1. Fewer physicians in the work force. It is well known that physician practices are consolidating. Physicians and surgeons are gathering into larger groups to reduce costs, increase efficiencies, improve physician lifestyle, and comply with complex healthcare laws and regulations. This consolidation dilutes the physician/patient relationship.
2. The rise of “super losses”: According to industry sources, large claims against physicians and surgeons are on the rise. And, what the company calls “super losses”, or those totaling more than $5 million, are increasing. These mega losses are now accounting for a larger percentage of claims submitted by physicians and surgeons. In the past decade, rates charged by defense counsel have increased significantly. According to one report, this is especially true for large firms where handling “bet the firm” litigation, defense costs can be $600 or more per hour.
3. Hospitalists: In addition, as small, local hospitals and physician groups merge with faceless larger entities, patients have less hesitancy to sue than they had when they felt like they were suing their “friend”. The reduced supply of physicians in the marketplace will also put pressure on medical malpractice insurance rates.
4. More patients: As baby boomers approach retirement, demand for medical care is expected to rise sharply, which will undoubtedly lead to an increase in medical malpractice insurance claims. The increase in the number of physicians in the next decade is likely to be much lower than the anticipated growth in the percentage of people over 65 over the same time frame. As a result, in some parts of the country, the physician population will struggle to meet demand. Patients, already irritated about office wait times, will have to wait even longer to see their physician, thereby potentially delaying diagnoses. Also, primary care physicians will be asked to perform more procedures and make more diagnoses in a day, thereby increasing the likelihood of being sued.
5. Tort Reform: Another issue that could well lead to medical malpractice insurance rate increases for physicians and surgeons is the anticipated wave of legal challenges to established limitations on malpractice litigation, including caps on damages, shortened statutes of limitations for filing lawsuits, and caps on attorney fees—reforms which are largely credited for controlling the cost of medical malpractice insurance by reducing medical malpractice litigation.

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As more people become insured, the number of medical malpractice claims against physicians and surgeons will increase. Compounding the issue is the fact that these newly-insured individuals are largely unfamiliar with the healthcare system.
The doctor-patient relationship is diminishing as expanded-care teams take over at different steps of the patient’s treatment program. For instance, nurses are taking on larger roles in the doctor’s office, and hospitalists, doctors who monitor the hospital stays of patients, are taking on medical center duties. The physician may diagnose a patient’s problem and then show up again for the out-of-hospital follow-up.

As a result of the Affordable Care Act, the Accountable Care Organization, ACO, model is gaining traction. Hospitals are purchasing smaller physician practices, hiring the doctors and nurses, and blending them all into ACOs. Patients are far less likely to be treated by and develop a trusting relationship with a single physician. Rather, the patient sees a number of professionals as he moves through the system.

Insurance Companies who specialize in medical malpractice insurance see this loss of personal connection to the patient by the medical community as ripe for med mal claims.

On the other hand, as hospitals buy up small physician practices around the country, the market for medical malpractice insurance shrinks. The hospitals who employ the physicians and surgeons pick up more of the risk. Insurers will be forced to compete harder for clients, creating pressure on rates.

Meanwhile, the ACO will standardize treatment methods. Some of this standardization will be good. Some will not be sound. The deep-pocketed hospitals will risk exposure to extreme lawsuits similar to the asbestos lawsuits of the 1980’s.

In addition to all this, the country is experiencing demographic changes which will surely impact medical malpractice insurance companies.

• Americans are aging and requiring more care, thereby stressing the already overburdened system and a growing doctor shortage.
• Physicians are also aging. Younger physicians want a better work/life balance which entails shorter working hours.
• Americans are experiencing more obesity, leading to more diabetes, heart issues, cancer, and knee and joint problems.

All of these trends, and others we cannot anticipate, will lead to greater medical malpractice exposures in the years ahead. Based on an article in the Insurance Journal-National, June 16, 2014.

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We do know that the Affordable Care Act (ACA) will lead to more people purchasing health insurance through government-run insurance exchanges. These people formerly did not carry health insurance. Within the next few years, it is estimated that more than 22 million people will have health insurance. The mere presence of more insured people will likely increase the number of medical malpractice claims.

