Healthcare
Risk management will be the right prescription as current threats worsen and new ones emerge.
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What to Expect in 2025
Medical inflation and record-high pharmaceutical costs will continue to pressure economic viability at every level of healthcare — and lead to changes in the utilization of private healthcare. The labour shortage has become endemic, and healthcare organizations will continue to struggle with staffing. Climate change, an uncertain political environment and cybercrime add yet more difficulties in maintaining resiliency. Providers that have a rigorous focus on enterprise risk management and insurance coverage design can improve their health in 2025.
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1
Economic Viability
Healthcare organizations will explore novel sources of revenue to ensure viability.
2
Vitality
Employee shortages will continue. Can providers find a cure?
3
Resiliency
In an environment rife with risk, sophisticated risk management will drive resiliency.
4
Cybersecurity
Better safeguards against cyber breaches will take on new urgency.
Healthcare organizations will explore novel sources of revenue to ensure viability.
1 | Economic Viability
$17.4 billion
Total spending on prescription drugs by Canada’s public drug plans in 2022-20231
Employee shortages will continue. Can providers find a cure?
2 | Vitality
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In an environment rife with risk, sophisticated risk management will drive resiliency.
3 | Resiliency
In 2025, high medical cost growth will create fiscal difficulties for providers, particularly hospitals. In fact, Canadian hospital expenditures increased 11% in 2022 and 4% in 2023, outstripping inflation.2
And annual increases of 5% between 2018 to 2019 and 2022 to 2023 for prescription drug prices have been difficult for providers and patients, with one in five Canadians unable to afford their prescriptions.3
Meanwhile, chronic underfunding and long wait times for healthcare have caused a crisis of confidence in the federal and provincial governments’ ability to keep the public system viable. And the emergence of private healthcare — at times reimbursed by the government — isn’t guaranteed to secure additional resources or reduce wait times in the public sector.4
Healthcare executives are fully aware of the fiscal challenges facing them. According to the HUB International 2025 Outlook Executive Survey,5 48% of Canadian healthcare executives identified rising costs as a major threat to their economic viability, behind only concerns about AI and business disruptions.
Rural hospitals remain in their own category of distress, and labour shortages have forced closures of emergency rooms and other services.6 While programs put into effect during the COVID-19 pandemic to help providers have been extended several times, the country is still seeking a long-term solution.7
Instead of relying on government reimbursements to fix their fiscal woes, healthcare organizations can look at mining potential new revenue streams. For instance, there are emerging opportunities to provide support services to the life sciences and clinical research sectors as these partnerships can be extremely lucrative and provide a lifeline for institutions.
But with the rewards come risks: A third-party financial loss tied to a mismanaged drug trial protocol, for example, is typically excluded from healthcare policies. Such opportunities can quickly become headaches without counsel from an experienced broker with knowledge in the healthcare and biopharma industries.
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The long-term labour shortage will continue to affect healthcare organizations’ services, finances and overall work environment.
In 2023, the costs of physicians and other medical professionals reached 23% of total health expenditures in Canada, second only to the cost of running hospitals.8 The high expenditure on labour is expected through 2025.
Even with the amount of spending on salaries, medical professionals are still in short supply. In Ontario, where the situation is more dire than in other provinces, the shortage of registered nurses hit 26,000, a gap that has widened 3% since 2022.9 Meanwhile, the shortage of long-term care workers, critical for helping the country’s aging population, has degraded care and put facilities at risk.10
High salaries can’t address worker burnout, an issue affecting nearly 80% of public health workers in Canada.11 And the growing severity and frequency of violence against healthcare workers drains their emotional health and industry resources.
For all their promise, artificial intelligence and technology can’t supplant absent bodies. A cure will require public efforts to address educational shortfalls and private efforts to improve working conditions, including a strategy that creates an optimal employee experience through personalized benefits.
Especially important to healthcare employees are enhanced mental health services, increased safety and improved working conditions. These benefits can help prevent burnout, increase a sense of being valued and improve work-life balance — some of the most common reasons healthcare workers leave the profession.12
Healthcare organizations need to explore other long-term strategies to address staffing concerns. For instance, health systems can partner with nursing schools to design programs that offer the opportunity for employment upon graduation.13 And telehealth has continued to be an important method for delivering care, especially in areas outside major metropolitan areas, where there aren’t enough physicians to care for the population.14
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If revenue worries and the labour shortage weren’t enough, threats ranging from climate change to an unsettled regulatory environment will test healthcare organizations’ resiliency in 2025.
