The rise in the dollar amount of medical malpractice payments by hospitals and physicians outweighs the increased number of payouts in driving up malpractice costs, according to a study issued recently by Chicago-based Aon Risk Services, an actuarial and consulting practice for hospitals and medical groups.
Physicians in general practice and internal medicine can expect to lose an average of $13,600 this year in medical malpractice payouts and defense costs, up from $12,230 projected for 2003, based on data from more than 38,000 hospital liability claims and close to 3,000 physician liability claims. Rates for other specialists are calculated as multiples of the base rates set for general practitioners and internists, according to study co-author Greg Larcher, an actuary and assistant director at Aon.
Similarly, hospitals on average should expect to make 4.5 malpractice payments for every 100 beds and to lose $6,600 per bed this year in damages and defense costs, up from $6,055 per bed last year. The average payment per hospital will run about $149,000 per case in which a payment is made. That figure excludes plaintiffs' cases filed but withdrawn or dismissed without payment, Larcher said.
Of the 17,071 closed claims filed against hospitals, the study showed that 19% of the payouts went to attorneys and other defense costs, while 81% went to plaintiffs. The study did not break out attorney costs, Larcher said.
Aon focused the study on 11 states, where nearly 64% of claims originated out of a national database of claims from 48 states, Larcher said.
The frequency rate of claims paid has grown 3% per year from 1995 to 2002, while the severity rate rose 6.5% during the same period, Larcher said.
"While the number of claims coming in the door is growing, it's the size that has a greater impact on the trend we're seeing," Larcher said.
The projected 2004 average loss per bed for hospitals in the states studied by Aon did not correlate well with a list of 19 so-called medical malpractice "crisis states" prepared by the American Medical Association.
For example, Louisiana, with the highest projected 2004 medical malpractice cost per bed at $11,800, is listed by the AMA as "currently OK," while Ohio, one of the AMA's "crisis" states, had the second-lowest cost per bed at $3,400. Pennsylvania, an AMA crisis state where physicians have demonstrated for tort reform, ranked third from the bottom of the Aon 11 at $4,200.
Larcher said regional variability within states and sample size offer an explanation.
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