Risk and Insurance Management Join with Advocacy to Control Malpractice Insurance Costs for Physicians
Extensive advocacy efforts also help protect Catholic Health Initiatives’ physicians and market-based organizations from rising medical malpractice insurance costs.
Catholic Health Initiatives’ commitment to self-insurance and advocacy for tort reform has mitigated the impact of rising medical malpractice insurance premiums for physicians who practice at Catholic Health Initiatives’ hospitals.
"Escalating jury awards and insurance premiums are creating issues of access and availability of medical malpractice insurance for physicians," said Mitch Melfi, Esq., senior vice president and chief risk officer for Catholic Health Initiatives. "In some cases, physicians are being forced to move to less litigious states to obtain coverage or to quit practicing altogether, which in turn creates access to care issues for individual patients and communities."
Catholic Health Initiatives has been able to soften the impact on physicians and market-based organizations in two ways. "First, through ownership of Preferred Professional Insurance Company (PPIC), Catholic Health Initiatives can provide an alternative source of coverage to physicians who practice in our hospitals," said Melfi. "Second, Catholic Health Initiatives’ large commitment to self-funding through First Initiatives Insurance, Ltd. (FIIL), our wholly owned captive insurance company, allows our market-based organizations to be more in control of insurance costs by controlling losses."
PPIC, which is owned by 16 Catholic health care systems including Catholic Health Initiatives, maintains an A.M. Best rating of A-minus, which Melfi said is difficult to do in the current insurance environment. "With the growing number of insurance companies either being downgraded financially or exiting the marketplace altogether, PPIC is a tremendous tool to assure that physicians who practice in Catholic Health Initiatives’ market-based organizations have appropriate medical malpractice insurance coverage."
Currently, more than 80 percent of all liability and workers compensation insurance dollars collected from Catholic Health Initiatives’ market-based organizations stay in the self-funded program and are not passed on to the commercial marketplace. "Three things can impact the funding requirements for FIIL," said Melfi. "Two of them – reinsurance costs and investment performance – are beyond our control. However, the third – loss costs – is completely within our control. It is vitally important that we do all we can to control loss costs through effective loss prevention and safety programs in our facilities."
The captive insurance company allows for a large spread of risk and enables Catholic Health Initiatives to keep annual rate increases well below market averages. Catholic Health Initiatives’ Risk and Insurance Management Group annually conducts a Cost of Risk Analysis, which compares Catholic Health Initiatives’ cost of risk to that of the commercial marketplace. "Every year that we have done this analysis, Catholic Health Initiatives’ cost of risk has been significantly below market comparisons. The analysis for fiscal year 2003 demonstrated a $38,788,285 savings, or a 29 percent savings over the commercial marketplace."
The board of First Initiatives Insurance recently approved a five-year strategic plan that calls for the pursuit of five core strategies: performance, quality, safety, coverage and growth. "This reaffirms the board’s and staff’s commitment to providing the best possible funding mechanism for self insurance and their commitment to loss prevention and safety," said Melfi.
Extensive advocacy efforts also help protect Catholic Health Initiatives’ physicians and market-based organizations from rising medical malpractice insurance costs. Catholic Health Initiatives has provided market-based risk managers with information that details the impact of the medical malpractice crisis on their organizations, plus letter templates market-based chief executives can use to write to state and federal legislators who could influence tort reform. "Catholic Health Initiatives is committed to doing the right thing in providing compensation to those who are injured in one of our facilities," said Melfi. "State and federal tort reform that would cap damages would only limit non-economic damages – injured patients could still be compensated for 100 percent of their out-of-pocket costs, or non-economic loss."
For more information on Catholic Health Initiatives’ response to the medical malpractice crisis, contact Mitch Melfi at email@example.com.