Max
06-05-2003, 11:05 AM
Peace of mind is pricey
Some malpractice insurance soars
By Novelda Sommers
Daily Press
June 5 2003
NEWPORT NEWS -- Concern that more Peninsula physicians might stop delivering babies because of rising malpractice-insurance costs has prompted Riverside Health System officials to make an expensive offer to some of its doctors recently.
System officials decided to pay a quarter of their employee obstetricians' malpractice-insurance costs.
The move could cost the system, which runs the biggest of three hospitals on the Peninsula, upward of $300,000 a year, said Barry Gross, the system's chief medical officer and executive vice president.
One of the doctors who will be helped, Jeff Henke, said the subsidy amounts to about $27,700 for him. He found out recently that his malpractice-insurance premium will increase to $111,000 next year, from $64,000 this year. The amount of money that he gets for seeing patients through pregnancies, meanwhile, hasn't increased and isn't likely to, he said. He now finds himself considering whether to keep delivering babies, in spite of the help from Riverside, he said.
"If we see another increase, then I will have to stop doing obstetrics," said Henke, who's delivered babies for 13 years. "This is something I worry about every single day."
Riverside's decision underscores a deepening malpractice-insurance crisis affecting doctors and hospitals nationwide. It's a condition expected by many people in the medical profession to only deteriorate.
Increasing malpractice-insurance premiums are causing many doctors to leave high-risk specialties, such as obstetrics, neurology and, in some states, emergency medicine. A number of insurers - weakened by lower investment income and higher claims - have quit offering malpractice insurance or, as in the case of Tennessee-based Doctors Insurance Reciprocal, have been forced to quit. Others are rapidly increasing insurance rates for high-risk specialties.
Thousands of doctors, including about 2,200 in Virginia, had to scramble for insurance in the troubled market in January, after Tennessee regulators placed Doctors Insurance Reciprocal in receivership.
The regulators made their decision partly because the company bought reinsurance to cover all its risks from Doctors Insurance Reciprocal affiliate Reciprocal of America, based in Glen Allen. The Virginia company - which wrote malpractice insurance for hospitals in several states, including Virginia - was forced into receivership, days earlier. None of the companies had sufficient reserves to cover their liabilities, regulators found.
Riverside decided to help its obstetricians pay part of the cost of malpractice insurance after Doctors Insurance Reciprocal went under and rates went up under a new provider, Gross said.
"It became apparent we would be losing doctors," said Gross, a gynecologist and former obstetrician.
Riverside's medical center was also among those left without an insurer after Reciprocal of America folded, said Wade Broughman, Riverside Health System's chief financial officer.
Officials decided that rather than look for coverage with a new insurer, they could self-insure the system and buy reinsurance for excessive damages that the system might incur. The new approach went on line in May. Sentara and Bon Secours were already self-insured.
"We've had to scramble to get it," Broughman said. The annual costs are about the same, but the exposure to payouts is higher under self-insurance. In a bad year, the health system could lose several million dollars, Broughman said.
Consumers are affected by rising malpractice-insurance costs, health-care experts say, through decreased access to specialists and higher prices.
A handful of obstetricians on the Peninsula have stopped delivering babies over the past two years, though no agency has kept track of exactly how many have quit. Riverside, Mary Immaculate and Sentara officials all fear that more will go.
For Hampton gynecologist Robert Treherne, the decision to stop delivering babies occurred a year and a half ago, after he learned that his rates would more than double - to $50,000 - even though, Treherne says, he's never been sued.
He was delivering more than 30 babies a month - several times the number that Treherne thinks is ideal for providing good care - to maintain his income and pay for insurance. Elliott Lucas, Treherne's partner, also quit delivering babies.
Many observers credit the state's cap on damages that can be awarded in a malpractice case for helping keep insurers in the state and for keeping rates lower than in other states. Seven companies still offer medical-malpractice insurance here.
Virginia law caps medical-malpractice damages at $1.65 million. The Virginia General Assembly voted to raise the $1 million cap, in place since 1983, four years ago. It will increase by $50,000 annually until it reaches $2 million in 2009.
Jack Harris, executive director of the Virginia Trial Lawyers Association, said that though he thought the cap was "draconian" because it could deny victims fair compensation, it seemed to have helped Virginia doctors.
Some legislators have talked about reducing the cap, a move that Harris said his association would vehemently oppose.
