Hospital CEO Lisa Coleman said that a rival bid from insurer AIG had sent a revised quote with a lower premium.
The KHIC quote remained at $90,898 while AIG’s dropped from $96,000 to $88,644. The KHIC policy included insurance for punitive damage judgments, while a punitive damage policy with AIG would cost $8,600 more, according to Coleman.
The board re-examined the bids after selecting KHIC at their regular December 21 meeting.
Coleman said that to enroll in the KHIC program, the hospital had to provide capital, and would have to do so again if it left the program and wished to enter. The hospital has given $24,000 in capital. “If we stay in for one more year, we have the potential to get half back over a seven year period,” said Coleman. “It is a remote possibility to get this back and any claims against us would be paid out of this amount. There would be no potential if we got out now.”
Coleman added that the hospital’s management company QHR had not advocated KHIC as an insurer prior to this year because of the company’s shaky financial history.
Board President Michael Gross said, “I am not a big lover of KHIC. They have belly-upped one time and are not forthcoming with financial information on their company.”
Bob Noel asked if it was a common tactic for insurers to lower costs for an initial policy then raise for subsequent policies, to which Coleman replied that the possibility existed.
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