Medical Malpractice e-Resource

Wayne County's doctors are beginning to see some relief from sky-high malpractice insurance premiums that for years have contributed to the exodus of physicians from the region.

The drop in rates, combined with patient safety initiatives at Wayne County hospitals, have saved them millions of dollars in malpractice costs.

But the county still ranks among the nation's most expensive in terms of coverage for physicians who already struggle to provide care to an impoverished and ailing population that includes more than 700,000 uninsured and underinsured.

"The problem is still a problem," said Dr. Thomas Selznick, a Livonia family practitioner. "By no means are things under control in Michigan."

More than two dozen clinics and four hospitals have closed in Detroit in the past decade, driven out of business in part by the high cost of delivering care. The high costs have contributed to a shortage of physicians. Oakland County has 7,514 physicians to serve 1.2 million residents, while Wayne County has 5,291 physicians for 2 million.

While the dip in 2005 Wayne County's malpractice rates -- among the steepest in the nation -- will help bring the county more in line with other communities, many physicians doubt that the drop signals a significant turnaround.

Wayne County's internists and obstetricians and gynecologists saw a 17.5 percent drop in the most expensive annual premium between 2004 and 2005, according to Medical Liability Monitor, a trade journal.

"Rates for physicians are leveling, albeit at historic high levels," said Barbara Dillard, editor of the Monitor. "Whether this is a sustainable trend that signals the beginning of another soft market, only time will tell."

Costs in Wayne County still far outpace other places in Michigan. One of the state's largest medical malpractice insurers, AP Capital, charges a Wayne County internist $38,943 annually for $1 million in coverage, while an internist in Oakland or Macomb counties would pay $33,490.

Michigan's internists and general surgeons received the biggest overall rate cut nationwide, with an average drop of 19 percent, according to the Monitor.

Pinpointing reasons for high rates -- and the drop -- is difficult.

Doctors argue that trial attorneys drive up rates with frivolous lawsuits that earn them big money. Wayne County pays out a relatively high number of malpractice claims compared to other places.

"Lawsuits are still outrageous for doctors," Selznick said.

Decreased competition in the insurance market may contribute to high overall costs. High malpractice premiums also trickle down to patients.

The national average malpractice premiums for all physicians rose 15 percent between 2000 and 2002 -- nearly twice the rate of total health care spending per person, according to the Congressional Budget Office.

As for last year's drop, local health care leaders credit a combination of increased vigilance at hospitals and legal reform that helped lower the cost of settlements. Results are just beginning to kick in from malpractice reform measures passed in the 1990s that cap how much doctors must pay in some cases.

Many doctors also join policies offered through larger medical systems that give them lower group rates. Many doctors don't pay the highest premiums because they get less than $1 million in coverage.

Henry Ford Health Care System paid 40 percent less in malpractice claims and coverage in 2005 than in 2004, from $36 million to $22 million. The six-hospital system has focused on patient safety, using electronic medical records and changing medical practices systemwide.

Henry Ford reported a 75 percent drop in bloodstream infections and a 69 percent drop in surgical infections in the two years.

The decrease is "very much related to quality initiatives," said Henry Ford President and Chief Executive Officer Nancy Schlichting. "When you reduce mortality, people won't sue."

Dearborn-based Oakwood Healthcare System saw an 11 percent drop in malpractice payouts and premium payments between 2005 and 2006. St. John Health System paid about $44 million in 2005-06 for payouts and coverage, about the same as the year before.

At the eight-hospital Detroit Medical Center, malpractice payouts dropped to $25 million in 2005 from $35 million in 2004.

There, too, electronic record-keeping and other safety measures helped drive change, said Chief Operating Officer Ben Carter. Meticulous medical record-keeping has made a major difference, he said.

"We've been working very aggressively toward managing our malpractice expenses," Carter said.

The key to long-term success remains elusive, said Michael Cannon, director of health policy studies at the Washington, D.C.-based Cato Institute. No state has had outstanding success, he said.

The best way to find a solution is to allow individual states, and possibly individual doctors, to try different approaches, he said.

"People can learn from each other's mistakes that way," he said. "If you create one set of rules for everybody, that means if they screw up, they screw up for everybody."

As for Selznick, in Livonia, his rates dropped last year, but only because he got on a group policy through a health system and got a separate policy for doctors in his practice who care for patients in nursing homes. Coverage for physicians who care for the elderly is particularly high, he said.

The relief, he said, won't last.

"It's a false sense of security."