"There really is no medical-malpractice crisis in Virginia at all," Harris maintained. "We have one of the strictest caps in the country. In addition, we have a whole series of other measures designed to guard against frivolous lawsuits and protect physicians."
For example, the Virginia Birth-Related Neurological Injury Compensation Program and Fund were created 16 years ago, as alternate means of compensating families of children who incur lifetime brain or spinal-cord injuries from accidents during birth. The program was meant to hold down the number of malpractice lawsuits in the state.
Insurance companies' woes have more to do with a hardening of the market and loss of investment income, Harris said. When the stock market was doing well, insurers could underprice their products to attract business and make up for losses by earning money on investments.
A recent analysis by Weiss Ratings Inc. - an independent ratings agency that evaluates the financial strength of financial institutions and insurers - found that in 19 states that have them, caps have failed to prevent sharp increases in medical-malpractice insurance premiums even though insurers enjoyed a slowdown in their payouts.
In states that enacted caps during a 12-year period, physicians saw a 48 percent increase in median premiums, to $30,246 last year from $20,414 in 1991, Weiss reported. Virginia saw a 29 percent increase, to $21,343 last year from $16,497 11 years earlier.
Doctors and hospital officials on the Peninsula agree that6 the state's cap on malpractice awards has helped keep their rates down, compared with those in other states that don't have caps. But health-care providers still struggle here, as national insurers leave the market and raise rates across the country.
Virginia physicians' premiums have also risen in general, the State Corporation Commission reports.
The commission found that by the end of 2002, obstetrician/gynecologists in Hampton Roads were paying $19,300 to $70,800 for insurance. That's an increase from six years earlier, when the rates topped out at $29,600, the commission said. The increases are lower for other specialties. Generally, the less invasive the specialty, the lower the insurance costs.
But, "nobody's happy with the rates," said Hazle Konerding, a Richmond dermatologist and president of the Medical Society of Virginia.
Konerding said she just learned that her practice's malpractice-insurance premiums will increase 40 percent in the next year, even though the practice's claims history is clean and she's in a low-risk specialty.
What it means, she said, is that she'll take home less pay. Her staff might not get raises.
It could be worse, she said: "I've heard of folks who could only get insurance that would cost everything they make."
Novelda Sommers can be reached at 247-4767 or by e-mail at nsommers@dailypress.com
Copyright © 2003, Daily Press
Some malpractice insurance soars
By Novelda Sommers
Daily Press
June 5 2003
NEWPORT NEWS -- Concern that more Peninsula physicians might stop delivering babies because of rising malpractice-insurance costs has prompted Riverside Health System officials to make an expensive offer to some of its doctors recently.
System officials decided to pay a quarter of their employee obstetricians' malpractice-insurance costs.
The move could cost the system, which runs the biggest of three hospitals on the Peninsula, upward of $300,000 a year, said Barry Gross, the system's chief medical officer and executive vice president.
One of the doctors who will be helped, Jeff Henke, said the subsidy amounts to about $27,700 for him. He found out recently that his malpractice-insurance premium will increase to $111,000 next year, from $64,000 this year. The amount of money that he gets for seeing patients through pregnancies, meanwhile, hasn't increased and isn't likely to, he said. He now finds himself considering whether to keep delivering babies, in spite of the help from Riverside, he said.
"If we see another increase, then I will have to stop doing obstetrics," said Henke, who's delivered babies for 13 years. "This is something I worry about every single day."
Riverside's decision underscores a deepening malpractice-insurance crisis affecting doctors and hospitals nationwide. It's a condition expected by many people in the medical profession to only deteriorate.
Increasing malpractice-insurance premiums are causing many doctors to leave high-risk specialties, such as obstetrics, neurology and, in some states, emergency medicine. A number of insurers - weakened by lower investment income and higher claims - have quit offering malpractice insurance or, as in the case of Tennessee-based Doctors Insurance Reciprocal, have been forced to quit. Others are rapidly increasing insurance rates for high-risk specialties.
Thousands of doctors, including about 2,200 in Virginia, had to scramble for insurance in the troubled market in January, after Tennessee regulators placed Doctors Insurance Reciprocal in receivership.
The regulators made their decision partly because the company bought reinsurance to cover all its risks from Doctors Insurance Reciprocal affiliate Reciprocal of America, based in Glen Allen. The Virginia company - which wrote malpractice insurance for hospitals in several states, including Virginia - was forced into receivership, days earlier. None of the companies had sufficient reserves to cover their liabilities, regulators found.
