the new med mal crisis where have all the doctors gone?
TRANSCRIPT
The New Med Mal Crisis
Where have all the doctors gone?
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
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
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?
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
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
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.
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
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”.
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”
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
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
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?
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
Keith AllenSVP, ActuaryMedical Mutual225 International Cr.Hunt Valley, MD 21030(800)[email protected]