Welcome to the Business Journal Archives
Search for articles below, or continue to the all new BusinessJournalDaily.com now.
Search
Medical Malpractice Roundtable: Doctors Afflicted
From Our MidMay Print EditionYOUNGSTOWN, Ohio -- The Business Journal conducted a roundtable discussion on rising medical malpractice rates April 16 at the Holiday Inn - Boardman.Participating in the discussion were Ann Womer Benjamin, director of the Ohio Department of Insurance; state Rep. Charles Blasdel, R-1, East Liverpool; Marc S. Saunders, general surgeon at St. Joseph Health Center, Warren, and president of the Mahoning County Medical Society; Thomas Kaminiski, diagnostic radiologist at Trumbull Memorial Hospital and president of the Trumbull County Medical Society; Dean Economous, family practitioner in Salem and president of the Columbiana County Medical Society; Ed Hassay, vice president at Sky Insurance Co. who handles professional liability policies; Clifford Waldman, chief medical officer at Humility of Mary Health Partners; Howard Rohleder, president and CEO, Salem Community Hospital; attorney Patricia Jacobson, general counsel for Forum Health; Andrea Wood, publisher of The Business Journal, and Dennis LaRue, copy editor of The Business Journal. LaRue led the questioning, moderated the discussion and edited the transcript prepared by Tracey L. Berarducci, certified stenotype reporter at David R. Burton & Associates.The second half of the roundtable discussion, which focuses on remedies, will be published in the June print edition of The Business Journal. A rebuttal roundtable discussion, consisting of a panel of attorneys and a retired judge, will be published in the MidJune print edition of The Business Journal. These transcripts also will be published online.THE BUSINESS JOURNAL: Most businesses have seen their expenses go up as well as the components of their overhead. Why should business owners be concerned about doctors' inability to pay, or difficulty in paying, their malpractice premiums?Marc Saunders, president, Mahoning County Medical Society: I've been in practice since 1994 and my charges haven't changed one bit. But my reimbursements have been regulated by Medicare, which sets the rates. All the insurance companies follow suit. Consequently, my rates have been dropping every single year. I have no way to pass on extra costs to my patients. I have to take what the insurance companies pay me. Malpractice insurance rates have gotten so out-of-hand that it's prohibitive to the practice of medicine.Howard Rohleder, president and CEO, Salem Community Hospital: The reason people ought to be concerned is that it affects the physician's choice of where to locate their practice. There may be other states that are more desirable, where the malpractice rates are not as big a part of their overhead.Thomas Kaminski, president, Trumbull County Medical Society: This is not a new problem. It's new in the sense that there's a crisis in our community. But this problem goes back to California in the '70s. Back then California took aggressive action.So things can be done to stabilize this problem. It just takes political will. And it's been working almost 30 years in California.Dean Economous, president, Columbiana County Medical Society: It comes down to access to care. If more physicians pick up and leave the area, there are fewer specialists to treat certain medical conditions. The public will need to go to a larger center such as Pittsburgh or Cleveland.State Rep. Charles Blasdel, R-1, East Liverpool: It's not just access to care, but access to quality care, because the quality of care is going to diminish as well. The Ohio General Assembly recognizes that we're moving into a crisis. Specifically, I'm sure we'll get into those issues with the Med-Mal [Medical Malpractice] bill passed in 2002 and House Bill 282 passed in March. The Legislature does recognize the seriousness of the situation and has been quick in moving to take steps in conjunction with the [Taft] administration.Edward Hassay, vice president, professional liability, Sky Insurance Co.: I'd like to clarify something that may seem a matter of semantics. Everybody defines crisis a bit differently. In the insurance industry, our definition is not having companies who supply medical malpractice insurance. There is no crisis in terms of availability. There are severe problems regarding affordability. We know what doctors are up against. Ann Womer Benjamin, director, Ohio Department of Insurance: I am not the industry spokesperson. I am the industry regulator. Those are two entirely different things. I have tried to balance affordable malpractice insurance premiums with companies' need to make a profit. We've taken our regulatory role very seriously, by increasing our scrutiny of rates and the financial condition of these companies. We are still investigating the underwriting and rating practices of the five major companies offering medical malpractice coverage in Ohio.The second thing to understand is that the Ohio Department of Insurance reviews and regulates rates. We do not regulate price. Those are two different things. In our rate regulation, we have limited authority, and very little discretion with respect to rates that don't appear to meet certain standards.We have actuarial and statutory standards we use to measure the rate requests that come into the department. If those standards are met, we do not have authority to reject that rate, regardless of what the increase might be. That is particularly frustrating for me as a relative newcomer to the Ohio Department of Insurance because I know what the doctors are going through.In addition, we do not regulate the reimbursements companies make to doctors.One of the things that we have been discussing internally is finding some way for doctors, at least temporarily, to pass on some of their [rising] costs. But that would go directly to the patient/consumer, and I'm not sure how the Legislature would feel about that.One last point: Is there a crisis? The American Medical Association says Ohio is in a crisis. Based on the sharp increases in premiums over the last few years, I believe we are now at a point of being in a crisis [based on my conversations] with health care providers, and it is getting more serious.Clifford Waldman, chief medical officer, Humility of Mary Health Partners: From the businesses' perspective, malpractice is a defining issue for health