Filed Under:Markets, E&S/Specialty

Temporary Doctors, Hotel Doctors Find Med Mal Coverage In E&S Market

The cost and overhead of running a private practice have overwhelmed many doctors in recent years. Facing increased paperwork, tighter insurance regulations and restrictions, and shrinking medical reimbursements, many doctors--especially primary care physicians--have given up their private practices and looked for alternatives.

Among these alternatives are temporary staffing agencies for doctors, which have become one of the fastest growing health care trends this decade.

Known in the industry as "locum tenens"--Latin for "holding the place of"-- these agencies send some doctors traveling from city to city to work in clinics. The agencies may also place temporary doctors for certain specialties that suffer from physician shortages or place them in facilities and practices that have temporary needs due to vacation or maternity absences. The physicians working on a temporary basis include primary care physicians and specialists who are needed in rural areas.

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

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

Coverage for temporary doctors can be provided on a claims-made or occurrence basis, and rates are on a per diem basis. Medical malpractice insurance for hotel doctors is based either on the number of visits, or revenue, averaging about 1-3 percent of gross revenue.

Overall, the medical malpractice insurance market continues to be unique, with about 60 percent of private practice physicians insured by members of the Physician Insurers Association of America, a trade association of more than 50 professional liability insurance companies owned and operated by doctors and dentists. Those doctors who are categorized as hard-to-place risks--whether they are foreign born, work in solo practices or work as temporary doctors--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 becoming broader and starting to mirror those of the admitted market. Rates for these hard-to-place risks are getting more competitive and capacity today remains strong.

Another new type of risk whose insurance needs have been met by the E&S market is the telemedicine professional. Spurred by the development of advanced Internet and telecommunication technologies, telemedicine is a rapidly growing segment of medicine where information is transferred from one location to another for the purpose of consulting, monitoring, and even diagnosing and ordering treatments or tests for patients.

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

When X-rays, CT scans and other diagnostic tests are performed at a local hospital, doctor's office or imaging center, the digital images are transmitted to teleradiology firms that could be located in Butte, Mont., Halifax, Nova Scotia or further away. Many operate 24 hours, seven days a week. The images are read and diagnostic opinions are transmitted back to the attending physician.

Teleradiology costs are based on the number of tests that are read by the medical professional, so medical malpractice insurance for these teleradiologists also is typically based on the number of reads.

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

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

Other areas of growth and change in the medical profession where the E&S market is filling medical malpractice insurance needs are allied health professionals. There is a great demand for coverage provided for nurse practitioners, physician assistants and other professionals who are increasingly supplementing physicians in hospitals and private practices. In fact, some locum tenens staffing agencies focus solely on allied health professionals.

Capacity for medical malpractice insurance remains strong, but the challenges remain for many health professionals. Some states, looking to cut budgets, are eliminating professional liability coverage for allied health professionals, psychiatrists and others.

Recently, for example, North Carolina advised allied health practitioners (outside contractors) that they would have to secure professional liability coverage for work performed in the prison system. This coverage was previously afforded by the state.

The good news is that wholesale brokers and the E&S markets remain committed to serving medical malpractice needs with increasingly broad coverage and competitive rates.

Parker Harvey is president of Healthcare Professional Services (www.healthcareprofservices.com), an insurance intermediary and wholesale broker specializing in professional liability insurance and general liability insurance for all aspects of the healthcare industry. He can be reached at harvey@healthcareprofservices.com.

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