Physician Trends, Malpractice Insurance Rates and Telemedicine

There are many changes that are presenting on to the market. Conventional wisdom holds that rates for the medical malpractice insurance carriers will increase soon.  And, yet, According to Crittenden (our favorite source for medical malpractice insurance industry news), The majority of medical malpractice insurance carriers will keep professional liability rates stable.

The Affordable Care Act will eventually change the rates and the delivery system significantly;

and, many insurance carriers will confess to some uncertainty about whether  holding rates stable is the right decision.  

The physician shortage and the possible effects of the Affordable Care Act will bring uncertainty and lack of confidence,  so  the rate stability is  one of habit, some fear and a lot of competition in the m market.

There is some evidence, some data that suggests the rates should increase.  And, right now, there is still sufficient reserve and capital strength from this continued lowering of the number of claims per 100 (known in the medical malpractice industry as ‘frequency’), that the carriers are still confident enough to lower or hold the line on these unprecedented low rates.

Some carries, in some states have actually stared to raise premiums.  Not most states;  in most states,  however the favorable conditions, the ‘soft’ conditions in the physician continue.  The ‘med mal’ market during the past many years has introduced conditions that make it extremely difficult to rates to rise by more than 10 – 20 %.  Over 85 % of physician premiums remained steady or lowered over the past year, with just 15 % increasing (and those increases were just 2 % on average.

Competition makes big changes impossible in spite of dynamics supporting increased premiums.

The pricing increases are supported by the growing number of claims (relative to the past few years, shrinking reserves and the increase in the average cost per claim.  The cost of defending a claim has reached record highs, but the number of claims continues to fall.  For example, The Doctors’ Company’s number of claims per 100 is about ½ of what it was just 10 years ago, which more than offsets the increase in the average cost per claim (referred to as severity).

The drop in claims is one of the larger factors allowing the decline in pricing along with the persistent introduction of new insurance carriers into the various markets.   And, add to that, the expansion of those already in the market.

Other Carriers already writing coverage are expanding their geographic reach, all of which has the effect of increasing supply and holding down prices/premiums. 

The Doctors’ Company and Medical Protective (two of our biggest insurance carriers).

Carries with a majority  of their business focused on physicians only have been the most wary of any increases;  in some states, like North  Carolina, The Doctors’ Company reduced rates by 15 %  (in some specialties) Medical Protective will cut rates for its physicians and Surgeon, allied and general health coverage for facilities by less than 3 % overall.   And, some other companies view the instability of the market as another reason to fear making any moves at all (no matter what the numbers indicate)…these companies will reduce pricing by even larger amounts, from 5 – 15 % .  all in all, the soft market will continue for the foreseeable future (with some incidents of rate increases).

New Products make up lower premium.

More than a few companies will turn to the creation of new products new programs, discounts and underwriting changes to build business, or to attempt to hold on to their revenue levels…to ensure profitability.  The Doctors’ Company is constantly exploring new facility, specialty coverage; Medical Protective writes allied healthcare providers insurance  which allows for a lot of new premium to make up for that lost to consolidation or claims or other attrition factors.

Pro Assurance is developing a specialty concierge care program, and working on a new OB/GYN Risk Alliance purchasing group which will attempt to pull in premium. (source Crittenden)..

Most medical malpractice insurance carriers will offer new credits on physician business;  to continue to lure new physicians some companies are making it easier to qualify for the premium discounts;  as soon as you complete a risk management course, the premiums will come down.  Free Cyber protection, accelerated discounts to honor claims free periods are other ways medical malpractice, physician focused underwriters are working to keep premiums down.  For the first quarter of the year, medical malpractice insurers increased new business by writing some ancillary care providers, Nurse practitioners, Aestheticians, Lab Techs and other medical assistant categories.   As the physician extenders take on more role within the health care system, the more premium dollars will be earned from these providers. 

Nurse Practitioners can purchase their own medical malpractice insurance so that they can market their services to other providers and organizations.  The laws over the past few months are expanding the scope of care for N.P’s, with Nevada recently granting the Nurse Practitioners authority to prescribe medication without a physician’s permission.  California is considering allowing NP’s to set up their own standalone practices.   Stand Alone, policies and higher limits have become more and more common for insurance carriers providing insurance for Nurse Practitioners as the Affordable Care Act moves closer to implementation.

Other innovations will attract revenue…

Telemedicine!!

We have many physicians, formally, or informally engaging in the practice of telemedicine to some degree.  Pediatricians may ask a worried parent to send a cell phone picture of a puncture wound to a child’s hand due to a neighborhood dog bite; a young student away at college worried about a skin rash may send a clear picture to a local dermatologist through a secure, organized and medical protocol driven web portal, an in-home care agency may use physician assistants and nurses to examine patients communicating to a physician through store and forward technology,  acute care and Intensive Care Units use telemedicine to transmit vital statistics to Intensivists, Adult care and pulmonology specialists to treat the old and very ill.

Regardless of the trends or pricing or technology ahead, The Doctors’ Insurance Agency will work hard at understanding how to insure your practice.

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