care. Not only is it affecting the doctors who have to decide whether they can remain in practice and where, it's also going to severely affect the people making up their minds whether to go into a health-care profession.Second, it's also going to contribute to what specialties they go into. In the late 20th century, we talked about a physician shortage. We found much of that was related to a maldistribution by specialty and geography -- severely impacting rural and inner-city areas. We may be looking at a maldis-tribution of specialties that are high-risk, have high malpractice rates and are in locations that have high malpractice risks.In this area, we've documented at least 23 physicians who have left their practices. At least 10 are practicing in other states because [of] lower malpractice rates.Finally, it is going to impact how physicians practice. We have a private-practice model of health care. But more physicians are looking for opportunities to work in large groups -- almost a corporate style of medical care. That's going to continue.Pat Jacobson, senior vice president of legal services and general counsel, Forum Health: It isn't just physicians who are affected by access to care. If the physicians leave [an area], the hospitals have no one to practice there. The hospitals themselves can find they can't offer certain services to the patients any more. That has to be detrimental to everyone in the community. And if you don't have the patients, you don't have physicians, you don't have hospitals. Where do you go? It's devastating.I've been in the legal practice 24 years. I've represented hundreds of physicians, dozen of hospitals. And this is a problem.It comes up repeatedly. There are many contrasting ideas about why this is occurring. But the bottom line for employers who read The Business Journal is that none of us can afford this effect on hospitals and physicians.Most of you are familiar with the recent press conference in Dr. Colella's former office. [Citing malpractice premiums he could no longer afford, Colella left to practice in Wisconsin.] There it was reported that malpractice insurance premiums are much higher in the 14 northeastern Ohio counties, Tier 1, than the rest of the state. If you go west, you hit Tier 2 and premiums are lower. And if you go to the southwest portion of the state, Tier 3, they're even lower. As a percentage, how much less do doctors in tiers 2 and 3 pay than in Tier 1? And why the disparity?Hassay, Sky Insurance: Rates are predicated on actual experience, historical experience, territory experience. States like Pennsylvania, West Virginia, other problematic states like New York, Oregon -- all have seen severe problems with the increased costs of malpractice. One of the carriers we represent looked at their experience countrywide and found Ohio was becoming a very sore spot. We found it's one of the most difficult. That company is very committed to the state of Ohio. Thanks to Director Benjamin's cooperation, we still have a lot of viable companies out there. Unfortunately, they can't price [insurance policies] right.What they and we have found is that the northeastern Ohio quadrant represents the highest portion of their per-doctor defense costs and per doctor settlement costs, the highest frequency and the highest severity in the state. This is a company that traditionally did not raise rates to any large extent. And they did not change territories for a couple of decades.Insurance companies can see that if they don't change rates here, they're going to have to pull out. If they raise them, which is very distasteful and which they started to do, they must also not renew policies of a lot of physicians. So now you have availability trying to match affordability, and they both become problems.On one hand we're happy to say that they're still here writing business. On the other hand, we're not happy to say how much they're charging.The reason for the tier system is that they reflect different rates.So the question is, Why? Is it because juries here are awarding higher judgments?Hassay: Yes.Saunders, Mahoning Medical Society: That's part of it.Benjamin, Ohio Department of Insurance: No, it is not that [simple] --Hassay: There's no simple answer to this one. You can't get somebody walking into a [courtroom] anymore who doesn't have a lottery mentality.We've seen the [disbarred attorney Richard] Goldberg cases. We've seen attorneys making millions and millions. We've seen judges more sympathetic than we'd like them to be. We see very aggressive attorneys. It's got to the point where this whole system has gotten way out-of-hand.Benjamin: To give you some perspective with respect to rate differentials, I'm looking just at [obstetricians/gynecologists] because they're at the higher end of specialty premiums. The high for an OB/GYN, as of their most current rate increase, effective Jan. 1, has not been accepted by my department. We're reviewing that. It was the company's third increase in the last year. The highest base rate is $151,988 for an OB/GYN. That shows up in Columbiana, and Cuyahoga, Mahoning and Trumbull counties.Then the middle tier is $86,850. That's Carroll, Champaign, Clark counties.The lowest rate covers just a handful, including Hamilton County. That's $69,481, a base rate for OB/GYNs there. That can be increased or decreased by 25%, depending on a doctor's claims history and a variety of other factors. Hassay: We walked through some of these cases with several companies. When times are good, the companies will do whatever they can to massage the rate downward for physicians they think are less of a risk.In the past we were giving part-time credits. We were giving teaching credits for physicians who taught as well as operated private practices. Maybe a 30% discount.Or if they found that a certain classification [of physicians] might be a better risk, they would target those classifications and discount them.They didn't display any kind of adverse results to us. Consequently, what happened with this particular carrier is that when things started to sour, those discounts disappeared.I'll give you an example of a neurosurgeon, a very high-risk category. He had a special program; he got a 30% discount that suddenly came off the table -- all within one cycle of his renewal. Right at renewal -- they changed his territorial rate because we moved the line of Territory Two with the favorable rate to Territory One. That's"