As I See It
Can We Stop Escalating Malpractice Insurance Costs?

Jeff Thompson

Uncle! Many of your physician-colleagues around the country are yelling that right now. As you read this, they are giving up medicine. They're tired of the endless steam of crises getting in the way of practicing medicine, and this medical malpractice insurance issue is the straw that's breaking backs.

The current skyrocketing cost of medical malpractice insurance was brought on by an extraordinary series of events. Each on its own -- an extended soft insurance market, severe stock market adjustments or the September 11 tragedies -- would have affected medical malpractice premiums. But combined, they represent a threat to how physicians do business and physicians staying in business.

Correction will take several years, which is why you've got to do something right now! You don't have several years. In that reality lies the opportunity for the perpetuation of your practices, your livelihood.

DON'T JUST STAND BY AND WAIT TO SEE WHAT HAPPENS

Twist and turn this conundrum any way you wish, and you'll realize that there are three keys to its long-term management. The first is tort reform. Awards for pain and suffering must be capped. Popular initiative? Of course not. That's why it will be a battle. Think of the consequences, and make others do the same. Write to your legislators individually and collectively. Convince them of the ramifications of physicians "going out of business."

The second key is reducing exposure to claims by implementing more effective "business systems" in your practice. The very best companies in America boast business systems as a primary reason for their risk management and business success. If they can do it, you can do it, and it doesn't have to be expensive. Here's the plan:

• Implement a compliance manual and employee policy manual. These documents are perfect templates for steps required to operate a business efficiently and effectively.
• Develop and implement effective job descriptions and conduct performance reviews. You'll see that your profits will increase immediately.
• Manage the financial health of your business by consistently reviewing specific financial and operational reports and managing the results. Every successful business entity does this. Do you?

The third and equally critical key to solving this problem is "selling" insurance companies and those who benefit from your being in practice (consultants, attorneys, accountants, pharmaceutical companies, billing companies, IPA's etc.) on the fact that implementing these business systems will lower the incidence of claims.

We all must collaboratively give underwriters comfort that systems in place will effectively reduce exposure to assets and thus result in lower premiums. Why all of us? Because we all win together and we all lose together!

TAKE YOUR FUTURE INTO YOUR OWN HANDS

Perhaps premium hikes and lack of insurance policy availability and capacity will be the incentive that you and your colleagues need to behave differently. Certainly, if physicians did a better job controlling their exposures, the insurance underwriters would be able to look more favorably at their risk and pricing methodology.

That's exactly where the opportunity lies. The business systems outlined above put your future in your hands.

Jeff Thompson is the principal in JP Thompson & Associates, an integrated business management consulting firm. You can contact him at jpt@jpthompson.com  or www.jpthompson.com.