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Malpractice premiums constitute small component of expenses

MANAGED CARE September 2006. © MediMedia USA
Compensation Monitor

Malpractice premiums constitute small component of expenses

MANAGED CARE September 2006. ©MediMedia USA













Few issues galvanize the medical community like the cost of malpractice insurance, but a recent survey shows that the increases are less severe than many physician advocacy groups suggest. A study published in Health Affairs reports that surveys of self-employed physicians from 1970 to 2000 indicate that premiums rose until 1986, declined until 1996, then rose again, but were actually lower in 2000 than in 1986. In 1970, premiums constituted 6 percent of total expenses, rose to 11 percent in 1986, but by 1996, were back down to 6 percent of total expenses. So where are physicians feeling the pinch?

From 1970 to 1986, total practice expenses increased an average of $4,330. Office expenses increased 27 percent, and nonphysician personnel expenses increased 36 percent. This report suggests that malpractice premiums have consistently been a small percentage of total expenses.

Total expenses rising, but not because of malpractice premiums

Source: Rodwin MA, et al. Malpractice premiums and physicians' income: Perceptions of a crisis conflict with empirical evidence. Health Affairs. 2006;24(3)750–758.