American College of Physicians: Internal Medicine — Doctors for Adults ®


Philly's liability-rate crisis is far from over

Top schools still a big draw but staying is a tough sell for residents, subspecialists

From the April ACP Observer, copyright 2006 by the American College of Physicians.

By Lola Butcher

Daniel C. Randall, FACP, isn't happy about the medical malpractice situation in southeastern Pennsylvania, but he acknowledges that he benefits from it, in a way.

Board certified in internal medicine, he's taken a new job as an emergency medicine physician at a suburban Philadelphia hospital. Ironically, he credits the state's years of high malpractice insurance premiums and fears of litigation with driving out the competition: board-certified emergency medicine physicians who, although they may live in Pennsylvania, commute across the river to work in New Jersey.

High premiums are keeping internist Daniel C. Randall, FACP, in emergency medicine, not private practice.

"As an ER doctor, I can make more money than I can as a hospitalist, more money than I can in primary care," said Dr. Randall, who prefers to work part-time hours so he can spend more time with his two young daughters. "It enables me to work only 26 to 30 hours a week, making more money than I did at my last [primary care] job … where I was working 70 to 80 hours a week."

Welcome to Pennsylvania, where years of high liability premiums and litigation fears have had major fallout on health care costs, referral patterns, diagnostic decision-making and career choices.

Known nationally for its medical schools and medical research, Pennsylvania is also a charter member of the AMA's list of malpractice "crisis" states, drawn up in 2002 to highlight states with soaring premiums and little relief in sight. (See "Medical liability 'crisis' states.")

Late last year, state officials and local media began hinting that the malpractice crisis in the Keystone State may be on the wane, citing the fact that the state's largest liability carrier did not increase base premium rates in 2006, after six years of double-digit hikes.

But while internists in the state—particularly in the greater Philadelphia market, which is notorious for the size of local malpractice awards and settlements—are happy to hear that good news, the "crisis over" note is ringing false.

"Leveling off [on malpractice premiums] is not good enough," said Stephen Foreman, PhD, associate professor of health economics and allied health at Robert Morris University in Pittsburgh. "We could level off and even drop by 25%, and we're still double or triple the rest of the country."

Not good enough

Local newspapers have pointed out other hopeful signs that Pennsylvania's malpractice problems may be on the mend: More carriers are writing policies, and payouts from the state program that pays catastrophic claims between $500,000 and $1 million, funded from state coffers and mandatory physician assessments, have dropped dramatically. And the number of new malpractice suits filed fell by more than one-third between 2000 and 2004.

In fact, according to the industry newsletter Medical Liability Monitor, liability premiums for internists in Philadelphia dropped almost 2% between 2004 and 2005. The same newsletter, however, quoted 2005 premium figures from different carriers for internists throughout the state, all of which topped $16,000. Carrier quotes for internists in southeastern Pennsylvania in 2005 ranged from more than $26,000 to more than $36,000. (See "Medical liability premiums: Philadelphia internists make the Top 5.")

Even if premiums stabilize, internists say the pressures of the state's malpractice environment have colored their entire medical career.

"Over the 25 years I've been in practice, the malpractice climate has created a downhill spiral in the medical community, in my view," said Charles Cutler, FACP, a general internist in the Philadelphia suburb of Merion and incoming Governor for ACP's Pennsylvania Southeastern Chapter.

At the faculty practice associated with the Temple University School of Medicine, Lawrence I. Kaplan, FACP, section chief for general internal medicine, knows the group's malpractice premiums run close to $25 million, or 30% of practice revenues. He—like other internists associated with Philadelphia's four medical schools—is somewhat insulated from liability problems, but he has still noted growing dissatisfaction with clinical careers in internal medicine.

"I know a number of my peers who have left academic clinical medicine and gone into industry or pharmaceuticals," Dr. Kaplan said, "folks who I was surprised at because of their clinical and educational backgrounds."

The increasing popularity of hospitalist jobs, which protect internists from paying malpractice premiums, suggests that a growing number of physicians believe the independence that comes with private practice is no longer worth the financial risk.

