The New Med Mal Crisis
Where have all the doctors gone?
Types of Medical Professional
Liability(MPL) Insurance
• Healthcare Professionals : Commercial carriers
• Dentists/Oral Surgeons : Smaller specialists and
commercial carriers
• Physicians/Surgeons : Mostly PIAA companies
• Healthcare Facilities : Commercial carriers
• Hospitals : Multi-line carriers or self-insurance trusts
IABA Meeting – August 4th, 2012
About Physician Insurers Association of
America (PIAA)
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Formation of PIAA (mid-1970s)
Physician Owned/Operated Carriers
Medical Professional Liability (MPL) Crisis
Availability of MPL Insurance
Policyholder Dividends
www.piaa.us
IABA Meeting – August 4th, 2012
Historical Healthcare Liability Focus
• Serve a small customer base
• Offer a small number of products
• Compete in a small number of venues
…with the coming change in healthcare, does this model
still make sense?
IABA Meeting – August 4th, 2012
Premium Comparison
Industry Breakdown
Source: SNL Financial
IABA Meeting – August 4th, 2012
Medical Mutual Breakdown
Source: Medical Mutual
Number of Venues
Source: SNL Financial
IABA Meeting – August 4th, 2012
Healthcare Liability Outlook
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For now, financially strong based on recent results.
Fierce Competition in order to retain business.
Provider Consolidation/Integration.
New and emerging risks from healthcare reform and
consolidation will put pressure on loss ratios.
…PIAA companies will need to adapt to the new reality.
IABA Meeting – August 4th, 2012
Healthcare Reform Impact
• Number of Hospitals/Health Systems Decline : Fewer,
larger systems
• Physician Groups Decline : Becoming employees
• Managed Care/Health Plans Increase : Moving from FFS
to more of a Managed Care delivery system
• Miscellaneous Facilities Increase : Primary Care
facilities needed
• Allied Health Professionals Increase : Growth in nurse
practitioners and physician’s assistants
• Long Term Care/ Aging Service Increase : Population
ages
IABA Meeting – August 4th, 2012
Effect of Healthcare Reform on
Providers
• Move from Fee For Service Delivery System
– Few incentives to reduce costs
– Health care costs exploding
– Costs are primary driver of fiscal deficits for federal, state,
local governments
• Pressure on Providers for FFS
– Declining Reimbursements
– Cost Pressures
– Shift in mix of business (aging population, technology
requirements, etc.)
New system is designed to provide “Population Healthcare”.
IABA Meeting – August 4th, 2012
Advantages of Move to Employment
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Better reimbursement rates
More time for patient care
Less time spent on business of practice
Work/Life balance
Health system view as a necessity for “Population
Healthcare”
IABA Meeting – August 4th, 2012
Trend to Employed Doctors
Source: AHA Annual Survey of Hospitals
IABA Meeting – August 4th, 2012
Key drivers for Employed Physicians
Source: Analysis of AAMC-AMA Survey of Physicians Under 50
IABA Meeting – August 4th, 2012
Impact of Hiring Physicians as
Employees
• Possible rise in frequency and severity?
– Previously two separate policies, now Hospital and Physician
exposure combined.
– Joint-Defense.
– Vicarious Liability increased.
– Physicians providing care under different venues.
• Controllability
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Consent to Settle claims go to economic buyer.
Claims staff understanding of who controls claim.
Collaboration regarding defense of claims.
What to do with tail exposure?
IABA Meeting – August 4th, 2012
Success or Failure within the market will
depend on…
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Pricing/Reserving
Claims/Risk Management
Continue to provide best Products/Services
Expansion in new Markets/Products
IABA Meeting – August 4th, 2012
Keith Allen
SVP, Actuary
Medical Mutual
225 International Cr.
Hunt Valley, MD 21030
(800)492-0193
kallen@weinsuredocs.com