October 2001 Bulletin

Orthopaedists face soaring malpractice bill

Warn of ‘health crisis’ in Pennsylvania; threaten to leave state, retire early

Rising medical malpractice insurance costs are pushing many physicians to the wall, forcing them to rethink how and where they practice.

The efforts to seek relief are intense and the rhetoric heated–a case in point is in Pennsylvania. Physicians in the state are strapped with some of the highest malpractice premiums in the country on top of paying for the unfunded $2.1 billion liability of the Medical Professional Liability Catastrophe Loss Fund (CAT). The state-run CAT Fund has increased its surcharge for most physicians by 26 percent. The physicians are also practicing in a state with some of the largest jury awards and settlements in the nation.

Couple those factors with low reimbursement rates, and it’s not difficult to see why many orthopaedic surgeons talk about moving to a neighboring state with lower malpractice premiums, retiring early or scaling back their practice. And the impact on the future of heath care in the state could be considerable as residents look elsewhere to start practicing medicine.

"A severe health crisis is imminent," says Bruce B. Vanett, MD, president, Pennsylvania Orthopaedic Society (POS), in practice with a 20-man group in Delaware County, Pa. "Pennsylvania is in a state of disaster–especially in the southeastern region–but also in other regions. What we have is a ‘brain drain.’ The doctors in Pennsylvania, especially those in the surgical specialties such as neurosurgery, orthopaedic surgery, obstetrics, cardiovascular surgery and general surgery, are at a competitive disadvantage compared to physicians in our surrounding states who have much higher reimbursement rates and much lower malpractice premiums. For many physicians, these factors have made it financially unfeasible to practice in Pennsylvania anymore.

"There are also tremendous variations in malpractice insurance costs for orthopaedic surgeons that can vary from $16,000 to $130,000 throughout the state. These variations are made worse by the fact that the CAT fund surcharges can vary from year-to-year with no predictability."

According to malpractice insurance cost data compiled for the Pennsylvania Medical Society, a "typical" orthopaedic surgeon in the state pays $96,199 a year. In Delaware, the highest regional average is $37,783; Maryland, $36,621; New Jersey, $36,291; New York (excluding New York City), $35,291; Ohio, $53,048; and West Virginia, $65,184. (These figures include both primary care coverage costs and the CAT Fund.)

The threat of malpractice claims is another major problem for Pennsylvania physicians, says Dr. Vanett. Jury Verdict Research reports that the median verdict for Pennsylvania medical malpractice cases from 1994-1999 was $650,000, compared to $350,000 in California, a state that’s had meaningful tort reform for 25 years.

"Pennsylvania is a golden goose–we lay the golden settlements," says Lewis S. Sharps, MD, immediate past president of the POS and chairman of the Political Action Committee. "Trial lawyers are going to fight to the death to keep this ‘golden egg’ from being threatened which means preventing any substantive tort reform. We’ve a venue problem here and an uncontrolled jury system. Lawyers will do anything to take a physician who practices outside the city and drag them into the city for a malpractice case because they know they’re going to make more money." Orthopaedic surgeons point to settlements made in Philadelphia, where, it was reported earlier this year, juries awarded more than $336 million in medical malpractice verdicts in the first 11 months of last year, compared to about $13 million four years ago.

Two bills that unanimously passed the Senate in the spring are designed to ease the problems for physicians. S.B.556 would place the CAT Fund under an independent authority, pay off the fund’s estimated $2.1 billion unfunded liability, cap future CAT Fund surcharges and phase out the CAT Fund in six years. S.B. 406 would deter frivolous lawsuits that clog the legal system. More bills dealing with patient safety and venue issues are on the drawing board.

For Dr. Sharps, the malpractice crisis in the state has affected his four-man group practice in Paoli, Pa. "We are unable at this point to recruit the best and brightest of all in our training programs," he says. "Some of our finest orthopaedic surgeons are leaving the state. On a monthly basis, I’m faced with filling out recommendations for people who are applying for out-of-state privileges. And we’re going to have fewer physicians, fewer specialists to take care of an increasing patient base. What this means is there will be an impact on patient quality of care and access."

Separate public relations campaigns are underway at both medical societies to raise awareness with state legislators and the public about health care in the state.

POS also commissioned a study by the University of Pennsylvania to analyze the relationship between the state’s declining physician supply and the state’s malpractice liability conditions.

Orthopaedists in states such as West Virginia and Mississippi also are trying to find relief from rising premiums. In West Virginia, the governor has appointed a workgroup to find solutions to the problem.

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