The New Med Mal Crisis

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The New Med Mal Crisis Where have all the doctors gone?

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The New Med Mal Crisis. Where have all the doctors gone?. Types of Medical Professional Liability(MPL) Insurance. Healthcare Professionals : Commercial carriers Dentists/Oral Surgeons : Smaller specialists and commercial carriers Physicians/Surgeons : Mostly PIAA companies - PowerPoint PPT Presentation

Transcript of The New Med Mal Crisis

Page 1: The New Med Mal Crisis

The New Med Mal Crisis

Where have all the doctors gone?

Page 2: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

Types of Medical Professional Liability(MPL) Insurance

• Healthcare Professionals : Commercial carriers• Dentists/Oral Surgeons : Smaller specialists and

commercial carriers• Physicians/Surgeons : Mostly PIAA companies• Healthcare Facilities : Commercial carriers• Hospitals : Multi-line carriers or self-insurance

trusts

Page 3: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

About Physician Insurers Association of America (PIAA)

• Formation of PIAA (mid-1970s)• Physician Owned/Operated Carriers• Medical Professional Liability (MPL) Crisis• Availability of MPL Insurance• Policyholder Dividends• www.piaa.us

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IABA Meeting – August 4th, 2012

Historical Healthcare Liability Focus

• Serve a small customer base• Offer a small number of products• Compete in a small number of venues

…with the coming change in healthcare, does this model still make sense?

Page 5: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

Premium Comparison

Industry Breakdown Medical Mutual Breakdown

76% of In-surers

9%

12%3%

Percent of Premium from One Line

90% & Up of Premium75% - 89% of Premium50% - 74% of PremiumUnder 50% of Premium

98.0% Physicians/ Surgeons

1.7% Dentists 0.2% Facilties

Medical Mutual Premium Breakdown

Source: SNL Financial Source: Medical Mutual

Page 6: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

Number of Venues

1 2-5 6-10 11-20 21-30 31-40 41+0%

10%

20%

30%

40%

50%

60%

70%

80%

Medical Mutual

State Activity

Number of States

Perc

ent o

f Car

riers

Source: SNL Financial

Page 7: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

Healthcare Liability Outlook

• For now, financially strong based on recent results.

• Fierce Competition in order to retain business.• Provider Consolidation/Integration.• New and emerging risks from healthcare reform

and consolidation will put pressure on loss ratios.

…PIAA companies will need to adapt to the new reality.

Page 8: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

Healthcare Reform Impact• Number of Hospitals/Health Systems Decline :

Fewer, larger systems• Physician Groups Decline : Becoming employees• Managed Care/Health Plans Increase : Moving

from FFS to more of a Managed Care delivery system

• Miscellaneous Facilities Increase : Primary Care facilities needed

• Allied Health Professionals Increase : Growth in nurse practitioners and physician’s assistants

• Long Term Care/ Aging Service Increase : Population ages

Page 9: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

Effect of Healthcare Reform on Providers• Move from Fee For Service Delivery System

– Few incentives to reduce costs– Health care costs exploding– Costs are primary driver of fiscal deficits for federal,

state, local governments• Pressure on Providers for FFS

– Declining Reimbursements– Cost Pressures– Shift in mix of business (aging population, technology

requirements, etc.)

New system is designed to provide “Population Healthcare”.

Page 10: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

Advantages of Move to Employment

• Better reimbursement rates• More time for patient care• Less time spent on business of practice• Work/Life balance• Health system view as a necessity for “Population

Healthcare”

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IABA Meeting – August 4th, 2012

Trend to Employed Doctors

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

-10%

0%

10%

20%

30%

40%

50%

60%

70%

Change in Doctors Employed by Hospitals Since 2000

Full TimePart TimeTotal

Source: AHA Annual Survey of Hospitals

Page 12: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

Key drivers for Employed Physicians

Time for family/personal life

Flexible scheduling

No / limited on-call

Minimal management responsibility

Practice income

Long term income potential

Advancement opportunity

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Work / Life Balance

MaleFemale

Percent rated Very Important

Source: Analysis of AAMC-AMA Survey of Physicians Under 50

Page 13: The New Med Mal Crisis

IABA Meeting – August 4th, 2012

Impact of Hiring Physicians as Employees• Possible rise in frequency and severity?

– Previously two separate policies, now Hospital and Physician exposure combined.

– Joint-Defense.– Vicarious Liability increased.– Physicians providing care under different venues.

• Controllability– Consent to Settle claims go to economic buyer.– Claims staff understanding of who controls claim.– Collaboration regarding defense of claims.– What to do with tail exposure?

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IABA Meeting – August 4th, 2012

Success or Failure within the market will depend on…

• Pricing/Reserving• Claims/Risk Management• Continue to provide best Products/Services• Expansion in new Markets/Products

Page 15: The New Med Mal Crisis

Keith AllenSVP, ActuaryMedical Mutual225 International Cr.Hunt Valley, MD 21030(800)[email protected]