Executive Summary
Malpractice claims against internal medicine physicians are increasing, according to a recent report. Another analysis found that costs are surprisingly stable.
- A significant percentage of "catastrophic" claims come from obstetrics.
- Projected loss rates vary greatly across the country.
- Physicians are increasingly being insured by hospitals.
Malpractice claims against internal medicine physicians are increasing, according to the 2013 PIAA Data Sharing Project Risk Management Review, a database that captures medical malpractice claims data.
"When we talk about medical liability, the focus is on obstetrics, general surgery, orthopedic surgery, and anesthesiology. But we are starting to find that internal medicine is being reported more and more," says P. Divya Parikh, director of research and risk management at PIAA, an insurance trade association.
If an acute myocardial infarction is missed after the patient goes to the emergency department, for example, the patient's primary care physician is also likely to be named in a resulting malpractice claim.
Parikh attributes this situation, in part, to patients' higher expectations for medical encounters. "Ten years ago, people wouldn't necessarily sue if the internal medicine doctor didn't pick something up. People are now asking, 'Who is the person in charge of the care?'" she says. "This is an area we are keeping our eye on."
Costs are stable
The cost of medical malpractice is growing at the slowest rate in 14 years, according to Aon Risk Solutions' 2013 Hospital and Physician Professional Liability Benchmark Analysis. The analysis looked at claims paying out a maximum of $2 million because that amount is typical of hospitals' retained insurance layer. Here are key projections for 2014:
- The projected loss rate for hospital professional liability is an estimated $2,940 per bed. The frequency of claims is projected to be 1.67% per occupied bed equivalent, and the severity of each claim is projected to be $176,000.
- The loss rate for physician professional liability is projected to be $6,030 for each class 1 physician, with a frequency of 2.97% per class 1 physician. The severity of these claims is expected to be $203,000.
- The projected loss rate for hospital general liability is expected to be $119 per occupied bed equivalent. The average general liability claim is expected to be $36,000.
- Obstetrics (OB), the most costly specialty in terms of malpractice claims in 2013, is expected to again be one of the costliest in 2014. Projected loss rate for hospital obstetrics claims in 2014 is expected to be $171 per birth.
Erik Johnson, FCAS, MAAA, Aon Global Risk Consulting's assistant director and actuary, says, "While OB comprises only about 10% of overall claims, in looking at 'catastrophic' claims, the share that comes from OB continues to grow." Of claims resulting in payouts of more than $5 million, 43% involved hospital OB units.
- Projected loss rates vary greatly across the country. Florida ($7,440) and Pennsylvania ($4,720) have projected loss rates significantly higher than states such as Indiana ($800) and Minnesota ($810).
Severity of claims rising
Historically, malpractice costs tend to be cyclical and have trended sharply in positive and negative directions in the past, says Johnson. However, the number of claims projected for 2014 is "absolutely flat," he says, and the severity is rising at 2.5% a year.
"That is the lowest trend rate that we've ever reported on," Johnson says. "In fact, we don't even believe that rate is driven by claim payments, but by the expenses associated with defending a claim." (See related story, below, on the trend of physicians' malpractice insurance being covered by hospitals.)