Malpractice costs soar nationwide

Doctors and health policy experts call the soaring cost of medical malpractice insurance a threat to the very existence of health care in the United States, but a national debate rages over the actual severity of the problem.

Steep increases have forced some doctors to discontinue their practices and at least 1,300 health care institutions across the country to curtail services, according to a report by the American Hospital Association. Fears exist, especially among doctors, that if the trend continues, practicing medicine will become financially infeasible.

"If [doctors] keep going without any help, there won't be any more health care," said Phil Israel, a general surgeon at Kennestone Hospital in Marietta, Ga., and a board member of the MAG Mutual insurance company. "Doctors will drop out of practice because they simply can't afford the premiums."

After increasing only marginally in previous years, malpractice insurance costs have recently skyrocketed, with drastic localized increases for physicians in fields with high incidences of lawsuits.

The national average premium rate for an obstetrician and gynecologist, for example, is currently about $28,000--a 30 percent increase over the last two years--whereas the average rate for an OB/GYN in Miami is over $200,000.

Unmanageable malpractice costs have forced some health-care providers to discontinue their highest-risk services, such as when the only trauma ward in the Las Vegas area had to shut its doors.

"It is a very serious problem with our hospitals," said Don Dalton, a spokesperson for the North Carolina Hospital Association. "At some point, it forces hospital boards into difficult decisions of which services are discontinued and which groups of employees are let go."

To help stem the crisis, the U.S. House of Representatives passed a bill Sept. 26 capping pain and suffering damages in malpractice cases at $250,000.

"Duke is well-positioned to manage better than others this kind of problem, but it's still a major problem," said Kenneth Morris, chief financial officer of DUHS, who called the malpractice problem a threat that could potentially "bring the Health System to its knees."

Malpractice coverage is conversely becoming impractical for insurance companies. "Doctors are no longer insurable," Israel said. "They simply can't pay enough in premiums."

In December 2001, The St. Paul Companies, Inc., the second-largest private insurer in the United States, dropped its medical malpractice coverage after it lost nearly $1.5 billion in the last four years alone.

"Based on analysis of market trends, we didn't see [the losses] stopping, so we decided not to continue," said Andrea Wood, a spokesperson in corporate communications at St. Paul.

The announcement left thousands of doctors and hospitals without malpractice plans, including DRH and RCH, which were placed under the protection of Durham Casualty earlier this year.

Despite the prominence of the malpractice crisis in the news, many experts downplay the severity of the problem. "There's a huge gap between the rhetoric and reality," said Burton Craige, a Raleigh lawyer who has tried malpractice cases for the past 18 years. "There's no doubt that right now, there are some steep premium increases, but this comes after a decade of steady premiums."

Craige recognized, however, the seriousness of the increased costs to doctors. "I'm sure they're real and affecting health care providers," he said.

Judy Sing, a Raleigh lawyer who has tried malpractice cases for four years, said the crisis is exaggerated by the media. "I've read the stories, but I don't agree with any of that," she said. "I think it's just propaganda trying to stir up anti-trial lawyer sentiment."

Frank Sloan, director of the Center for Health Policy, Law and Management at Duke, agreed the crisis may be partly overstated. "There's a tendency in the media to pick the best story," he said, but admitted, "In very vulnerable situations, the increases have affected [doctors]."