'Risk pool too small for medical malpractice insurance in NMI'
By Rianne Pangelinan-Brown
Medical malpractice insurance from reputable U.S.-based insurance companies is not readily available to the CNMI because the islands’ risk pool is too small, according to the Commonwealth Health Center’s litigation counsel, David Lochabay.
â€œThere aren’t enough doctors [on the islands] to spread the risk of malpractice claims for an insurance company to be able to administer a policy to collect payments and pay out whatever claims there may be,â€? Lochabay said.
This, he said, is one of the reasons why a reputable insurance company would not likely sell medical malpractice insurance to the CNMI.
He explained that the way insurance works is that a great number of people pay up a small amount of money in order to create a pool of money. From that pool of money, claims will be paid depending on what the insurance is. Lochabay said that doctors would have to pay a certain amount in premiums every month or year and that money will be collected by an insurance company and administered.
â€œFrom that, any claims for any negligence will be paid out of that. But you have to have a minimum number of people paying premiums before that will work. If you don’t have enough people paying premiums, then one claim wipes you out,â€? Lochabay said.
To ensure, however, that doctors are not truly vulnerable to malpractice claims, all non-government physicians need to show proof of medical liability coverage should they want to practice at the Commonwealth Health Center, according to Public Health Secretary Joseph Kevin Villagomez.
He said the issue of medical malpractice insurance has been a â€œmajor issue with private providers since there is no readily available medical malpractice insurance coverage carrier in the CNMI or Guam.â€?
As a compromise, Villagomez said that â€œwe have been requesting all private physician that want to have privileges at CHC that they need to show purchase of a bond for up to $100,000 or show assets (either monetary or goods) that is also at the $100,000 level.â€?
Another source of information that insurance companies would look at before extending medical malpractice insurance here is the history or the insurance database of CHC, which is not available.
â€œThe only thing they would know is that we have a really small risk pool and that is enough in itself-that risk pool is too small. That, and the history of a particular insurance claim is absent,â€? Lochabay said.
He described it as a â€œcomplete shot in the dark.â€?
â€œNo businessman, no insurance company wants to take a complete shot in the dark. They want to know what they’re doing, they want to be able to assess the risk before they assume the risk, and there is no way to assess the risk here,â€? Lochabay said.
Another factor a reputable U.S. insurance company would take into consideration is the size of the hospital.
â€œCHC is a small hospital with limitations in the types of services it can render. .They would look at CHC and likely conclude that CHC cannot furnish the broad range of services that would be necessary to minimize their exposure in the event of a claim,â€? Lochabay said.
He said that insurance companies would also likely take medical referral into account.
â€œAll those reasons makes a reputable U.S. insurance company coming out here and getting into the Saipan market an impossibility; they will not do it,â€? he emphasized.
Lochabay conceded that it would be possible for international insurers to come out here and provide such an insurance but it would cost the CNMI too much to be feasible.
A provision was made two years ago to require CNMI doctors to get medical malpractice insurance. A former legal counsel researched and determined that it would cost the cash-strapped Public Health $6 million to $8 million annually to buy medical malpractice insurance in the international market for the physicians at CHC.
â€œSo yes, they would come out here and assume the risk, but they want an arm and a leg for it. But we cannot blame them because they do not have any way of judging what their claims experience is going to be,â€? Lochabay said.
Six to eight million a year in premium for medical malpractice insurance would translate to another hefty increase in hospital charges. DPH had just implemented new rates on Dec. 1, 2007, replacing facility rates that were in place since 1993.
â€œWe didn’t raise prices for 15 years. This led to a huge jump in prices and we don’t need another one, we don’t need to add another 20 to 40 percent for insurance,â€? Lochabay said.
He added that the CHC needs to hold prices down as low as possible â€œso that people will be able to access healthcare as needed.â€?
â€œDoes it do any good to have doctors that are insured, to have a hospital if people cannot afford to go there?â€? he asked.
CHC pays between $100,000 to $200,000 a year on medical settlements a year. Lochabay said that not all settlements are admission of fault; some are made to avoid lengthy-and costlier-litigation.