The number of physicians giving up their private practices and going to work for hospitals and healthcare systems is alarming. The truth is that many of these physicians make the decision without consulting their medical malpractice insurance broker. Before signing anything, a doctor should read all the fine print, speak to their broker, and get their attorney involved. As the move toward employment continues to grow physicians need to be aware of a few important issues.
The trend is certainly not confined to any specific geographic area. It’s happening on the West Coast, all over the Midwest, and in the Eastern U.S. A recent article highlights the trend in the Southeast, specifically Florida. In Jacksonville, one area hospital has become the 5th largest employer in the region. The hospital stepped up its acquisitions of private practices in 2006. So many doctors are leaving private practice to join hospitals in the area that it has healthcare advocates concerned there won’t be enough access to care in the future. Adding to the concern is the millions of new, formerly uninsured patients that will be entering the U.S. healthcare system in the next several years.
Educate Yourself. Weigh the Options.
It may turn out that becoming an employee of a system or hospital is the right move, but don’t do it without knowing the pros and cons. Safety is the number one reason physicians give for moving out of private practice. There are many unknowns in the future of healthcare, and with patient numbers down, Medicare and insurance reimbursements decreasing, and expenses on the rise, it’s no wonder doctors would rather find some protection in the shelter of a large employer. Bring on the employment benefits like health insurance and retirement plans; say goodbye to risk, employee evaluations, and accounts receivables. Sounds pretty good doesn’t it?
What Else Changes When a Physician Becomes Employed?
The first things to go are control and choice of a medical malpractice insurance policy. Unless negotiated ahead of time, when a physician becomes an employee he is covered by the hospital’s malpractice insurance or a self-insured trust. These plans don’t normally cover Prior Acts, which means the doctor will have to buy a tail (Extended Reporting Endorsement) to cover the exposure back to his Retroactive Date.
Tails are costly: Premiums are 2 – 3 times the premium of the medical malpractice policy at the time of cancellation. Some physicians end up spending $20,000 — $30,000 or more to purchase a tail. This expense can be avoided by negotiating to keep an individual medical malpractice policy, or by requiring that the hospital pay the premium for the Tail.
Why Keep Your Own Malpractice Insurance Policy?
Physicians should negotiate to keep their own individual medical malpractice insurance policies for other reasons too. When you have your own policy you know you have the right coverage. Most doctors have no idea what the hospital’s insurance looks like.
- What are the limits?
- Do I have a “Consent to Settle Clause?”
- Also, if you keep your own policy, you have an insurance company that has your best interest in mind (not the hospitals).
- What if there’s a malpractice claim involving the doctor and the hospital?
- Are there conflicts of interest?
- Will you get the best defense possible?
- Is the hospital going to deflect blame?
Another good reason to keep your own policy is that in most cases you pay lower premiums than what may be deducted from your paycheck for the hospital’s plan. Don’t think their coverage is included free! Somebody’s paying for it one way or another. Lastly, you have access to a broker for help with questions. You need an advocate. Find a broker you can trust and keep your own medical malpractice insurance policy. These are important issues if you are considering selling your practice and becoming employed, so don’t sign that contract without consulting your broker.