Redefining medical malpractice insurance to help physicians thrive

Jared Kaplan: ©Indigo

There has been a significant boom in digital health tools, and physicians are seeking to integrate these tools into their clinical workflows to streamline efficiencies, boost business performance, and improve patient outcomes. The value these tools can bring to physicians and health care organizations is even more important now as we’re seeing physicians being hit with rising costs and lower reimbursement rates.However, physicians need to be aware that these new technologies may also bring new medical malpractice risks. A survey by QBE found that despite the benefits of digital health tools, 63% of brokers report their clients are “extremely concerned” or “very concerned” about the associated risks. In addition, 60% of brokers report that the volume of clients’ digital health services-related claims has increased compared to a year ago. Taking a modern approach to medical malpractice insurance will help physicians stay ahead of the curve, build resiliency and continue to provide high-quality patient care.

Medical malpractice insurance needs an update

The traditional medical malpractice insurance process is outdated—both in terms of the application process to generate a quote (think 15+ page paper application) and the data used to evaluate physicians’ risk profile. Physicians are assessed on their specialty, geography and claims history; however, past claims do not always predict future claims in medical malpractice, and this causes some physicians to get stuck in a price range higher than their true risk. Also, while physicians are typically underwritten based on their macro footprint (i.e. geography, specialty, and education), with the exception of their claims history, physicians’ individual characteristics are ignored in the underwriting process. For example, just because five orthopedists work in the same office in Brentwood, Tenn., that doesn’t mean they all carry the same risk profile—however they’re often priced that way. There is a massive opportunity to customize underwriting based on the individual profile of a physician.

This customization is made possible when medical malpractice insurers utilize a wider variety of data, including health care claims data, socioeconomic data, and even political data, during the underwriting processes.This gives insurers a more holistic view of physicians’ actual risk, enabling more accurate pricing for medical malpractice coverage. If we go back to the example of the five orthopedists in Brentwood, let’s say each physician in the group cares for a separate patient population and has unique prescribing habits, patient outcomes, and scope of services. Even if each physician in the group has a clean claims history, their future risk potential may be dramatically different. Medical malpractice coverage must take a more modern approach that tailors coverage to each physicians’ true risk profile, rather than continuing to use an inefficient underwriting process that is often more costly to physicians. It’s also important to note that conducting more complex analyses in the underwriting process doesn’t necessarily equate to more work—this can all be made possible with AI.

Helping physicians navigate new technologies and evolving malpractice risks

Adopting a more tailored, data-driven approach in the medical malpractice insurance underwriting process also better protects physicians as they leverage new digital tools. This is especially important given it’s possible one day digital tools will face similar product liability risks of medical supplies companies – i.e. did the AI tool fail or did the physician incorrectly use it? Take telemedicine as an example. While many physicians are looking to leverage it, there are specialties where delivering care via telemedicine is less risky, but there are some where there is more risk. For example, psychology and psychiatry are traditional telemedicine specialties where oversight of physical symptoms is less important, and therefore, they are less risky. Primary care is somewhat risky, as there are many aspects of primary care services that can be conducted virtually, but OBGYN and neurosurgery services are extremely risky.

It’s also important to take into consideration that medical malpractice insurance is provided on a state-by-state basis, but telemedicine tools complicate this as physicians can use telemedicine to care for patients across a handful of states. From a medical malpractice standpoint, this means that a physician that relies heavily on telemedicine and practices across a wide swath of states could be riskier than a physician that practices in just one state – and their policy and premium should reflect that. Each state has different rules and regulations for telemedicine, and more states means more complexity to ensure license compliance. There are always risks when implementing new health care tools, and ultimately telemedicine can be incredibly valuable for physicians and patients, especially in rural areas where there may be limited access to in-person care. Physicians should be able to use these tools, while also being appropriately protected. This requires medical malpractice insurers to take these nuances into consideration when evaluating physicians’ medical malpractice risk.

Digital health tools can deliver immense value to physicians – both for their business and in their clinical practice—especially as cost pressures continue to squeeze physicians from all angles. Physicians should utilize these tools strategically in clinical practice and feel confident doing so, while also understanding the potential malpractice risks that come with these new technologies. To better support physicians as they work to advance the industry and provide better outcomes for patients, medical malpractice insurers must utilize a data-driven, tailored approach to insurance underwriting and coverage that more accurately assesses physicians’ risk and takes into consideration the impact of new digital health tools. The traditional processes of the past are no longer serving the physicians of the future, and having a clearer picture of potential malpractice risks will have downstream positive impacts on physicians and patients.

Jared Kaplan is CEO and Co-Founder of Indigo – an AI-powered insurtech platform for medical malpractice insurance.