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OB/GYN Editorial August 2002
Liability Insurance: A New Crisis
Ronald T. Burkman, MD Associate Editor
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Just when everything seemed stable, not necessarily good, just stable,
a new crisis is upon us—the escalating cost of liability insurance.
Although we had similar crises in the early 1970s and mid-1980s, the
current situation is somewhat different. Costs of insurance increased
in those prior times, but the business structure of medical practice
was different. A significant proportion of the health insurance of
patients was indemnity insurance, a system that allowed practices
to set their own rates for services. Currently, however, most insurance
is under some form of a managed care plan with fixed rates of reimbursement.
While in the past we decried the rising cost of liability insurance,
fortunately we did have a means of passing those real costs of practicing
medicine to the "customers" using our services. Under today's financial
arrangements, we do not have the ability to readily pass those costs
on to our "customers."
Today, although most plaintiffs lose when they go to trial, an
increasing number of plaintiff verdicts are returned with astronomical
awards. During the past year, in my own state of Massachusetts,
a jury awarded $21 million in an obstetrics case. Nationally, the
median jury awards between the years 1994 and 2000 for all cases
increased 43% with the median award levels relating to childbirth
increasing to more than $2 million per case (Jury Verdict Research
Report. Malpractice: verdicts, settlements and statistical analysis.
2002). It is unclear why jury awards are climbing to these levels.
Certainly, unhappiness with the current health care system with
the perceived lack of responsiveness under "managed care" is a significant
factor. Further, the practice of medicine is probably being perceived
more as a corporation than a personal business enterprise. Thus,
it is easier to go after big awards from a company rather than individuals.
Other reasons for increasing costs include falling interest rates,
which reduce the ability of insurance companies to gain a return
on investment to help cover claims. In addition, due to high medical
loss ratios, a number of insurance companies are leaving the medical
liability market. Because this results in less competition, physicians
are faced with rising premiums.
In addition to physicians being unhappy over rising costs, the
current crisis has significant effects on patient care. Due to unaffordable
cost or lack of insurance coverage, obstetrician-gynecologists in
some locales are leaving to re-establish practice elsewhere. This
results in reduced access to care for women. Others (particularly
older physicians who are still practicing obstetrics), after weighing
the cost versus benefit of continuing obstetrics, are opting to
discontinue this portion of their practice. Thus, the more-senior
practitioners are quitting obstetrics, leaving a significant void
in levels of experience. There is a current emphasis on reducing
error in the practice of medicine. It is recognized that much of
the error is related to problems with complex medical processes.
However, to carefully analyze these processes and make the necessary
changes that improve patient safety will require an openness in
the review and discussion of all medical mishaps and so-called near
misses. With the current liability situation where most physicians
feel they are targets, it is unlikely that meaningful progress will
be made without some type of liability protection. The bottom line
is that there is a need for meaningful tort reform that will reduce
the unreasonable size of some jury awards, yet will maintain some
protection for patients. Although there is interest in such legislation
on the national level, the most meaningful reform will have to occur
at the state level. Legislators will not respond to complaints about
the excess cost of doing business in today's climate from a group
believed to be privileged. The more convincing arguments will point
out the potential problems with access and lack of progress on patient
safety. Unfortunately, relative to their legislators, most physicians
are "silent sufferers." However, if we really want any chance at
reform, now is the time to step up and be counted. Remember, it
is in times of crisis that action is more likely to occur.
Ronald T. Burkman, MD
Associate Editor
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