A new physician-owned malpractice insurance company, New Star, has been launched by Novant Health, a Winston-Salem, N.C.-based eight-hospital system. The new company is licensed by state insurance agencies in both North and South Carolina, and its initial membership will consist of the 691-physician Novant Medical Group. The company will offer its products only to physician practices where doctors have medical staff privileges at Novant Health facilities, such as 805-bed Forsyth Medical Center in Winston-Salem, 497-bed Presbyterian Hospital in Charlotte and 60-bed Brunswick Community Hospital in Supply, N.C., according to a news release.
David Sousa, general counsel for Medical Mutual Insurance Co. of North Carolina, a physician-owned liability carrier covering some 6,500 doctors, expressed doubts over New Stars staying power. Over the last decade, weve seen a number of similar programs sponsored by hospitals come and go, Sousa says. In addition to malpractice insurance ventures not generating the amount of revenue many health systems expect, Sousa says another problem is that these companies are more willing to settle nuisance lawsuits and, at times, dont offer a vigorous enough defense.
But Novant spokesman Jim Tobalski disagreed with Sousas assessments. This insurance company is going to be run by physicians," Tobalski says, "so we think theres a big differenceits a company the health system started, but it will have significant physician input. Citing competitive reasons, Tobalski declined to comment on what physicians would be charged.
Sousa, however, says that Medical Mutual Insurance Co. charges an average of $13,000 to $14,000 for $1 million of coverage, which includes a range from $4,000 to $5,000 for primary-care physicians to $50,000 to $60,000 for obstetricians and neurosurgeons.