Malpractice Nightmare

Take a neurosurgeon practicing in New York State in 1970 and making $70,000 a year. He had to pay about $4,700 annually for malpractice insurance, which protected him against lawsuits from dissatisfied patients. Today the cost of that insurance is about $14,000. The precipitous rise is not confined to New York. Across the U.S., insurance companies are hiking premiums* as more and more patients hale doctors and medical institutions into court--and as juries increasingly award damages in six-and seven-figure amounts.

The growing burden of malpractice insurance is already forcing a number of doctors to retire early or consider moving to states where rates are lower. It is also making it increasingly difficult for young physicians to set up practice. In some states where higher rates have been turned down by insurance commissions, insurance companies have announced that they will no longer provide the vital coverage. This week Senator Edward Kennedy, New York Representative James Hastings and other congressional leaders will meet in Washington with medical authorities to consider legislation for what may be one effective way to head off the crisis: federal malpractice insurance.

Solutions are needed fast. In New York, for example, the Argonaut Insurance Co., which was denied a hike of 196.8% in January (after a 93.5% rise last July), plans to cancel all physician policies on July 1. No other company has volunteered to take over for Argonaut, which insures most of the state's doctors. In Maryland, a court order is now preventing the St. Paul Fire & Marine Insurance Co., the state's major malpractice insurer, from carrying out its plan to cancel all physician policies. Similar crises exist in North Carolina, Michigan, California and Florida.

Risky Operations. Hospitals are struggling to meet their rising malpractice premiums by passing costs along to the patient. The Michael Reese Medical Center in Chicago may increase its daily rates $12 a bed. In New York, where 23 hospitals were faced last week with a 600% rise in malpractice costs, officials estimate that the increase could add $50 to a patient's bill. To protect themselves against malpractice suits, many physicians and hospital administrators are now demanding additional X rays and laboratory tests to document the need for treatment in case the patient sues, that too is adding to hospital costs and bills. Staff doctors are also becoming more reluctant to perform especially risky operations or procedures.

Many state and national medical groups are so concerned with the malpractice problem that they have developed their own proposals for legislation. Meeting in Manhattan last week, the Medical Society of the State of New York requested that the state legislature set up a twelve-member board consisting of physicians, attorneys and laymen to review malpractice claims and award settlements; this would avoid costly trials and help reduce premiums. Both the American Medical Association and the American Hospital Association have suggested a malpractice-award system that would work along the lines of workmen's compensation. Under this plan, each injury would result in a specific amount of compensation. Explains James Groves, an insurance expert for the A.H.A.: "This would mean that negligence would become less of a factor in malpractice suits. Many injuries result not because of negligence, but because medicine is an unexact science and often things happen at the hand of God."

Physicians and hospitals are not the only ones who would gain from changes in malpractice insurance. As Dr. Malcolm Todd, president of the American Medical Association, says, "If doctors can't get insurance, it's hard to expect them to practice medicine."

* Premiums are determined by the probability of lawsuits and the size of damage awards associated with each specialty; psychiatry and dermatology premiums, for example, are low, those for orthopedic surgery and anesthesiology high.

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