In fact, Jerome Santoro, FACP, chair of medicine for Main Line Health, which has a 400-member department practicing at three nonprofit hospitals in Philadelphia's western suburbs, fears he is seeing the demise of the traditional private-practice model.

"By necessity, you're seeing more and more employed doctors," said Dr. Santoro, an infectious disease specialist. "I think the old model of 'my doctor is there for me all the time' is, under these kinds of pressures, going to go away." While Main Line Health initially employed some primary care physicians and OB/GYNs, he said, the group has had to respond to premium pressures by employing some of its more high-risk physicians, including neurosurgeons.

And physicians' ability to share a practice in the market is evaporating, he said. "Physicians who want to work part-time and raise a family can't do it," he pointed out. "They'd have to pay the entire premium." That's not feasible in a market where the major insurer pays only 80% of Medicare, Dr. Santoro said—a reimbursement structure one local internist likened to being "bludgeoned" and that greatly compounds problems with liability premiums.

Dr. Randall, who is based in Sellersville, Pa., has already decided not to tackle that private-practice hurdle. Carriers have quoted him premiums of between $20,000 and $30,000 to work in an office-based practice.

"The minute you open the doors and see one patient, you owe the malpractice premium for the entire year as if you were working 120 hours a week," he said. "That's a fixed cost that is not dependent on volume."

Shrinking referral patterns

Premiums aren't the only worry, as internists also point to the now ubiquitous practice of defensive medicine. At the Grand View Hospital emergency room where Dr. Randall works, for instance, that concern translates into extra tests—and paperwork.

"I've always tried to explain all the potential options and risks to patients," he said. "But now I make sure to list every single option I discuss with patients and document that they are deciding not to get an extra test or be admitted to the hospital, if I suggest it." While he used to document that level of detail only for life-threatening situations, "now I do it routinely for almost everyone." The end result, physicians say, is wasted expense due to unnecessary admissions and prolonged hospital stays because of malpractice fears.

Even more frustrating is the market's exodus of subspecialists. For primary care physicians in southeastern Pennsylvania, making a referral has become a time-consuming, hit-or-miss telephone survey of fewer subspecialists contracted with a shrinking patchwork of health plans.

Eileen K. Carpenter, ACP Member, a partner in the four-physician Health Associates of South Philadelphia Inc., described her frequent search for a consult, now that many of the physicians she used to refer to have left town or stopped taking referrals. "I'm going through the referral directory and calling the specialists listed one at a time," she said. A typical conversation? " 'Do you still take this plan?' and 'Oh, no, we stopped taking it.'"

Dr. Carpenter's first back-up plan—calling on the city's academic health centers—is no longer reliable. "You call up Temple's orthopedic clinic, and they'll want to know what the patient's ZIP code is," she said. "They'll take people only from their ZIP code, because they can't take everybody from the whole city. They're overrun."

She has particular trouble finding a local hand specialist for patients with carpal tunnel syndrome who need surgery, as well as pain management specialists. As a result, she is forced to refer patients to specialists who she does not personally know—a worry for her and an inconvenience for patients who have to travel farther to see a specialist.

"I am getting increasingly nervous about shouldering the responsibility of caring for patients who can't see a specialist, can't get specialist appointments for many months, can't get specialists to return their phone calls, or have specialists who tell patients to follow up with me instead of contacting their offices for the results of invasive studies," she said. "The standard of care in Philadelphia is based on the easy availability of specialists—so if you manage a patient and don't do as well as a specialist could, a jury will feel care fell short and find you liable."

Dr. Kaplan, who practices in Philadelphia, said it's now hard to find physicians willing to do obstetrics along with routine gynecology. And Dr. Randall noted that his hospital has no plastic surgery or neurosurgery. "[Patients] have to go to a larger hospital," he said. "We have to send them to Allentown or down to Philadelphia."

