Med mal management for integrated systems more critical than ever
It is estimated that 50% to 60% of physicians and hospitals are exploring ways to team up. Aon Risk Solutions, the global risk management business of Aon Corp., expects this trend to lead to significant collaborative activity, including mergers, acquisitions, joint ventures, and additional developments across the United States.
Those changes will bring new risks that risk managers should plan for now, according to a new report from the American Society for Healthcare Risk Management (ASHRM) in Chicago and Aon Risk Solutions, the global risk management business of Aon Corp. The impact of these new liability risks should not be underestimated cautions, says Ron Calhoun, managing director and Health Care Practice leader for Aon Risk Solutions in Charlotte, NC.
“This expected increase in hospital and physician collaboration can be directly linked to the Patient Protection and Affordable Care Act, which is motivating a shift in the marketplace,” Calhoun says. “Hospitals are moving from volume-based reimbursement methodologies to outcome-based solutions. This requires a more integrated approach to care delivery to achieve the cost efficiencies necessary to compete in today’s evolving market.”
Health systems will face significant risk management challenges associated with integrated physician-hospital medical malpractice and professional liability risks. In addition to regulatory scrutiny, Calhoun says these risk-related issues must be considered:
- experience rating variables;
- allocation strategies;
- tail coverage issues;
- capital requirements;
- increased premium flow;
- financial reserve methodologies;
- coordinated defense strategies;
- clinical risk management efficiencies.
The 12th annual hospital and physician professional liability benchmark analysis found that 73% of systems surveyed will self-insure the combined hospital-physician malpractice risk. That increased responsibility for the actions of physicians will have a major impact on hospital liability, says Erik Johnson, FCAS, MAAA, author of the analysis and Health Care Practice leader for Aon Global Risk Consulting in Charlotte, NC.
“We believe this report to be the most comprehensive analysis of self-insured risks in the health care industry. Our findings reflect that when hospitals team up with physicians, they are effectively doubling down on medical malpractice risk,” Johnson says. “As a result, medical malpractice for new physician-hospital arrangements will be a critical issue.”
Johnson offers these examples from the report:
- Smaller regional and local hospitals might find themselves without the capital, infrastructure, or expertise to develop as an Accountable Care Organization (ACO).
- Regional hospital systems might not own the assets needed to be competitive and could be looking to buy specific physician practices to fill the gaps.
- Middle market hospital systems are looking to develop capabilities to help drive efficiencies in specific clinical specialties, such as radiology and orthopedics.
- Integrated health systems might be rethinking relationships with home health agencies, home infusion companies, hospice agencies, and behavioral health firms to achieve a more seamless delivery of service post-discharge.
The “2012 Hospital and Physician Professional Liability Benchmark Analysis” is available for purchase at http://tinyurl.com/ashrmreport. The cost is $269 for ASHRM members and $369 for non-members.
Sources
- Ron Calhoun, Managing Director and Health Care Practice Leader, Aon Risk Solutions, Charlotte, NC. Telephone: (704) 343-4128. Email: [email protected].
- Erik Johnson, FCAS, MAAA, Health Care Practice Leader, Actuarial and Analytics Practice, Aon Risk Solutions, Raleigh, NC. Telephone: (919) 786-6246. E-mail: [email protected].
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