Update from my state association listserv:
"I am writing to you today to address some of the concerns and questions raised on the Council listserv about our decision to switch preferred professional liability insurance providers.
I want to start with two important points. First, the driving principle of this decision was putting the membership first. Second, I want to be very clear that the APA staff acted within their authority to assess options for providers and negotiate the contractual agreement.
While many members have responded positively to this news, I understand that some of you have concerns about the choice, the process by which it was determined, and/or the way in which you learned about the switch. I want to apologize as the CEO of APA for the angst this has caused some of you. We definitely could have done a better job in managing the roll out, particularly in anticipating the reaction by some of our members who have had a long-standing relationship with The Trust and adjusting our communications strategy accordingly.
CONTRACT NEGOTIATIONS AND TRANSPARENCY OVERALL. Contract negotiations themselves are confidential. In the course of negotiations, companies provide confidential information about their business strategies, share proprietary information, and engage in privileged discussions with our team. We would be doing a disservice to the parties we negotiate with if we made those conversations public. This is not unique to APA.
We can, however, improve on discussing the
results of those discussions. Initiating this conversation sooner may have helped to allay concerns raised about transparency, and we will work harder to ensure this happens going forward.
NEGOTIATIONS WITH THE TRUST AND THE REQUEST FOR PROPOSAL (RFP) PROCESS. We began negotiations with The Trust in the spring of 2017, well in advance of our contract expiring in the summer of 2018. After several months of negotiations, we were not able to reach an agreement and believed that the offer from The Trust was significantly too low, especially in relation to the agreement that we had with The Trust at the time. An independent assessment indicated that what we were being offered by The Trust did not meet the IRS fair market value standards, so we were obligated by our fiduciary responsibility to seek out an offer more in line with those IRS standards. In September, we issued a request for proposals for other bidders and got three highly qualified responses to the RFP. All three RFP responses contained the following elements which The Trust had steadfastly refused to provide:
- A premium discount specifically for all APA members;
- Complete transparency for APA into program metrics: number of members enrolled, loss history of program, and program profitability;
- Access to insurance partners’ non-APA member psychologists for APA membership recruitment;
- Compensation for APA based on the success of the program and in compliance with IRS fair market value standards.
Once we had the results from the RFP in hand, we offered The Trust the last right of refusal with the hope that we could still reach an agreement with them. On January 20, we shared summary results of the RFP responses with The Trust and asked again if they would revise their offer. The Trust declined and informed APA that they would not negotiate on those elements. At that time, The Trust indicated that there was no need to continue negotiations.
DECISION TO KEEP PARTNER CHANGE CONFIDENTIAL UNTIL ACTIVATION DATE. As it became clear to us that we were not going to reach an agreement with The Trust, I had a series of conversations with the CEO of The Trust, Jana N. Martin, Ph.D. We were trying to come together to reach an agreement, but we also talked about how, if we were not going to reach an agreement, we needed to do it in an amicable way, not disparage one another. We wanted this to be a smooth transition, and that was my commitment to her. When we selected a new provider in April, it was my decision not to publicize the new agreement, so that The Trust would not experience any harm while their contract was still in effect.
The decision to ensure The Trust’s relationship with us was protected until it ended is the reason why members did not get prior notice. In retrospect, while it was important to keep our commitment to The Trust, more attention should have been paid to the importance of providing our members with information in a timely way.
NEW PROVIDER. American Professional Agency, Inc., one of the largest malpractice providers in the United States, currently insures 20,000 practicing psychologists, including 8,000 APA members, and has the A.M. Best rating of “A” (excellent). They partner with major groups like the American Psychiatric Association in the administration of their sponsored professional liability program.
It is important to note that APA members are
never obligated to choose the designated APA preferred provider. In this regard, 8,000 of our members chose American Professional Agency although The Trust was our preferred provider at that time, and many have already reached out for a quote or to switch since we announced this change last week.
As always, members can and should choose the provider that best meets their needs.
BOTTOM LINE. I believe this decision was in the best interest of APA and its members, and the process by which it was reached was consistent with our association’s standard procedures. I hope this helps to address some of the concerns that have been raised."
I look forward to conducting two webinars early next week to provide detailed background information and to respond to any additional questions. Monday’s (7/16) webinar is intended specifically for Council members. Tuesday’s (7/17) webinar will be open to the general membership, and Council members are encouraged to attend if you are unable to participate on Monday.
Information about the dates and times of the webinars as well as links to register for one or both of them are as follows:
Monday, July 16, 2018 at 11:00 AM EDT (for one hour) at:
https://attendee.gotowebinar.com/register/8695990577079466499
Tuesday, July 17, 2018 at 7:00 PM EDT (for one hour) at:
https://attendee.gotowebinar.com/register/5032383748469537027