Experts also predict the dilution of the doctor/patient relationship, as the model of one physician treating one patient through the various stages of care gives way to expanded-care teams and hospitalists with only surface relationships with patients. Under this new model, patients are not likely to be treated by a single family physician, with whom he has a relationship. Instead, he will move through a series of medical professionals as he goes from diagnosis, to treatment, to recovery. This model, of a team of professionals—doctors, nurses, physician assistants, hospitalists—makes up what is called Accountable Care Organization, or ACO. The ACO model is growing rapidly, as hospitals buy up small physician practices, making the doctors and nurses employees of the hospital, and blending them all into the ACO model.

The Accountable Care Organization model creates a new set of risks for the medical malpractice insurance companies. Patients gradually lose contact with the doctor because of the lack of continuity of care. As a result, he is more likely to sue because he is less emotionally and physically attached to his treating physician, thereby giving way to more medical malpractice claims.

As the number of private medical practices decreases, as hospitals buy up practices and take on their risk, medical malpractice insurance companies will compete heavily for the remaining private practice business. And malpractice companies that insure the deep-pocketed hospitals could face massive lawsuits similar to the ones faced in the asbestos lawsuits of the last couple of decades.

Other interesting trends are playing out concurrently, putting pressure on the already-strained medical malpractice system: Americans are aging and putting more pressure on the healthcare system, physicians are getting older and wanting to create a better work/life balance, and obesity is rising, leading to more cases of heart disease, diabetes, and joint ailments.

In addition, the Affordable Care Act does not address the issue of medical liability reform, which has proven to bring down the cost of medical malpractice insurance, not only in Florida, but nationwide. This is a glaring missed opportunity of the entire healthcare reform legislation, according to analysts.

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The doctor-patient relationship is diminishing as expanded-care teams take over at different steps of the patient’s treatment program. For instance, nurses are taking on larger roles in the doctor’s office, and hospitalists, doctors who monitor the hospital stays of patients, are taking on medical center duties. The physician may diagnose a patient’s problem and then show up again for the out-of-hospital follow-up.

As a result of the Affordable Care Act, the Accountable Care Organization (ACO) model is gaining traction. Hospitals are purchasing smaller physician practices, hiring the doctors and nurses, and blending them all into ACOs. Patients are far less likely to be treated by and develop a trusting relationship with a single physician. Rather, the patient sees a number of professionals as he moves through the system.
Insurance Companies who specialize in medical malpractice insurance see this loss of personal connection to the patient by the medical community as ripe for med mal claims.

On the other hand, as hospitals buy up small physician practices around the country, the market for medical malpractice insurance shrinks. The hospitals who employ the physicians and surgeons pick up more of the risk. Insurers will be forced to compete harder for clients, creating pressure on rates.

Meanwhile, the ACO will standardize treatment methods. Some of this standardization will be good. Some will not be sound. The deep-pocketed hospitals will risk exposure to extreme lawsuits similar to the asbestos lawsuits of the 1980’s.

In addition to all this, the country is experiencing demographic changes which will surely impact medical malpractice insurance companies.

• Americans are aging and requiring more care, thereby stressing the already overburdened system and a growing doctor shortage.
• Physicians are also aging. Younger physicians want a better work/life balance which entails shorter working hours.
• Americans are experiencing more obesity, leading to more diabetes, heart issues, cancer, and knee and joint problems.

All of these trends, and others we cannot anticipate, will lead to greater medical malpractice insurance exposures in the years ahead. Based on an article in the Insurance Journal-National, June 16, 2014.

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As a Florida agent who specializes in the sales and service of physician and surgeon malpractice insurance for over thirty years, I can offer some thoughts:
First, choose a physician and surgeon malpractice insurance company that has a laser focus on your specialty. Be sure the company focuses its resources on you, because you want the company to understand your particular needs as a Florida physician and surgeon. You do not want to take a back seat to other specialties—dentists, homeowners, chiropractors, contractors, etc. A lack of focus on the Florida physician and surgeon can weaken the malpractice insurance company’s ability to properly defend you, the Florida physician, should a claim occur.

Second, it is important to select a physician and surgeon malpractice insurance company with a long history of insuring and defending physicians. Nothing trumps experience in defending Florida physicians and surgeons. A new malpractice company may place all its resources on marketing and lack experience in the “nitty- gritty” of defending you if you have a claim—which is why you purchase malpractice insurance in the first place.

