MGMA Research Finds Skyrocketing Medical-Liability Premiums are Hampering Patient Access to Care

ENGLEWOOD, Colo. -- The Medical Group Management Association (MGMA)'s newly available 2004 medical liability premium member research validates the need for immediate Senate passage of comprehensive medical liability reform legislation to halt the rapid increases in malpractice insurance premiums.

"This updated information confirms that physician group practices continue to struggle with excessive medical liability premiums," said William F. Jessee, MD, FACMPE, president and CEO of the MGMA. "The data demonstrate that increases in medical liability premiums over the past several years are hampering practices' ability to provide needed care to patients."

MGMA's questionnaire collected responses from 770 medical group practices that employ 12,757 physicians.* The responding group practices represented 49 different specialty and multi-specialty practice types with a median practice size of seven physicians.

Results showed that:

· Medical group practices faced an average premium increase of 37.24 percent between 2003 and 2004, on top of an average premium increase of 39.6 percent between 2002 and 2003;

· 15.6 percent of responding medical group practices reported that their physicians plan to retire, relocate or restrict their services over the next three years; and

· 23.9 percent of practices reported that they no longer treat certain high-risk patients, or that patients must travel to other facilities for certain procedures as a result of medical liability premium increases.

This research also suggests that practices are reducing liability coverage levels to offset cost.

The Senate is scheduled to consider liability reform legislation targeting specialties hit particularly hard by rising insurance premiums. MGMA supports these efforts as a first step to achieving liability reform for all physicians.

"MGMA will continue to work with Congress to pass reasonable, comprehensive reform legislation benefiting all group practices and the patients they serve," said Jessee.

* The findings reported here are drawn from a self-selected sample of medical practices that responded online. Respondents are primarily MGMA members, and the results may not be representative of all practices.

Professional Liability of Physician Practices: 2004 Member Research Report

Medical Group Management Association

March 2004

Summary of Findings

Responding Practice Demographics

Total respondents: 770 practices

Physician representation: 12,757 physicians

Median practice size: 7 physician FTEs (full-time-equivalent)

Practice types: 3 different multi-specialty practice types

46 different single-specialty practice types

Reported Premium Increases: All Practices

2002 average increase to 2003 average: 39.60%

2003 average increase to 2004 average: 37.24%

2002 reported maximum increase to 2003 reported maximum: 365%

2003 reported maximum increase to 2004 reported maximum: 400%

Reported Premium Increases: Multispecialty Practices

Primary care only - 2002 average to 2003 average: 67.53%

Primary and specialty care - 2002 average to 2003 average: 41.67%

Specialty care only - 2002 average to 2003 average: 40.85%

Primary care only - 2003 average to 2004 average: 51.02%

Primary and specialty care - 2003 average to 2004 average: 41.69%

Specialty care only - 2003 average to 2004 average: 40.53%

Reported Premium Increases: Specialties Hardest Hit

Average increases, 2003 average to 2004 average

Surgery: General: 49.41%

Cardiology: 48.55%

Gastroenterology: 44.64%

Ophthalmology: 40.98%

Surgery: Neurological: 39.11%

Obstetrics/Gynecology: 35.00%

Orthopedic surgery: 33.75%

Internal medicine: 33.27%

Urology: 32.16%

Anesthesiology: 31.00%

· Other specialties indicating significant increases: radiology, hematology/oncology, pediatrics: general, family practice, otorhinolaryngology, surgery: cardiovascular and emergency medicine.

· A number of other specialties reported very high increases but are not reported here because there were fewer than 10 responses in the sample.

Reported Premium Increases: States hardest hit by premium increases

Average increases, 2003 average to 2004 average

Indiana: 85.00%

Oklahoma: 78.98%

Missouri: 64.43%

Pennsylvania: 63.12%

Arizona: 55.50%

Ohio: 49.89%

North Carolina: 44.34%

Florida: 40.13%

Georgia: 36.23%

Oregon: 35.82%

· Other states from which more than 10 responses were received that indicated greater than 20 percent average increases: Illinois, Maryland, Massachusetts, New Jersey, Tennessee, Texas, Virginia and Washington.

· A number of other specialties reported very high increases but are not reported here because there were fewer than 10 responses in the sample.

Practices are seeking ways to offset the increasing costs of insurance without limiting services to patients. The survey provided the following observation:

· 13.8% have discontinued certain services

· 11.8% have referred high-risk patients elsewhere

· 10.5% have referred high-risk procedures elsewhere

· 17.5% have switched to lower-cost carriers

· 17.1% reduced coverage amounts

· 16.2% have suspended practice expansion plans

The findings reported here are drawn from a self-selected sample of medical practices that responded online. Respondents are primarily MGMA members, and the results may not be representative of all practices.

The MGMA, founded in 1926, is the nation's principal voice for medical group practice. MGMA's 19,000 members manage and lead more than 11,500 organizations in which more than 237,000 physicians practice. MGMA's core purpose is to improve the effectiveness of medical group practices and the knowledge and skills of the individuals who manage and lead them.

Source: MGMA