Industry Braces for Fallout From Docs' Malpractice Woes

For years, when there was talk about physician/insurer tension, the insurer was understood to be an HMO or some other sort of managed care entity. Now, nationwide, physicians are feeling abandoned by another sort of insurer — the companies that had covered them for malpractice.

Those premiums are going up so quickly that many physicians are feeling pressure to stop offering certain procedures, to move to states that are friendlier to medical practices, or even to retire early.

Exactly how this eventually affects HMOs and other managed care organizations is, at this point, anybody's guess.

Hospitals are very much under the gun. The stress that the current provider shortage places on them and on health plans has long been noted. Outlandish malpractice premium hikes exacerbate the situation — and, as USA Today reports, "outlandish" may well be the correct word.

Consider the case of Joe Prud'homme, MD, an orthopedic surgeon who used to work in Beckley, W.Va., until his annual malpractice insurance premium doubled to more than $80,000. Enough is enough, said Prud'homme, and moved 80 miles to the southeast to Blacksburg, Va., where he now pays $18,000.

HMOs making an effort to improve customer service — the customer in this case being members — may also run into some problems.

John Schmitt, MD, an Ob/Gyn in Raleigh, N.C., predicts that patients will wind up paying more and resenting it.

"It won't be immediately passed on to the patients, as we are locked into managed care contracts on a fixed payment schedule," Schmitt wrote to a state senator. "But we all will soon pay for these increases by way of higher premiums, out-of-pocket expenses and deductibles."

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