Protecting a unique approach
An interview with Philip M. Reilly, Vice President, Finance/CFO
Kol Bio-Medical Instruments, Inc.
Founded in 1971 in Fairfax, Virginia, KOL Bio-Medical Instruments is a specialty distributor committed to bringing emerging medical technologies to the market. KOL partners with innovative client manufacturers who share a strong desire to enhance the healthcare value chain by improving patient health and/or dramatically reducing costs in the system. Among the companies that have been represented by KOL are SpaceLabs, St. Jude Medical, Pall Corporation, Angio Systems, Fresenius, and Becton Dickinson. KOL currently has a sales force of about fifteen and is in more than twenty states in the eastern United States.
In years past, products liability coverage for specialty distributors was sometimes an afterthought – in many cases, these companies relied on their manufacturing partners to have the appropriate coverage. For KOL, securing their own coverage through Medmarc in the late 80’s made sense for a number of reasons notes Philip Reilly, Chief Financial Officer.
“If a partner had a relatively low limit and they were negligent, we could potentially be dragged into the courtroom. By having our own coverage, we are also buying defense. If we are sued, even if it isn’t our fault, we want to have coverage as you’ve got to defend yourself even if you’re totally innocent. And finally, because some of our manufacturers are smaller emerging companies, they may have lower limits and if they are faced with a lawsuit, they could be forced into bankruptcy and we’d be left standing there – which is something we want to avoid.”
The movement towards more aggressive credentialing by hospitals was another important factor in KOL taking on their own products liability coverage.
“Hospitals are under pressure from the JCAHO [Joint Commission on Accreditation of Healthcare Organizations], they’re under pressure as a result of new legislation, they’re under pressure through HIPAA [Health Insurance Portability and Accountability Act]. There are a lot of external forces that are driving hospitals to be sure they are protecting themselves and they are very often demanding proof of insurance”, says Reilly.
(Editor’s note: Please visit http://www.medmarc.com/Resources/Pages/Newsletters.aspx to read more on the topic of credentialing.)
When it came to selecting an organization to provide KOL’s product liability coverage, the choice was obvious.
“We wanted an insurance provider that understood our business,” says Reilly. “The advantage of Medmarc is that it was started by the Health Industry Manufacturers Association, now AdvaMed. We are in an unusual business where we represent manufacturers yet we still have product liability exposure – the Medmarc team understands our unique situation and provides solutions that are customized to match our specific needs. They also understand situations that are peculiar to our industry such as credentialing and can advise us on those areas.”
“Very often as companies grow and become more successful, there are claims and there are problems,” added Reilly. “Medmarc is more likely to be able to help you because they understand the business. If something goes wrong, because of their specialty knowledge and years of experience in this industry, Medmarc can assess a situation immediately and assess it better. One of the major carriers might take longer to come back with an answer and it might not be the answer you wanted.”
To learn more about KOL Bio-Medical Instruments, please visit www.kolbio.com.