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NATIONAL HARBOR, Md. — Medical malpractice claim severity for hospitals and employed physicians nationwide will have grown by a projected 2.5% at year's end, and claim frequency will have grown by 1%, according to a joint study by Aon Risk Solutions and the American Society for Healthcare Risk Management.
Meanwhile, a steady increase of physicians employed by hospitals, as well as new state laws that could significantly affect medical malpractice insurance costs, topped the list of health care providers' risk concerns identified in the 2012 Hospital and Physician Professional Liability Benchmarking Analysis, released Monday at ASHRM's annual conference in National Harbor, Md.
Ongoing consolidation in the health care provider industry has led more hospitals and health care facilities to directly employ physicians, and the vast majority of those facilities are using their own self-insurance programs to provide medical malpractice coverage for those doctors, according to the study.
Eighty percent of surveyed risk managers for hospitals employing physicians indicated their facility self-insures its physicians against medical malpractice exposures. Seven percent said most of their facilities' employed doctors are insured through the commercial market, and 13% said they use a combination of self-funded and externally purchased coverage.
Although risk managers touted the potential for cost savings, simplified claim defense and uniformity of risk management best practices, risk consultants at Aon noted the considerable challenges associated with self-funding an employed physician's professional liability exposures, including providing transitional or “tail” coverage, as well as coverage for prior acts of doctors while associated with their former employers.
Most providers indicated that while they do provide tail coverage for their employed physicians, slightly more than two-thirds said they do not provide any coverage for prior acts. Another 37% only provide the coverage in certain instances, and just 2% provide it in “many or all” instances, the survey said.
The study also examined several recently enacted or developing laws in Florida, Massachusetts, New Hampshire and Oregon that are likely to substantially influence decisions relative to providers' professional liability risk management and insurance programs.
In Massachusetts, for example, a law enacted in August aimed at curbing the growth rate of health care costs and incentivizing providers to migrate towards value-based care delivery and reimbursement models included a mandatory 180-day “cooling off” period that must precede a malpractice lawsuit. The rule is intended to give health care providers a chance to prevent a lawsuit by disclosing and apologizing to an injured patient for the underlying act or event, as well as an opportunity to negotiate compensation without involving the courts.
A similar, though much less rigid law, was passed in New Hampshire in June.
Legislators in Florida, meanwhile, are considering a bill that would replace the state's current malpractice litigation protocols with a comprehensive patient compensation system.
“The ability to mitigate, transfer and/or manage the current traditional risks facing health care providers should be considered an assumptive core competency of health care providers and their business partners,” Ron Calhoun, managing director of Aon Risk Solutions' health care practice, said in a statement accompanying the study's release. “The new health care landscape will be impacted by a range of developments, such as new alignments across all providers and care settings, and among multihospital and multiphysician groups, payer-provider links for risk sharing, data integration and patient management, and financial and data transparency.”