals to conduct thorough risk assessments for each location ensures that policies appropriately address site-specific vulnerabilities, such as high patient volumes or regional weather risks.

Education and training

Investing in staff education is critical for minimizing risks. Regular training on HIPAA compliance, patient safety, and cybersecurity can prevent avoidable claims. Some carriers even provide training resources tailored for healthcare practices, which can enhance both compliance and risk management efforts.

Conclusion

For multi-location dental practices, creating a cohesive and effective insurance program is essential for sustainable growth and operational security. By understanding the unique coverage needs of a multi-location setup, navigating state-specific regulations, exploring comprehensive policy options, and implementing strong risk management practices, dental practice owners can mitigate risks and streamline their operations.

Partnering with an experienced insurance professional who specializes in dental practices ensures access to tailored solutions that deliver both protection and efficiency. Taking these steps not only safeguards the practice, but also positions it for successful, long-term expansion. Once in place, the best insurance programs, will scale with the practice and remain cost efficient, even as the business continues to grow.

Contact the Dental Practice team at Risk Strategies today to learn more.
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About the authors

Kyle Wallace has over 35 years of experience in the insurance industry. The last 25 have been spent working exclusively with dentists of all specialties and dental practices of all sizes. Kyle is recognized in the dental community as an authority on dental practice risk management and malpractice claims prevention.

Herb Ford specializes in advising dental practices and dental service organizations (DSO) on how to protect their dental practice and organization. He does this by creating comprehensive insurance programs that protect them against known and unknown risks.