Amidst a Constantly Evolving Medicolegal Landscape, 2018 PIAA Medical Liability Conference Examines Emerging Challenges
Hosted at the Waldorf Astoria Hotel in Orlando, Fla., the 2018 PIAA Medical Liability Conference assembled the various members of the medical professional liability industry from May 16 – 18 for three days of educational sessions, networking and meetings.
“You are here because the work we all do is critical to the practice of medicine,” said Richard Anderson, MD, president and chief executive of The Doctors Company as well as chairman of the PIAA Board of Directors, during a videotaped welcome to the Medical Liability Conference. “We have gathered many of today’s foremost thought leaders to join us in discussing some of the most pressing issues facing the medical professional liability community. I think you will find this meeting to be extremely helpful in advancing our shared mission.
“Though the legal assault on the medical profession is in its fifth decade, the nature of the battle has evolved continuously. Today, the profession itself is in the midst of extraordinary change, and we need to know the medicolegal implications.”
Following are some of the highlights from the educational sessions at this year’s Medical Liability Conference.
Increasing Healthcare Value Will Require More Physician Risk
Keynote speaker Amitabh Chandra, PhD, professor of public policy and director of health policy research at the Harvard Kennedy School of Government, kicked-off the two-day Medical Liability Conference with a session titled The Healthcare Trilemma: Access, Quality & Innovation.
Amitabh began his presentation by defining healthcare value as health outcome divided by cost of care, concluding that the United States has low-value healthcare. He noted that health outcomes have not improved significantly since 1999, yet the cost of care has increased by 200 percent. Amitabh further noted that in its attempt to both bend the cost curve of American healthcare and expand access to care, the U.S. government incentivized the consolidation of corporate healthcare players, sidelined physician input to the detriment of healthcare value and added further challenge to healthcare-access expansion. This is because when hospitals systems consolidate or purchase independent physician practices, costs increase and health outcomes deteriorate. Physician practices vertically integrated with a hospital system are significantly more likely to refer patients to the hospital’s more high-cost services. Likewise, as health insurance companies grow their number of insureds, their ability to negotiate lower prices increases — yet, these health insurers rarely pass the savings on to their insureds. In this sense, Amitabh said, “two monopolists are definitely worse than one monopolist.”
According to Amitabh, physicians are uniquely situated to take the lead on increasing healthcare value. For value-based payments to be effective, the physician is going to be required to have knowledge of the costs involved, employ rich data on longitudinal outcomes when determining course of treatment and take on increased risk for being the gatekeeper to treatment. Because of this, Amitabh reasons, medical professional liability reform must be an integral component of any attempt to increase healthcare value.
During the session titled MPL in the Future: Responding to the Evolution of Healthcare, moderator Scott Syphax, chief executive of the strategic advisory firm Syphax Strategic Inc. and a NORCAL Mutual Insurance Co. director, led four chief executives at PIAA companies through an interview-style discussion of the various forces driving today’s dynamic healthcare environment, how best to innovate in coordination with the relentless pace of new complexities and what the medical professional liability industry might look like 25 years in the future.
Asked how he views the future of the medical professional liability industry, ProAssurance Corp. chairman, chief executive and president W. Stancil Starnes said that it’s “going to change drastically because it has to.” He envisions a future where single-state, monoline MPL insurers are relegated to history and an environment with “fewer players and larger insurers.” He also questioned the viability of the mutual structure as the number of independent physicians needing medical professional liability insurance decreases. As the number of independent physicians decrease, the customer of the future will be large physician groups and even larger hospital systems.
Physicians Insurance A Mutual chief executive and president Mary-Lou Misrahy opined that medical professional liability insurers that do not diversify will no longer be in business 25 years down the road. Rather, she sees opportunity for insurers who are able to provide risk management skills and act as third-party contractors. The MPLI companies that survive are going to be “smarter and more strategic.”
Coverys chief executive and president Gregg Hanson anticipates a further consolidation of medical professional liability insurance companies where certain insurers dominate certain regions of the country. He also expressed concern over the number of medical liability defense attorneys heading for retirement without an adequate supply of talent to replace them.
At an afternoon session titled The Expansion of Telemedicine: A Boon to MPL, or Just a New Set of Challenges?, panelists discussed the incredible potential that advances in telecommunications and advanced information technologies have to help redistribute healthcare information and expertise to where and when it is needed — potentially increasing access to and reducing the costs of healthcare. To illustrate this potential, panelists drew attention to 2008 data regarding quality and performance from the U.S. Department of Veterans Affairs that indicated telemedicine reduced the number of bed days of care by 25 percent, generated a 19-percent reduction in hospital admissions and received a mean satisfaction score rating of 86 percent.
While the potential benefits of telemedicine are tremendous, panelists noted that it is not without its medical liability risks — pointing to telesurgery as the most risky application of tele-technology and delay in diagnosis the highest percentage of telemedicine medical liability claims.
Bruce Gehle, JD, chief operating officer of Piedmont Liability Trust moderated a session titled A Brief History of the Apology/Early Communication Initiative where panelists reviewed the history and intent of reforms to state codes of evidence that prevent statements of apology, sympathy or condolence from being admissible at medical professional liability trials. Currently, 37 states and the District of Columbia have implemented some sort of apology law since 1986 in hopes of mitigating malpractice claims.
But have apology laws been effective at diminishing liability risk? According to the Benjamin McMichael, JD, PhD, postdoctoral student at Vanderbilt University, the answer is no. According to McMichael, apologies signal to patients that malpractice has occurred and — knowing that malpractice has occurred — patients are more likely to sue. COPIC senior legal counsel Jean Martin, MD, JD, argued that apologies alone are insufficient, but are more effective within the context of a communication-and-resolution program that includes an early offer of compensation and a staff with specialized training to address the unexpected outcome and answer patient questions.
The Financial State of MPL
Diving deep into the financial health of the medical professional liability insurance industry, during the session MPL Financial Update: Signs of Change, James Hurley, consulting actuary at Willis Towers Watson, examined the underlying drivers of the medical professional liability industry’s financial results.
Looking at data from a composite of 35 medical professional liability insurance companies, Hurley noted that there has been a steady climb in the both the combined ratio (105 percent in 2017) and loss ratio (73 percent in 2017) that began in 2010, and dividends have been decreasing inverse to the climbing combined ratio. During that same period, favorable one-year loss reserve development has been decreasing — from $1.3 billion in 2010 to $449 million currently. And direct premium written fell from $4.1 billion in 2008 to $2.8 billion in 2017.
In the face of those troubling statistics, Hurley calmed the concerned by noting the positive effect investment income has had on the industry and its continuing swell in surplus, which increased from $6.6 billion in 2008 to $11.2 billion in 2017.
In conclusion, Hurley reported that he sees signs of change. While the medical professional liability insurance industry continues to produce operating profit relative to premium and improved investment income has helped significantly, reported coverage-year results imply a marginal rather than healthy profit.
-This summary was written by Michael Matray, Editor of the Medical Liability Monitor.