Systems study med-mal self-insurance

As the trend toward physician employment by hospitals continues to heat up, more healthcare systems are weighing the benefits and costs of providing malpractice coverage for doctors through in-house self-insurance plans.

An annual analysis of medical malpractice trends conducted jointly by risk-management firm Aon and the American Society for Healthcare Risk Management finds that doctors insured by hospital-employers tend to have lower overall liability loss rates compared to their peers on commercial malpractice plans. However, hospitals also take on added administrative burdens and overall risk in the process.

About 73% of hospitals in the Aon/ASHRM survey reported insuring their physicians in-house, while 24% used commercial medical malpractice carriers and the remainder used some combination of both, the study says.

In 2010, the average loss rate for employed physicians on their hospitals' insurance plans was $6,100, while the same rate for physicians on commercial plans was $15,810, the survey found. Additional savings came from administrative simplicity and the courtroom advantages of having doctors and hospitals employ the same defense teams in trials.

However, those savings can be offset by the higher overall risk put onto hospitals that self-insure doctors, particularly in more volatile periods of claims activity than has been seen in recent years. The loss rate for hospital professional liability claims has increased at a steady 5% annually since 2007, and average per-claim costs are expected to hit $171,000 in 2011, the study says.