Sunday, August 03, 2003

At the Acme Surgical Corp. we are attempting to come up with a budget for the next FY. The largest non-professional expenditure is our liability insurance premium. As Dr. Smith has posted:

Yesterday, I discovered that the rate for my insurance went up again, by $6,000. In May, a year's worth of coverage from my current insurance company was $8,000 a year. In June, the price went up to $15,000 a year. Now, in July, they're saying it's $21,000 a year. They won't tell me how much it will cost in September, when I start paying for my own policy. The agent says the company "just won't quote a price for September policies until after August 1."

This is quite insane. The situation with my carrier is going bad as well. The five of us paid $185,000 last year for a 1 million/3 million policy. We have since added a sixth surgeon to the practice and we are quoted a rate which may be as high as $310,000. This with a payout history of $0. We still can't budget for it however, because we won't get a firm number until September, just before the premium is due. Or collection rate is about 27 percent of our billing. So doing the numbers means we have to bill 1.14 million just to make enough to pay the premium. With reimbursement going nowhere but down, expenses must be cut. But which ones?
Well, what about not paying for insurance?
"Going bare" ,or as Medical Economics gently puts it, becoming "self-insured" is a growing trend in Florida. Florida law allows a physician to "self-insured" if they can pay $250,000 of a judgment, if not they may lose their license. This is accomplished either with an escrow account or by a letter of credit form a bank. Many south Florida hospitals have eliminated the requirement to carry coverage for staff membership, and at least one HMO has followed suit.
However, the dangerous part of "self-insurance" is the "self" part. One's personal assets may be placed at risk. A booming industry nowadays is asset protection. If you have time next weekend you can even catch this meeting about salting your money away. (As an aside, some experts recommend an asset-protection plan even with insurance, as another aside a Google for "going bare" is quite an education.
The primary goal of going bare and offshore accounts is to eliminate the physician as the "deep pocket" in a liability suit. This (hopefully) will dissuade a contingency-fee attorney from coming after you if all they can get is $250,000. Hospitals don't like the idea because it because it makes them the "deep pocket". However hospitals faced with a departure of specialists over liabilty insurance may find themselves with little choice than to allow a "bare" staff.
This is probalby the "weapon of mass destruction" in the liability battle. The one who has the most to lose under a "bare" system is the patient. $250,000 maximum is not enough to attract an attorney to take the case or cover medical expenses. But many see no other choice when th alternative is to get out of medicine.
"Going bare" is not an option at this time for me, the boards of both hospitals have rejected attempts to change bylaws to allow dropping of coverage. My politically tuned-in senior partner says there is a move afoot in our community to unite the doctors around this issue, hoping to force the hospitals to give in. Anti-trust? Perhaps Ross would like to comment.
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