The cost and overhead of running a private practice haveoverwhelmed many doctors in recent years. Facing increasedpaperwork, tighter insurance regulations and restrictions, andshrinking medical reimbursements, many doctors–especially primarycare physicians–have given up their private practices and lookedfor alternatives.

Among these alternatives are temporary staffing agencies fordoctors, which have become one of the fastest growing health caretrends this decade.

Known in the industry as “locum tenens”–Latin for “holding theplace of”– these agencies send some doctors traveling from city tocity to work in clinics. The agencies may also place temporarydoctors for certain specialties that suffer from physicianshortages or place them in facilities and practices that havetemporary needs due to vacation or maternity absences. Thephysicians working on a temporary basis include primary carephysicians and specialists who are needed in rural areas.

These temporary doctors also help fill gaps at nonmedicalfacilities, such as correctional facilities or hotels. In fact,there are some staffing agencies that specialize just in supplyingdoctors to hotel chains. So if you get sick while staying at ahotel and the hotel sends a doctor to treat you, it's a good chancethat doctor came from one of these temp agencies.

The medical malpractice insurance needs of these nontraditionaldoctors are being filled by the excess and surplus lines insuranceindustry, including many leading E&S carriers, as well as bywholesale brokers who specialize in the health care industry. TheE&S market is well suited for these “nontraditional” doctors,and not just because we have traditionally covered new or uniquerisks. The primary reason is that these doctors cross state linesfor work and the standard markets usually avoid multistaterisks.

Coverage for temporary doctors can be provided on a claims-madeor occurrence basis, and rates are on a per diem basis. Medicalmalpractice insurance for hotel doctors is based either on thenumber of visits, or revenue, averaging about 1-3 percent of grossrevenue.

Overall, the medical malpractice insurance market continues tobe unique, with about 60 percent of private practice physiciansinsured by members of the Physician Insurers Association ofAmerica, a trade association of more than 50 professional liabilityinsurance companies owned and operated by doctors and dentists.Those doctors who are categorized as hard-to-place risks–whetherthey are foreign born, work in solo practices or work as temporarydoctors–can find a home in the E&S market.

During the 30 years that I've been in the insurance industry,I've seen the E&S industry grow and its policy forms becomingbroader and starting to mirror those of the admitted market. Ratesfor these hard-to-place risks are getting more competitive andcapacity today remains strong.

Another new type of risk whose insurance needs have been met bythe E&S market is the telemedicine professional. Spurred by thedevelopment of advanced Internet and telecommunicationtechnologies, telemedicine is a rapidly growing segment of medicinewhere information is transferred from one location to another forthe purpose of consulting, monitoring, and even diagnosing andordering treatments or tests for patients.

For example, with the advance of digital radiology, manyradiology groups and hospitals are contracting for off-site“teleradiology” services.

When X-rays, CT scans and other diagnostic tests are performedat a local hospital, doctor's office or imaging center, the digitalimages are transmitted to teleradiology firms that could be locatedin Butte, Mont., Halifax, Nova Scotia or further away. Many operate24 hours, seven days a week. The images are read and diagnosticopinions are transmitted back to the attending physician.

Teleradiology costs are based on the number of tests that areread by the medical professional, so medical malpractice insurancefor these teleradiologists also is typically based on the number ofreads.

Like the locum tenens groups, the multistate exposure has putteleradiology risks in the E&S market and coverage is almostexclusively offered on a claims-made basis. Coverage is verycompetitive, usually written for 50-90 cents per image read.

Look for a growing variety of telemedicine risks as more andmore hospitals and health networks embrace the efficiencies thattelemedicine offers. For example, we recently wrote coverage for“telepsychiatry” services, while some hospitals are using“teleintensivist” services in which patients are monitored bycritical care physicians at a remote location.

Other areas of growth and change in the medical profession wherethe E&S market is filling medical malpractice insurance needsare allied health professionals. There is a great demand forcoverage provided for nurse practitioners, physician assistants andother professionals who are increasingly supplementing physiciansin hospitals and private practices. In fact, some locum tenensstaffing agencies focus solely on allied health professionals.

Capacity for medical malpractice insurance remains strong, butthe challenges remain for many health professionals. Some states,looking to cut budgets, are eliminating professional liabilitycoverage for allied health professionals, psychiatrists andothers.

Recently, for example, North Carolina advised allied healthpractitioners (outside contractors) that they would have to secureprofessional liability coverage for work performed in the prisonsystem. This coverage was previously afforded by the state.

The good news is that wholesale brokers and the E&S marketsremain committed to serving medical malpractice needs withincreasingly broad coverage and competitive rates.

Parker Harvey is president of HealthcareProfessional Services (www.healthcareprofservices.com), aninsurance intermediary and wholesale broker specializing inprofessional liability insurance and general liability insurancefor all aspects of the healthcare industry. He can be reached [email protected].