Hospitals go naked without malpractice insurance

Faced with a litigious society and high insurance premiums, some hospitals are forgoing part or all of their malpractice insurance--known in the insurance world as "going naked."

Although it might save them money in the short-term, hospitals could face long-term effects, costing them more in the future or even hurting patient care, The New York Times reported.

"From a social perspective, it's very irresponsible," University of Pennsylvania law professor Tom Baker said in the article. "They're taking in these people knowing they're not able to make good on the harm they caused. Even a really good hospital is going to have a certain amount of medical malpractice. It's inevitable."

Hospitals "go naked" because many states don't require malpractice insurance. In addition, facilities in poor areas, including New York City, Philadelphia, Chicago Cook County and Florida Dade County, might choose to opt out because of expensive premiums, the NYT noted.

Hospitals also may forgo malpractice insurance, seeing it as a "lawsuit magnet," as one health executive called it in the article. Hospitals essentially stay strategically uninsured to avoid malpractice cases altogether. In some instances, it's the physicians who have separate insurance, subsidized or reimbursed by the hospital.

Some hospitals may have tapped their reserve money and may not be able to pay should the day come when malpractice does occur.

"As things come up, we utilize day-to-day working capital," Interfaith Medical Center CEO Luis Hernandez said. "If we ever get a large award, it could hurt us significantly." As a result of a $12.9 million award in 2006, reduced from a $31.6 million judgment paid out in installments, Interfaith Medical Center was forced to close its obstetrics unit.

The malpractice insurance costs for maternity care are especially high.

"Malpractice always has (been) and always will be a huge issue for maternity," Kathy Bauman, chief operating officer for clinical services at Coshocton County (Ohio) Memorial Hospital, told the Coshocton Tribune. "You never know what can go wrong when you have a baby born, and if they are born with a complication, there's a risk of things developing for 18 years that could come back on the doctor and the hospital. We only deliver the care that we have resources for."

Coshocton County Memorial Hospital only takes low-risk cases and refers out high-risk cases. Although its maternity unit isn't planning on closing any time soon, Bauman encouraged hospitals to reevaluate its resources and capability.

"Every hospital has to take a good look at themselves to make sure they're not trying to do something they're not capable of doing," Bauman said.

For more information:
- read the NYT article
- here's the Coshocton Tribune article

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