Having a medical malpractice liability insurance policy is a given for physicians. The more difficult decision is determining what that policy should look like.
Having a medical malpractice liability insurance policy is a given for physicians. The more difficult decision is determining what that policy should look like. And too often, physicians place too much emphasis on keeping premium down.
“You do get what you pay for,” explains Michael Bailey, principal, healthcare practice group at Barney & Barney. “You want to make sure you’re getting the best product at a reasonable price. And you want to make sure that your carrier has all of those resources so that you can continue your practice and be successful.”
Stability and support
Paramount among those resources, Bailey says, is financial stability. The last thing you want is to find yourself in a situation where a claim has been filed against you, and your carrier doesn’t have the financial wherewithal to provide support. That leaves you holding the bag.
“We want to make sure that all of our clients are placed with carriers who have the means to pay the claims when they do arise, and invest in their internal resources,” Bailey explains.
Among those internal resources is a strong defense counsel, one who works in a collaborative relationship between the physician, the defense attorney, and the claims staff.
“You want to make sure they’re protecting the physician’s interests, and educating the physician along the way of the claims process and what’s going on; providing advice on when it may be best to settle a claim, and when it’s important to take a claim to trial, based on their expertise,” Bailey explains.
Risk management assistance
Physicians should also look for an insurance carrier that will be a business advocate for them. That means understanding every facet of the physician’s practice, including compliance strategies; policies and procedures where hazard communication is concerned; conducting facility and clinical observations to see the employees; and provide solutions to prevent workplace injuries to their staff and maintain a safe environment for patients.
Flexibility, says Bailey, is also key.
“What we’re seeing right now is more and more groups coming together, joining forces,” he says. “Some dynamics may exist because you may have different specialties coming together. You may have physicians in different locations coming together. So you want to have a carrier who can accommodate those types of requests.”
In addition, as physicians building their practice, they often hire additional professional staff such as nurse practitioners, or look to explore new revenue streams by expanding their practice into different areas. As such, they need an insurance company that can accommodate that type of request.
“That’s the type of flexibility we look for,” Bailey says.
There are 2 important elements physicians need to consider where coverage limits are concerned: per-occurrence, and aggregate. Bailey explains that the majority of insurance companies offer a $1 million per-occurrence and a $3 million aggregate claims limit.
Depending on where the medical practice is located—some states are more litigious—higher limits, such as $2 million per-occurrence and $4 million aggregate, are worth considering.
Experts, says Bailey, are split on this strategy.
“Some people feel that if a physician has a higher limit of liability, that becomes the new target,” he explains. “That’s what attorneys are going to go after. As a result, some physicians are reluctant to buy that higher limit of liability, while others feel more comfortable knowing they have a robust limit available.”
Another important variable is defense costs—are they inside or outside the liability? If defense costs are covered inside the liability, that $1 million per-occurrence limit could erode quickly if attorney fees are taken off the top. Bailey recommends that from a risk management standpoint, it’s more advantageous to secure defense costs outside the limit of liability, thereby keeping the per-occurrence coverage limit intact.
A surgeon, for example, is susceptible to greater potential liability, and greater dollar amounts being sought, than a general practitioner.
“You can erode your entire limit of liability if you have ongoing litigation,” Bailey explains.
Today, more medical liability carriers are offering additional coverage for cyber liability and privacy liability—claims arising from breeches of privacy. For example, electronic medical records and patients wanting online access to their medical records create new and potentially costly exposures for physicians.
“We’re seeing more claims in these areas,” Bailey says. “If physicians are not getting these types of coverage offerings through their medical insurance carrier, it’s something they should be looking at outside of that relationship.”