Riverside decided to help its obstetricians pay part of the cost of malpractice insurance after Doctors Insurance Reciprocal went under and rates went up under a new provider, Gross said.
"It became apparent we would be losing doctors," said Gross, a gynecologist and former obstetrician.
Riverside's medical center was also among those left without an insurer after Reciprocal of America folded, said Wade Broughman, Riverside Health System's chief financial officer.
Officials decided that rather than look for coverage with a new insurer, they could self-insure the system and buy reinsurance for excessive damages that the system might incur. The new approach went on line in May. Sentara and Bon Secours were already self-insured.
"We've had to scramble to get it," Broughman said. The annual costs are about the same, but the exposure to payouts is higher under self-insurance. In a bad year, the health system could lose several million dollars, Broughman said.
Consumers are affected by rising malpractice-insurance costs, health-care experts say, through decreased access to specialists and higher prices.
A handful of obstetricians on the Peninsula have stopped delivering babies over the past two years, though no agency has kept track of exactly how many have quit. Riverside, Mary Immaculate and Sentara officials all fear that more will go.
For Hampton gynecologist Robert Treherne, the decision to stop delivering babies occurred a year and a half ago, after he learned that his rates would more than double - to $50,000 - even though, Treherne says, he's never been sued.
He was delivering more than 30 babies a month - several times the number that Treherne thinks is ideal for providing good care - to maintain his income and pay for insurance. Elliott Lucas, Treherne's partner, also quit delivering babies.
Many observers credit the state's cap on damages that can be awarded in a malpractice case for helping keep insurers in the state and for keeping rates lower than in other states. Seven companies still offer medical-malpractice insurance here.
Virginia law caps medical-malpractice damages at $1.65 million. The Virginia General Assembly voted to raise the $1 million cap, in place since 1983, four years ago. It will increase by $50,000 annually until it reaches $2 million in 2009.
Jack Harris, executive director of the Virginia Trial Lawyers Association, said that though he thought the cap was "draconian" because it could deny victims fair compensation, it seemed to have helped Virginia doctors.
Some legislators have talked about reducing the cap, a move that Harris said his association would vehemently oppose.
"There really is no medical-malpractice crisis in Virginia at all," Harris maintained. "We have one of the strictest caps in the country. In addition, we have a whole series of other measures designed to guard against frivolous lawsuits and protect physicians."
For example, the Virginia Birth-Related Neurological Injury Compensation Program and Fund were created 16 years ago, as alternate means of compensating families of children who incur lifetime brain or spinal-cord injuries from accidents during birth. The program was meant to hold down the number of malpractice lawsuits in the state.
Insurance companies' woes have more to do with a hardening of the market and loss of investment income, Harris said. When the stock market was doing well, insurers could underprice their products to attract business and make up for losses by earning money on investments.
A recent analysis by Weiss Ratings Inc. - an independent ratings agency that evaluates the financial strength of financial institutions and insurers - found that in 19 states that have them, caps have failed to prevent sharp increases in medical-malpractice insurance premiums even though insurers enjoyed a slowdown in their payouts.
In states that enacted caps during a 12-year period, physicians saw a 48 percent increase in median premiums, to $30,246 last year from $20,414 in 1991, Weiss reported. Virginia saw a 29 percent increase, to $21,343 last year from $16,497 11 years earlier.
Doctors and hospital officials on the Peninsula agree that6 the state's cap on malpractice awards has helped keep their rates down, compared with those in other states that don't have caps. But health-care providers still struggle here, as national insurers leave the market and raise rates across the country.
Virginia physicians' premiums have also risen in general, the State Corporation Commission reports.
The commission found that by the end of 2002, obstetrician/gynecologists in Hampton Roads were paying $19,300 to $70,800 for insurance. That's an increase from six years earlier, when the rates topped out at $29,600, the commission said. The increases are lower for other specialties. Generally, the less invasive the specialty, the lower the insurance costs.
But, "nobody's happy with the rates," said Hazle Konerding, a Richmond dermatologist and president of the Medical Society of Virginia.
Konerding said she just learned that her practice's malpractice-insurance premiums will increase 40 percent in the next year, even though the practice's claims history is clean and she's in a low-risk specialty.
What it means, she said, is that she'll take home less pay. Her staff might not get raises.
It could be worse, she said: "I've heard of folks who could only get insurance that would cost everything they make."
Novelda Sommers can be reached at 247-4767 or by e-mail at nsommers@dailypress.com
Copyright © 2003, Daily Press