Recruitment woes

For Dr. Carpenter, the squeeze between high malpractice premiums and low reimbursement, especially for low-income patients and working patients covered by HMOs, means she and her partners are unable to grow their business. With four practitioners juggling seven patient rooms, Dr. Carpenter has stopped training residents in her office because space is simply too tight.

"We would love to expand, but it's not going to happen if we can't buy," she said. "Every time we start to think we're going to be able to get ahead, expenses go up." The only bargaining chip physicians have for better reimbursement, she added, is to stop accepting a particular plan—a tremendous burden for patients. Still, "we are likely to have to stop accepting patients from one of our larger plans soon."

For Dr. Santoro, practicing medicine in southeastern Pennsylvania means gross revenues that have been flat for at least six years. "We've been able to maintain flat revenues," he said, "because we do more volume."

And one of the most troublesome consequences of protracted liability problems has been the impact on recruitment. Although Pennsylvania medical schools and residency programs are training more new physicians than ever, the vast majority of them now leave the state to launch their career. High malpractice rates are the primary reason, according to a study on Pennsylvania's physician supply.

The study, published in the June 2005 issue of Obstetrics and Gynecology, surveyed residents nearing the end of their training in several specialties—anesthesiology, emergency medicine, general surgery, obstetrics, orthopedics and radiology—considered to be at high risk for liability claims, as well as directors of residency programs in those specialties.

Researchers found that three-fourths of respondents intended to bail out of Pennsylvania when their residency ended—and that half of those planning to leave identified issues related to malpractice as the primary reason. (See "More residents training in—and leaving—greater Philadelphia.")

Keith W. Sweigard, FACP, is medical director for the 90-physician network owned by Abington Memorial Hospital, based in Abington, another Philadelphia suburb. He remembers when the network had the luxury of choosing new physicians trained at Philadelphia's prestigious academic centers. Now, that choice has been trumped by Pennsylvania's liability problems.

"If we have a candidate, we're delighted—as opposed to having a selection of candidates," said Dr. Sweigard. "In fact, we recently went through three different recruiting firms because we couldn't get local people from our medical schools interested." Two current candidates for internal medicine and family practice are interested—because they each have a spouse who needs to be in the Philadelphia area.

"We find the only way we can get people to fill some of these slots is that they have to have a second reason for staying in Philadelphia," Dr. Sweigard said. His group continues to experiment with incentives to attract more candidates, including signing bonuses and loan forgiveness for tail coverage from a recruit's previous insurer. "We also recognize that we have to recruit someone's spouse and family, not just the physician."

According to Dr. Cutler, efforts by the state's physicians to get tort reforms enacted have been stymied. Physicians over the past several years have made a concerted effort, for instance, to change the state constitution to allow legislators to cap noneconomic damages.

"That a very complicated and controversial issue," he said, "and one the state government has largely resisted."

Pennsylvania physicians are also looking into pushing for what Dr. Cutler called "'I'm sorry' legislation," which would allow physicians to extend sympathy to patients or families in the event of an unwanted outcome—and prevent such expressions being admitted in court.

They are also looking into alternative malpractice dispute resolution models based on mediation, including one model that has had some success in Chicago, another market where physicians struggle with soaring premiums, he said. Such models try to resolve differences before any litigation is filed.

"That's one very narrow light," Dr. Cutler said, "at the end of the tunnel."

Lola Butcher is a freelance writer based in Springfield, Mo., who specializes in health care business writing.

The information included herein should never be used as a substitute for clinical judgment and does not represent an official position of ACP.


Medical liability 'crisis' states

As one state suffering high malpractice premiums and fraying referral networks, Pennsylvania isn't alone. Here are the 22 states the AMA now designates as medical liability "crisis" states:

  • Arkansas
  • Connecticut
  • Florida
  • Georgia
  • Illinois
  • Kentucky
  • Massachusetts
  • Mississippi
  • Missouri
  • Nevada
  • New Jersey
  • New York
  • North Carolina
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • Tennessee
  • Texas
  • Washington
  • West Virginia
  • Wyoming

Source: AMA


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