Payment Plan, Hospital Buyouts Affect Med-Mal Area

In Arkansas, doctors will be facing a few challenges that could soon be affecting their jobs.

According to Lars Powell, an associate professor of insurance and financial services at the University of Arkansas at Little Rock, the first major obstacle comes from a new approach to paying for medical care in Arkansas.

"There's a payment reform going on so that we pay for medicine differently," Powell said. "It creates a primary care provider who's responsible for coordinating the care."

The new definition of "coordinator" creates new responsibility - and new potential liability, Powell said.

"It's something that we're trying to get hold of intellectually and get involved in the process," he said. "Arkansas is one of the first states to do this, so we don't have anything to go by."

Secondly, Powell said, is the national trend of hospitals buying physician groups. The problem stems from the cost of a court case versus the cost of settling.

"Just paying a lawyer to review and respond to a claim costs thousands of dollars," he said. "Actually going to trial is likely to cost more than $150,000 even if we win."

Settling is usually much cheaper, but from the insurance industry's position, it's more detrimental to doctors because it "exacerbates plaintiffs' incentive to file such claims," Powell said.

When a doctor becomes part of a hospital system, he said, the doctor often loses his insurance autonomy. Some hospitals provide insurance themselves, and the coverage will work in favor of the hospital.

"The general concern is that settlement is not in the interest of physicians, but it can be in the interest of a hospital or practice," Powell said.

And with doctors suddenly becoming parts of lots of different hospital systems, Powell said, it's at least a headache and at worst, a mark on doctors' reputations.

"Part of a physician's credentialing, their privilege to work in various hospitals, has to do with their number of claims paid against them," Powell said. "Whenever money is paid on behalf of physicians for med-mal, a record is created in the practice database that's accessible to the public."

Crises

In addition to the current issues, doctors well-versed in medical liability history will often refer to a "crisis," which could refer to a couple of different events.

In the 1970s, the first crisis occurred when med-mal claims exploded in "frequency and severity," Powell said. "Some insurance companies went out of business."

Large liability insurance companies, like State Volunteer Mutual Insurance Co. of Brentwood, Tenn., formed out of that crisis.

The more recent crisis happened in 2001 when St. Paul Cos. exited the medical liability market, leaving around 40,000 doctors nationwide without coverage. This resulted in the formation of mutual insurance firms in multiple states, or, in Arkansas' and some other states, the opening of new markets for other out-of-state carriers.