Third, choose a Florida medical malpractice insurance company that fights claims aggressively. If the Florida medical malpractice insurance company has the reputation for “rolling over” when you have a claim, the ramifications for you can be disastrous. You don’t want your name to wind up in the National Practitioner’s Data Bank because your malpractice insurance company did not defend you aggressively.

And finally, choose a physician and surgeon malpractice company that can help you prevent claims in the first place—through effective risk management or patient safety programs. Claims are very traumatic, even if you win and even if they are frivolous. You want a Florida malpractice company that helps you do everything in your power to avoid a lawsuit. Some malpractice companies will give a substantial credit for successful completion of a risk management course.

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The practicing physician or organization is generally the name insured.

Coverage under the physician and surgeon professional liability policy assumes that a policy is in force and that the claim comes within the scope of the policy. It also assumes that the claim is reported in a timely fashion and that there is no other coverage.

Coverage on the Physician and Surgeon professional liability (medical malpractice insurance) insurance policy is similar to other general liability policies:

• It promises to indemnify the insured physician or surgeon for damages for which he is found legally liable, including the payment of a judgment negotiated by the insurance company, up to the limits of liability stated on the policy.
• It pays legal defense and mediation costs incurred by the insured physician or surgeon. The malpractice insurance company generally has the right to choose the attorney and run the defense. This right includes the decision to settle or litigate the case. Some professional liability (malpractice) policies have a “consent to settle” provision, which allows the insured some say in the decision to settle. In any case, the insured physician has an obligation to cooperate with the insurance company in the conduct of his defense.

Generally, professional liability is not covered by the commercial general liability policy. In rare cases, it is added by endorsement; however, it is better to have a standalone policy.

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I would first like to explain what it means to have defense costs inside or outside the limit of liability. When we mention the limit of liability, we mean the limit of liability that is noted on the declarations page of the medical malpractice insurance policy. So, if a physician or surgeon in Florida has policy limits of $250,000 per occurrence/$750,000 aggregate, it means that, for one claim the medical malpractice insurance company is going to pay a maximum of $250,000. In one year, the total amount the medical malpractice insurance company in Florida will pay for all medical malpractice claims is $750,000.

In this case, it is obviously very important to determine whether the defense costs are paid inside or outside the limit of liability. If defense costs are paid inside the limit, and the cost of defending the doctor is $100,000, that physician now has only $150,000 available to pay a judgment or settlement. If the defense costs are paid outside the limit of liability on the medical malpractice insurance policy, the full $250,000 is available to pay a judgment and the $100,000 in lawyer fees, investigation expenses, defense and appeal expenses will not erode the physician’s limit of liability.

At first glance, this difference may not seem important. But if you were faced with a large claim, defense costs can add up very quickly and you could find yourself with no money left to pay a judgment or settlement of additional claims. Once the liability limits have been used up, your medical malpractice insurance company has no further obligation to pay any claim, judgment or claim expense or to defend or continue to defend you.

So, when purchasing or renewing your medical malpractice insurance in Florida, review it carefully with your agent to be sure defense costs are outside the limit of liability. This small difference could spell the difference between success or failure of your practice.

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When smaller practices merge into larger ones, it is not uncommon for doctors to then be insured by different medical malpractice insurance carriers. The group will undoubtedly move to one carrier, usually the one representing the larger entity. It is important for all physicians in a group to be insured by the same carrier, as the group will not want to negotiate among several insurers. This issue should be addressed before the merger takes place, so the new malpractice insurance coverage is active on the first day of operations. If the merging group has its own corporate coverage, it should be sure to maintain that coverage until accounts receivable are zeroed out and the corporations are closed.

In addition to ease of adjusting claims, there are other advantages for the group being insured by one medical malpractice insurance carrier:

• The cost per physician is usually less, as the group is usually able to negotiate credits;
• Physicians with prior medical malpractice claims may now be able to secure coverage from a standard carrier;
• The group can take advantage of free on-site risk management seminars and courses;
• Agents compete for group business, and can offer competitive bids.