Climate change, for one, has sparked heatwaves, wildfires, convective storms and other issues that disrupt operations and put people at risk. Globally, the healthcare system faces total climate change-related costs of $1.1 trillion by 2050.15
That’s played out in insurance rates. Following years of double-digit rate increases for property-casualty, liability and catastrophe coverage, the market has settled somewhat, with reductions in some geographies.
Globally, medical professional liability (MPL) insurance carriers were unprofitable in 2023,16 and those pressures appear to be continuing in 2024, which could lead to rates rising 15% or more in 2025. Jury awards of $10 million or more — so-called “nuclear verdicts” — are more prevalent in the litigious U.S. than Canada, but the trend doesn’t stop at the border. Driven by social inflation, the amounts awarded in nuclear verdicts are also increasing, making underwriters hesitant to fully cover liability for a single client.
Institutions are advised to employ hazard vulnerability analyses to inform long-term infrastructure planning and ensure their structures can handle extreme weather events that will affect
roads, flooding and roof integrity. In addition, healthcare organizations may need to retrofit facilities to ensure catastrophes do not impede care.
Then there’s compliance risk, which already requires a disciplined and rigorous approach to abide by federal, provincial and local regulations. And healthcare organizations seeking to boost revenues through partnerships with life science companies must ensure they are compliant with all regulations lest they risk sanctions, fines and the prospect of becoming uninsurable.
To stay resilient over the long haul, enterprise risk management (ERM) has become essential for the healthcare industry. Reviewing the fundamentals of what’s insurable and what can be retained or transferred is only part of ERM. Assessing and managing the scope of potential risks makes organizations more resilient and gives underwriters more reasons to look favourably on insureds.
Case Study
A HUB client, an independent healthcare system, needed direction on aligning the goals of their risk management division with their overall corporate goals. HUB conducted a thorough analysis to identify major risk factors to the division. In doing so, the healthcare system was given a blueprint, thereby setting up their ERM process for success.
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Cybercrime costs healthcare more than any other industry — and it’s not even close.
The average data breach for a healthcare organization between March 2023 and February 2024 cost US$9.8 million, compared to US$5.9 million for financial institutions and US$4.7 million in the industrial sector. The cost of a healthcare breach is down from the same period a year earlier, when it was US$10.9 million, but the sector remains the biggest target for cybercrooks.17
Because digital technology drives medical efficiency and effectiveness, it has become ubiquitous in healthcare settings worldwide. That massive footprint has made healthcare an attractive target for cybercriminals.
But the impact of cyberattacks on healthcare can cut far deeper than money. For example, a ransomware attack on five southwestern Ontario hospitals in the fall of 2023 compromised private information for hundreds of patients. Entire systems within hospitals were shut down, leading to cancellation of surgeries and other procedures, including radiation treatments for cancer patients.18
That kind of cyberattack puts patient care at risk, potentially leading to claims for medical professional errors, enterprise failures and management malpractice, affecting directors and officers.
Just as concerning are attacks on vendors: In February 2024, a data breach at American drug distributor Cencora affected its partner Innomar Strategies in Canada, revealing personal health information such as diagnoses and medications, as well as health and insurance numbers.19 A similar data breach at the First Nations Health Authority in British Columbia revealed similar information about indigenous Canadians across Western Canada.20
In the face of such threats, how can healthcare organizations minimize the risk? There are three essential elements to staying resilient against cyberthreats: thorough contingency plans; improved cybersecurity for new tools and software and vetting cybersecurity controls of third-party vendors; and staff training to help keep bad actors out of the system.
Insurance underwriters are examining the above steps before issuing coverage, as well as mandating two-factor authentication and stringent internal policies governing email and social media.
It’s essential to have an insurance broker who understands the scope of risks to healthcare organizations in this environment. But the right coverage for cybercrime is only one piece of the puzzle. Risk management that accounts for threats from within, vendors and bad actors alike can help ensure resiliency against cyberattacks that could potentially derail an organization.
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Better safeguards against cyber breaches will take on new urgency.
4 | Cybersecurity
Navigating Your Next Steps
HUB healthcare insurance specialists will work with you to develop a tailored strategy for 2025.
1
Thoughtfully lean into risk.
As risks in healthcare have increased, so have premiums. A higher deductible can reduce premiums and improve experience rating, while an alternative risk transfer vehicle can also help lower costs. Ask your broker what kind of insurance options meet your needs, whether that’s professional medical liability, property or catastrophe coverage.
