Interesting article on one way to decrease malpractice costs. This might stem the perceived outflow of MDs to open their own surgery centers and siphon off the best paying customers.
from http://www.businessweek.com/magazine/content/05_06/b3919063_mz011.htm (excerpt) A Remedy For Malpractice Malaise Hospitals are offering free coverage to recruit doctors from private practice For the past few years, the insurance industry has been running Dr. Stephen W. Crane's practice into the ground. A perinatologist, Crane treats expectant moms who have complications that endanger their pregnancies. Malpractice insurance premiums for such high-risk specialists run as high as $150,000 a year in Ohio -- triple what Crane paid when he moved to Akron seven years ago from Syracuse, N.Y. And with many insurers dropping their malpractice coverage, Crane feared he would be ditched altogether. So when Akron Children's Hospital offered him a full-time job last December, he jumped, thanks to one tantalizing perk: The hospital would foot the entire bill for his malpractice coverage through its own in-house insurance company. "At some point, you can't afford to be in private practice anymore," Crane says. Doctors and hospitals have been in a squeeze for some time, of course, as malpractice premiums have soared. Now they're also getting inventive. To keep more physicians from bailing out, hospitals are increasingly offering doctors malpractice insurance through not-for-profit entities known as "captives." The captive at Akron Children's can cover Crane and his colleagues for 50% less than doctors pay on the open market, estimates CEO William H. Considine. That's because, unlike traditional insurers, hospitals don't have to calculate premiums based on industrywide losses. Instead hospitals, which often supplement coverage through reinsurers, can design coverage around the hospital's track record, a much smaller risk pool. Today only 7% of doctors actually work for hospitals; the majority just obtain privileges to practice at them. That could change rapidly as hospitals learn they can make an end run around insurers. Among the 2,369 hospitals in 19 "crisis states," where the malpractice situation is most serious, 11% had in-house insurance in 2004 -- up from 9% in 2002. That number is expected to multiply. "Interest is skyrocketing," says S. Allan Adelman, a partner with law firm Adelman, Scheff & Smith LLC in Annapolis, Md., which advises hospitals on setting up captives. Dee _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
