A recent article published by Knowledge@Emory, an online business journal, presented the view of a leading Emory expert on health care reform regarding malpractice insurance rates. The article is titled “Will Medical Practices Survive Malpractice Insurance Rates?” and covers recent health care reform news including a discussion of medical malpractice insurance rates.

Excerpts from the article:

• President Barack Obama’s planned overhaul of America’s healthcare system took a step forward October 13 when the powerful Senate Finance Committee voted 14 to 9 along party lines, except for Republican Senator Olympia Snowe, to move its healthcare bill along for broader consideration. While this vote is a positive sign in a debate that has raged on for years, it comes too late for many physicians in high-risk specialties who have made the difficult choice to either restrict their practice, relocate to friendlier states, or to shut down shop altogether because of galloping increases in malpractice and other liability insurance.


Kenneth E. Thorpe, PhD

• Kenneth E. Thorpe, Robert W. Woodruff professor and chair of health policy and management at Emory’s Rollins School of Public Health, said, “In response to rising medical malpractice insurance rates, many physicians feel compelled to practice so-called defensive medicine, which may involve ordering extensive patient tests primarily to help defend their decisions in case the physician is later sued. Concern over malpractice insurance costs are also driving more specialists like obstetricians and gynecologists, and neurosurgeons, to restrict, sell or close their practices, leading to some question about whether or not there will be enough specialists available to meet the demand for their services.
• Part of the challenge is that the standard rules of a business model don’t always apply to medical providers, according to Thorpe.
• In a traditional business model, a larger organization can generally reduce many costs with economies of scale, but even if a doctor sells his or her practice to a larger group practice or a hospital, the insurance rates are still set by state commissioners,” he notes. “So even though a hospital practice may be substantially larger than a typical physician group practice, a hospital generally can’t exercise any more leverage when it comes to med-mal rates.”
• Regulatory restrictions on the medical business model may limit the ability of medical practitioners to respond to liability insurance rates, but Thorpe says other approaches could put a dent in the costs.
• “To begin with, more than 60 percent of med-mal claims go to identifying fault and administering the medical malpractice system leaving only 40 percent of the premium dollar paid to injured patients,” he says. At the same time 70 to in some states up to 90 percent of claims filed never receive any payment and are dismissed or dropped. “So it would likely be helpful if regulatory authorities or the courts can weed out the frivolous ones. Setting up specialized courts—similar to tax and other highly focused courts that already exist—might help to fast track the adjudication of these claims, which would cut down on administrative and other overhead costs. Will the proposed healthcare reforms address these issues? It remains to be seen if true reform can overcome the efforts of special interest groups that are trying to place their own interests above the public good.”