Company: THC
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0000070318-25-000009
Chunk: 61

Company: TENET HEALTHCARE CORP
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 61
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 is reasonably likely for there to be a 500‑basis point increase or decrease in our frequency or severity trend. Based on our reserves and other information at December 31, 2024, a 500‑basis point increase in our frequency trend would increase the estimated reserves by $58 million, and a 500‑basis point decrease in our frequency trend would decrease the estimated reserves by $45 million. A 500‑basis point increase in our severity trend would increase the estimated reserves by $190 million, and a 500‑basis point decrease in our severity trend would decrease the estimated reserves by $144 million. In addition, because of the complexity of the claims, the extended period of time to settle the claims and the wide range of potential outcomes, our ultimate liability for professional and general liability claims could change materially from our current estimates.

The table below shows the case reserves and incurred but not reported and loss development reserves:

December 31,20242023Case reserves$319 $270 Incurred but not reported and loss development reserves819 776 Total reserves$1,138 $1,046 

Several actuarial methods, including the incurred, paid loss development and Bornhuetter‑Ferguson methods, are applied to our historical loss data to produce estimates of ultimate expected losses and the resulting incurred but not reported and loss development reserves. These methods use our specific historical claims data related to paid losses and loss adjustment expenses, historical and current case reserves, reported and closed claim counts, and a variety of hospital census information. 

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These analyses are considered in our determination of our estimate of the professional liability claims, including the incurred but not reported and loss development reserve estimates. The determination of our estimates involves subjective judgment and could result in material changes to our estimates in future periods if our actual experience is materially different than our assumptions.

Malpractice claims generally take up to five years to settle from the time of the initial reporting of the occurrence to the settlement payment. Accordingly, the percentage of reserves at December 31, 2024 and 2023 representing unsettled claims was approximately 98% and 99%, respectively.

The following table presents the amount of our accruals for professional and general liability claims and the corresponding activity therein:

Years Ended December 31,20242023Accrual for professional and general liability claims, beginning of the year$1,046 $1,045 Less losses recoverable from re-insurance and excess insurance carriers(24