Insurer Rx: Kind doctors

To trim malpractice claims, United Medical helps physicians improve bedside manner, record keeping and procedure management


An upstart Iowa-based medical malpractice insurer is quizzing physicians on their bedside manners in hopes that a little kindness will create a fewer legal problems for its policyholders.

When United Medical Liability Insurance Co. began business mid-2005, President and Chief Executive James Krist, 48, said that he wanted to develop a malpractice carrier that is attuned to the physicians in Iowa. He didn’t want a company that was issuing policies to Iowa physicians the same way it might to caregivers in Florida or California.

“We don’t think there’s a lot of bad medicine in this state,” Krist said. “We have good physicians. And good results.”

Building an insurer from the ground up gave United Medical a fresh chance to look at the way risks might be reduced. So the company typically works with doctors on records and procedure management, which are important defenses when a complaint arises.

To keep that claim from even taking hold, Krist said all physicians who apply for coverage have to first complete a personality skills assessment test. Those who do poorly get what he called a coaching session on enhancing their communication skills.

Krist said he believes that physicians who can effectively and compassionately communicate with their patients will lower their exposure to claims.

He estimated that there are 8,000 physicians in Iowa, and that his target audience is about 3,000 – the ones who aren’t connected to large hospitals or clinics that typically provide their own coverage. So far, United Medical has written policies on about 200 caregivers.

“We’re doing fine,” he said, though he did not disclose the company’s finances.

Since United Medical began issuing policies, premiums in Iowa have dropped substantially. The biggest malpractice insurer in the state, Minnesota-based MMIC Group, has lowered its rates 26 percent.

“They’re trying to drive us out,” Krist said of the rate cut by MMIC.

Not exactly, said Julie Stafford, a vice president at MMIC. Loss experiences determine rates, she said.

“These are data driven,” Stafford said of the rate cut. “They are not driven by competition.”

For some reason – she said that medical professionals are still trying to figure why – claims have dropped in Iowa and elsewhere. So she said the company has been able to trim its rates.

“There isn’t any particular magic that’s blessed on Iowa,” Stafford said. “It’s based on frequency.”

United Medical itself has already lowered rates by 11 percent, Krist said. The company is able to keep its overhead low by relying on outside contracts to do some of its work, such as developing actuarial tables.

It doesn’t have much in the way of office expenses; it’s housed in Krist Insurance Services, the 30-employee general insurance agency that Krist founded in 1993. Just three people work for the company that handles claims and underwriting, though Krist said senior managers of the insurance agency pitch in with their expertise from time to time.

Medical malpractice insurance is a niche market, without a lot of insurers. Most are based elsewhere, such as MMIC or PIC Wisconsin, another large competitor in Iowa that is based in Madison. With rates of $50,000 or more per year charged to physicians in high-risk jobs such as brain surgery, it can be a rewarding business.

But it’s also marked by an extremely long lead time. Unlike auto insurers, claims can pop up a decade or more after a medical procedure occurs.

Mike Abrams, executive vice president of the Iowa Medical Society, said that because of that long lead time involved, it’s important that carriers have financial wherewithal to pay claims now and in the distant future.

“I’m happy to see low rates,” said Abrams. “What I want to see is solvent companies.”

United Medical has not been rated for creditworthiness by industry analysts such as A.M. Best rate, but Krist said that a rating is an eventual goal. But credit rating agencies typically avoid start-up companies for the first three or so years they are around, watching to see how they perform.

Julie Younger, president of Iowa Heart Center, said the West Des Moines clinic is aware of United Medical’s standing in the credit rating game, but the clinic wasn’t dissuaded from signing a contract to insure its 57 physicians and other licensed medical staff.

Younger said that Iowa Heart was glad to see that United Medical could offer it coverage that was about 20 percent cheaper than other coverage that was available at the time it switched carriers.

“It’s very helpful to have someone based within the state,” Younger said. United Medical was able to give it guidance on records management and risk reduction, and she said that the physicians were agreeable to the personality skills assessment.

Krist said some of the novel features of United Medical have brought it to the attention of investor and medical groups in other states. He may try to do business in neighboring states such as Illinois and Nebraska, because physicians in Davenport and Council Bluffs often treat patients on both sides of the borders.

Beyond that, though, he said that for the time being, “we’re focused on Iowa,” he said.
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