During the last decade, many of my friends and clients have made the decision to abandon their own practices and move to the employment model. Some have gone to academic settings while others have opted to join hospitals, larger independent groups, or corporations. The driving factors compelling these actions include declining reimbursement rates, increasing regulatory requirements, and administrative pressures. Some remain in their new settings and others have opted out and either returned to independent practice, made another alternative practice change, or retired. Guess it is not always greener or the other side, with new demons replacing the old.
Each and every move involves a plethora of moving parts, including contract terms and conditions, personal asset planning, billing issues, insurance considerations, and lifestyle changes. This article will focus on many of the matters presented during the transition with regard to professional liability (medical malpractice) insurance coverage.
Most independent physicians are in a position to evaluate their professional liability coverage on a yearly basis, taking into consideration components such as the insurer’s reputation and financial stability, cost, defense success, policy terms and limits, and regulatory and cyber protection. This allows the physician to maintain the flexibility and continuity of their own policy to protect their personal assets and reputation. Unfortunately, this “luxury” is not available to many employed physicians. Employed physicians may not be in a position to have significant control and input when they are included in an action that could lead to avoidable reporting to the National Practitioner
s Data Bank (NPDB), State Data Bank, and State Medical Board.
Thus, it is extremely important for the physician contemplating employment to be diligent in asking questions regarding their transition from independent to employed with respect to their professional liability coverage. Below is a compilation of questions gathered from various healthcare attorneys, CPAs, and insurance specialists. Although this is by no means a complete list, it can provide guidance in due diligence of this important issue.
• Will I be able to maintain my existing coverage?
• Will new coverage be provided through an admitted/rated insurer or by an alternate risk vehicle, such as a captive or risk retention group (RRG)?
• Will new coverage be fully retroactive? If not, who is responsible for the existing policy’s “tail”?
• Will I have separate limits?
• Is my new coverage limited to practice at my employer?
• What are the “tail” provisions should I leave, become disabled, retire, or die?
• Is the new coverage portable?
• Will I be covered for regulatory and cyber issues?
• Are there any deductibles and who is financially responsible for their payment?
• What say will I have in any claim activity (consent to settle, allocation of payment)?
• Am I entitled to my own defense counsel? Who pays?
• Are all others who practice with me covered for their actions?
• Do I have coverage for my medical administration duties?
The questions and issues above are only the tip of the iceberg when considering alternate practice opportunities and you would be well served to enlist experienced healthcare advisors in your quest. Good luck!