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    Managing physician risk in a costly world

    Amid speculation that malpractice insurance rates will rise, maintaining an air-tight risk management plan should be on doctors’ agenda this year.

    Malpractice insurance rates declined over the last decade as tort reform and industry safety measures led to fewer claims, but the size of the largest claims is growing. This could lead to higher rates in the future, experts say.This article appears in the 4/10/18 issue of Medical Economics.

    “It’s not widespread, but we’re finally beginning to see some upward pressure on [malpractice insurance] rates,” says Chad Karls, FCAS, principal and consulting actuary for Milliman, a Brookfield, Wis.-based actuarial and consulting firm. The examples are spotty geographically, but primary care practices are among those at higher risk, he says. 


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    A 2017 study of hospital professional liability by consulting firm Aon and the American Society for Healthcare Risk Management projects no increase in the number of claims below $2 million for 2018, but a 2 percent rise in claim severity. The study also noted “early signs” of a rise in the number of claims above $5 million, but the data wasn’t conclusive enough to quantify the increase.

    Also on the rise, the report found, are so-called batch claims, or multiple claims resulting from a repeated behavior. One example: improperly sterilized equipment.

    Karls expects liability insurance rates to stay favorable for another couple of years, but there are some signs of change ahead. Increasing demand for electronic records and safeguarding patient privacy could spur a rising number of claims.

    Internal medicine providers, in particular, could see higher rates as claims centered on failure to diagnose rise, Karls says. These types of claims can often take an extended time to surface as more is learned about how a disease progressed, so he urges doctors to be sure they are working with a highly-rated carrier.

    Beyond taking care when choosing a carrier, practice owners should stay vigilant in maintaining their risk mitigation strategies, he says. And that involves protecting a doctor’s personal finances from excess professional liability as well as those of the practice. 

    “Large hospital systems today have whole risk management teams to do investigations and implement policies,” says Craig Brodsky, JD, a partner with the law firm Goodell DeVries in Baltimore, Md. “The question is how to put that type of system in place at a smaller practice without breaking the bank.”

    Next: Physician, audit thyself


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