TX hospitals reinvest medical liability savings

Five years after the state of Texas approved a constitutional amendment capping non-economic damages for medical malpractice at $250,000, the state's hospitals are reporting major cuts in liability costs. The hospitals have been investing the savings in new patient-related programs, according to a new survey released by the Texas Hospital Association (THA). The THA surveyed 10 healthcare systems and 10 independent hospitals, which represented 176 facilities, or about 55 percent of the private med-surg hospital population in the state.

The 109 hospitals providing premium information told the THA that they'd seen a collective decrease in annual medical malpractice premiums of more than $100 million between 2003 and the largest years reported, which were 2008 and 2009. In some cases, the drop happened despite the fact that hospital coverage limits doubled, and in some cases tripled.

THA researchers found that 85 percent of hospitals have found it easier to recruit medical specialists and subspecialists since the state's reforms were enacted. It also found that 69 percent of respondents had maintained or expanded one or more of their services because of falling hospital liability insurance costs. For example, one Victoria hospital was able to improve ED coverage and keep its Level III trauma center designation, and a Houston children's hospital was able to rollout a new high-risk obstetrics program and used millions of dollars in liability premium savings to expand patient safety and quality improvement programs.

Presumably, this study was released in part to counter opponents to the state's med mal damage caps, who have recently gone to the courts with an argument that imposing the caps is unconstitutional. These opponents note that prior to the 2003 caps, many carriers had increased rates by as much as 150 percent, a rise that hasn't even been covered yet by the drops described here.

To learn more about these survey results:
- read this Healthcare Finance News piece

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