Professional Liability Premiums Are Rising: How to Counteract Costs
For a third year in a row, medical professional liability premiums have increased at rates not seen since the Liability Crisis of the early 2000s, the American Medical Association said in a recent report.
In March, the AMA released the findings of its annual survey of professional liability insurers. The organization found that in 2021, roughly 30 percent of premiums saw an increase, a continuation of a trend starting in 2019.
The organization noted that between 2010 and 2018, medical liability premiums remained relatively stable. The current upward trend began in 2019, when the share of premiums that increased was about 27 percent – nearly double the rate of the year before. In its report the AMA likened the 2019-2021 increases to the Liability Crisis of the early 2000s, the last “hard market” for medical professional liability premiums.
“The medical liability insurance cycle is in a period of increasing premiums, compounding the economic woes for medical practices that struggled during the past two years of the pandemic,” AMA President Gerald E. Harmon said in a statement. “The increase in premiums can force physicians to close their practices or drop vital services. This is detrimental to patients as higher medical costs can lead to reduced access to care.”
While the overall cost of liability premiums is trending upward, the AMA identified 12 states with the largest increases in premiums. Illinois led the pack with 58.9 percent of premiums increasing by more than 10 percent, followed by:
- West Virginia (41.7 percent);
- Missouri (29.6 percent);
- Oregon (20 percent);
- South Carolina (16.7 percent);
- Idaho (11.1 percent);
- Kentucky (7.4 percent);
- Delaware (6.7 percent);
- Washington (6.7 percent);
- Michigan (5.4 percent);
- Texas (4.9 percent); and
- Georgia (3.7 percent).
While the increases have mostly coincided with the COVID-19 pandemic, the AMA says it’s still too soon to know the long-term effects of the pandemic on premiums.
The AMA is not the only organization keeping an eye on professional liability premiums.
In the senior living and long-term care space, insurance broker Marsh McLennan recently announced that it is accepting participants for its 2022 General and Professional Liability Benchmark Report for Senior Living and Long-Term Care Providers.
Marsh is teaming up with management consulting firm Oliver Wyman and national trade organizations that support the senior living and long-term care industry to complete the report, which will provide a snapshot of key industry trends, loss drivers, and other factors impacting resident care and quality.
The anticipated report will include information on the effect of the pandemic on senior living and long-term care providers.
As the professional medical liability insurance market continues to harden and premiums rise, hospitals, health care systems, senior living and long-term care facilities will be forced to do more with already-limited risk management, legal and quality-assurance resources.
The current environment requires a proactive posture in terms of identifying problems in systems early that could lead to a higher legal spend down the road. Engaging an independent consultant trained to spot potential problems, and provide advice as to how to correct them, is invaluable for organizations.
When facilities find themselves facing litigation, completing early assessments of cases for merit is also essential. No defendant wants to settle claims for more than they’re worth, to try a case that should never have reached a courtroom, or settle a case prematurely. In each of these scenarios, early investigation is key.
Med Law Advisory Partners works directly with hospitals and health systems to complement their in-house leaders, broaden internal capacity for case analysis, determine the level of exposure based on merit, and facilitate a roadmap towards prompt resolution of claims.
Our hospital consulting team works extensively in the analysis of medically complex cases, patient safety events, surgical and peri-natal care outcomes, and identifying failures in systems and processes.
We partner with health systems to bring unique expertise that is highly cost-effective and cost-saving in an era where both quality of care and financial stewardship are critical priorities.
Med Law’s consulting nurse experts can often provide their clinical expertise to in-house legal teams at a much lower overall expense than outsourcing to outside counsel.
Additionally, Med Law offers our partners an opportunity to contain litigation costs so that healthcare organizations can have predictable, controlled budgets and expenses. Med Law helps eliminate the need for redundant, expensive clinical reviews of records.
We also provide nursing home litigation investigation and case preparation for clients. Our team has worked with both plaintiff and defense counsel and operators of senior-living care facilities for nearly 20 years, helping to mitigate and manage their claims.
Contact us today for more information on how we can partner with you.