Medical malpractice has been around for centuries and has two obvious goals: to provide monetary remuneration to patients who have been injured by substandard care and to deter poor treatment through fiscal punishment. Malpractice lawsuits were not prevalent enough to be a major medical concern until the early 1800s. Cycles ebbed and flowed from there, with malpractice premiums causing crises in the 1980s and again in the early 2000s.
Explore This IssueOctober 2013
Now, rates for medical professional liability insurance have been dropping for seven years, and an eighth straight annual decline is expected this year, according to Mike Matray, the editor of trade publication Medical Liability Monitor and the chief content officer of its associated website.
“We are in the longest, deepest soft market that the malpractice insurance industry has ever been in,” he said. “Right now, things are really good for the doctors as far as rates coming down, and the dollar amount of their premium has been going down for almost eight years.”
Matray said he understands that declining rates may seem immaterial to a physician who receives an insurance bill that eats into the bottom line. For some specialties, that premium can be as high as $200,000 or more. “I’m not saying it isn’t expensive,” he added. “It’s expensive to run a medical practice. At the same time, medical malpractice insurance is less expensive in today’s dollars than it was in 2005.”
The reduction in rates is multi-faceted. Prominently, state level tort reforms such as non-economic damage caps, health courts and arbitration hearings are making it harder to bring cases to trial, particularly for lawyers who take cases on contingency. Second, frivolous lawsuits “are making an impression on jury pools,” Matray said, which means fewer filed claims and fewer cases that make it to trial. Third, this soft cycle has outlasted the typical pattern of rates falling for three to four years before rebounding.
“A lot of smart actuaries keep saying this has to change soon, because in a soft market there is a lot of competition,” he said, noting that to compete for low rates, insurance companies are offering credits to clients and using their own reserve cash piles. “So, things are really going to change in the next couple of years,” he added.
Impact on Otolaryngology
So what does it all mean for otolaryngology leaders looking to be proactive about medical malpractice liability insurance?