Increase engagement through benefits.
2
Employees — especially healthcare workers — expect you to support their health, safety and wellbeing. A personalized benefits strategy based on fostering quality employee experiences (QEX) will boost engagement, recruiting and retention and lower risk.
Climate change, the need to protect workers against violence and increasing cybercrime means that healthcare organizations need to ensure they have proper protections against disasters and contingency plans if disasters occur. Collaborating with your broker to develop a comprehensive enterprise risk management strategy is a first step in ensuring resilience.
Prepare for the unexpected.
3
Understand the root cause of your large losses and explain to carriers what you’re doing to prevent future losses. Develop a strategy with your insurance broker to determine the best time and frequency to review alternative markets.
Understand your loss trends.
4
Be Prepared
Download our 2025 Healthcare Outlook and Insurance Market Rate Report to see what to expect in the coming year.
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Meet the Experts
Practice Leader, North America
Healthcare Practice
Peter Reilly
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Practice Leader, Canada
Liam Brown
Healthcare Practice
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Chief Marketing Officer
Ray Nolen
Healthcare Practice
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Expert
Tim Geddes
Healthcare Practice
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Risk Advisor
Jim Burke
Healthcare Practice
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Gigi Acevedo-Parker
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HUB Healthcare
When you partner with us, you’re at the centre of a vast network of experts who will help you reach your goals. For more information on how to manage your insurance costs, reduce your risk and take care of your employees, talk to a HUB healthcare insurance specialist.
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$1.2B
in commercial insurance premium brokered by HUB
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healthcare clients
47,700
insurance policies managed
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Related Resources
3. Canadian Institute for Health Information, Pan-Canadian Prescription Drug Data Landscape, March 2024.
4. Toronto Star, “Are private health care providers breaking the law? Four doctors speak out on for-profit care in Canada,” October 2, 2024.
5. HUB’s Outlook Executive Survey polled 900 C-Suite and VP-level executives on the issues facing them on profitability, employee vitality and organizational resilience.
6. CBC, “Canadian ERs keep closing this summer – but there’s no easy fix,” August 17, 2024.
7. CityNews, “Ontario extends program that helps rural and northern hospitals avoid ER closures,” March 22, 2024.
8. Canadian Institute for Health Information, “National Health Expenditure Trends, 2023 – Snapshot,” November 2, 2023.
9. RNAO, “CIHI data reveals critical nursing shortage in Ontario,” July 25, 2024.
10. Canadian Association for Long Term Care, “CALTC Health Human Resources Insight: The Unique Challenges of Staffing in Long-Term Care Homes,” May 26, 2023.
11. BMC Public Health, “Burnout among public health workers in Canada: a cross-sectional study,” January 2, 2024.
12. Financial Post, “Young nurses are leaving over working conditions, study says,” October 20, 2024.
13. University of Miami, “University of Miami and Steward Health Care Launch Clinical Education Partnership,” August 2022.
14. Canadian Institute of Health Information, “Virtual Care in Canada: Strengthening Data and Information,” 2022.
15. World Economic Forum, “This Earth Day we consider the impact of climate change on human health,” April 22, 2024.
16. Fitch Ratings, “US Medical Professional Liability Insurance Underwriting Loss Widens,” June 10, 2024.
17. IBM, “Cost of a Data Breach Report 2024,” July 2024.
18. CBC, “Southwestern Ontario hospital cyberattack cost organizations at least $7.5M,” August 30, 2024.
1. Canadian Institute for Health Information, Pan-Canadian Prescription Drug Data Landscape, March 2024.
2. Canadian Institute for Health Information, “National Health expenditure trends, 2023 – Snapshot,” November 2, 2023.
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Burnout affects nearly
80% of all public healthcare workers in Canada
$9.8 million
The average cost of a cyberbreach in healthcare, more than any other industry.
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$1.1 trillion
Global costs of climate change on healthcare by 2050.
Let your broker know what changes you’ve made to the business, so there are no surprises at renewal. Review exposures and insurance needs at least 90 days prior to policy renewal, so your broker can identify the best options.
Be transparent with your broker.
5
19. Fierce Pharma, “Data breach at pharma partner Cencora puts sensitive patient information at risk,” May 28, 2024.
20. CBC, “Cyber breach exposed personal data: Indigenous health authority,” October 7, 2024.