It is very important for the group to be insured with a quality medical malpractice insurance company. We have seen too many cases where, in a desire to save premium, the group chooses a non-rated or poorly rated carrier, only to be disappointed with the claims handling later on. We believe that the company should be “A” rated by A.M. Best and Company, and focus solely on writing medical professional liability insurance for physicians and surgeons. Society credits, loss-free credits, risk management credits, and discretionary credits are usually available for quality risks. Some of the best medical malpractice insurance carriers offer dividend and other profit-sharing plans to secure new business and reward loyalty.

If the physician and surgeon group is working with an experienced medical malpractice insurance agent, that agent should be proactive in “shopping” the group’s insurance each year. In some cases, it will be best to stay with the same company—for a number of reasons. However, it has been our experience that everyone benefits with competition. In the end, the physician group receives the best possible price with the best possible company—a win for the doctor for sure.

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Most medical malpractice insurers require the insured doctor report incidents that are reasonably expected to lead to claims. The definition of what is reasonable is usually rather vague. In addition, the insurer will require that the insured not engage in conduct that prejudices the insurance company’s ability to defend a claim. Failure to give timely notice could be seen as prejudicing the claim.

The question of when an outcome is likely to lead to a claim is very subjective. Generally, if a patient makes statements that lead the physician or surgeon to believe a claim will result should be reported. If a patient requests records following a bad outcome, this could raise a red flag. Clearly, if the physician or surgeon receives a request for records from a plaintiff’s attorney in connection with a questionable outcome, there is a duty to report the incident to the medical malpractice carrier. Healthcare providers need to exercise good judgment in evaluating the decision to report or not report bad outcomes.

There is, of course, a downside to reporting all negative outcomes. Even if a physician or surgeon never has an actual claim, reporting too many negative incidents could jeopardize his ability to secure medical malpractice insurance in the standard market from a quality company. Sometimes a doctor may be advised to “dump” every bad outcome to the incident trigger medical malpractice insurance company he is leaving. While this “dumping” practice may seem like a good idea at the time, it could very well come back to bite the doctor in the future. Most applications for new business ask about incidents that have been reported to a prior company.

It is probably best to call our office if you have a question as to whether or not to report an incident to your medical malpractice insurance carrier. We generally believe that, if the incident is serious enough for the doctor to call, it should be reported.

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What does locum tenens mean?

Locum tenens literally means “place holder”. A locum tenens physician is one who temporarily works in the place of the regular physician while that physician is absent. A locum tenens doctor allows for continuity of patient care when the office has an increased patient load or if a physician is away due to CME, sabbatical, vacation or illness. His patients continue to be cared for and he does not lose his valuable revenue stream.

Why locum tenens?

Choosing to practice as a locum tenens can be attractive to a physician at any stage in his career. A first year physician can try out a variety of practice styles and geographic locations before committing to something permanent. Physicians in the middle of their career can test different areas and bridge the gap in income. Mature physicians can scale back their practices without fully retiring.

Don’t forget about medical malpractice insurance.

A locum tenens physician should carefully consider the medical malpractice insurance implications of accepting a temporary position.

Florida medical malpractice insurance policies can be endorsed to extend coverage to an approved locum tenens physician. By “approved”, we mean that the name insured doctor needs to notify his medical malpractice insurer of the name of the locum tenens doctor and the dates when he or she will be practicing in his place. Some medical malpractice insurance companies require an extensive review of the qualifications of the locum and some do not, as long as the locum is of the same specialty, has a valid Florida license and has an approved claims history.

Do I need to purchase malpractice insurance if I am going through a placement agency?

If you are securing a locum tenens through a placement organization, that company may well provide coverage for the locum tenens. This is one of the main things you should check if using a placement company.

“Tail” issues for locum tenens.

It is important to check the tail requirements if the main physician carries a claims-made medical malpractice insurance policy. There is no problem if the primary physician keeps continuous coverage. If, however, he drops it and fails to purchase a tail policy, there may not be coverage for the locum. And, when the primary physician retires, gets a free tail, and then re-enters practice as a locum tenens, there may be a problem with that free tail. Our office highly recommends that the doctor check with his medical malpractice carrier and secure approval, in writing, if he decides to go back into practice as a locum tenens after retirement.

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