By Arthur D. Postal PropertyCasualty360.com
May 14, 2012 • Reprints
NU Online News Service, May 14, 12:21 p.m. EDT
WASHINGTON—The medical liability insurance industry has rebounded, and is reducing the intense peaks and valleys that it formerly endured, according to Brian K. Atchinson, the new president and chief executive officer of the Physician Insurers Association of America.
“The industry has stabilized significantly,” Atchinson said during last week’s annual meeting of the PIAA’s Medical Liability conference, which is being held this year in Washington, D.C.
Atchinson attributes the new industry stability to a variety of factors, including state efforts to rein in out-of-control settlements of medical malpractice claims; increased emphasis by physicians and hospitals on patient safety; and strong loss-prevention activities by medical liability insurers.
“Formerly the medical liability industry was prone to peaks and valleys,” Atchinson said, “periods of time when claims soared.”
But, he said, for a variety of reasons there has been more stability over the past 35 years as insurers, practitioners and states have taken actions designed to reduce claims and the cost of reaching settlements.
Medical liability insurers began to focus on quality healthcare and patient safety at that time because coverage was becoming unavailable or because costs were becoming so high that the community marketplace was being priced out of the market.
An example he cited was the unwillingness of obstetricians to open practices in rural areas as a major reason states began moving to curb the soaring costs of medical liability coverage.
The fact that PIAA represents about 60 to 70 percent of the practicing physicians in the United States, as well as many community hospitals, has allowed its members to be ahead of this trend, he said.
Its members are mutual insurers or self-retention groups focused on reducing claims and their own costs, he noted.
The fact that physicians and hospital managers are members of boards of PIAA affiliates is important, Atchinson said, “…because these people are focused on patient safety and delivering healthcare, not on the bottom line.”
The fact that states are focused on containing healthcare costs through caps and limits on non-economic damages is also important, he noted. More than 30 states have acted to impose tort reform, led by California.
Another reason for this rebound he cited was government efforts to improve healthcare research and quality.
He said that the federal Department of Health and Human Services has established a specific group, the Agency for Healthcare Research and Quality (AHRQ), has been a factor.
He also said that AHRQ has provided demonstration grants of $2 and $3 million to hospitals throughout the country aimed at medical liability reform and patient safety.
California has been a leader in medical malpractice reform, enacting a bill in 1977. Community hospitals, practitioners, and even unions and other forms of cooperatives are uniting to ensure the reforms are not eroded in California out of concern that otherwise quality medical care will become too costly, Atchinson said.
He cited the recent disclosure by California Insurance Commissioner Dave Jones that medical liability rates to providers have been reduced by $23 million annually.
The rate reductions followed a request last year by Jones, soon after he took office, to require medical malpractice insurers to submit rate filings to the Department of Insurance to justify their current rates. After review of those filings, Commissioner Jones called for rate reductions.
Jones said that, as a result of his rejection of excessive rates, five of the companies’ medical malpractice rates have been lowered substantially.
One change in the physician and practitioner’s practice that is helping to lower rates is when dealing with a bad medical result the medical professional will initiate contact with the families facing such a crisis immediately.
This has reduced the instances of lawsuits, Atchinson said. “In many cases, that is all a family dealing with a bad medical result is looking for.”
The result has been money refunds to hospitals and practitioners as insurers find they now have excess reserves.
Another factor in lower rates is providers are now focusing on emerging trends. For example, Atchinson said, providers recently found a number of bad results in bariatric or weight-loss surgery. As a result, providers quickly instituted procedures that improved patient safety, resulting in reduced claims, he said.
“As a result
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