What Happens to Your Medical Liability Insurance When Taking an Employed Position

While many doctors are finding themselves faced with reduced reimbursements, high medical liability insurance premiums and high expenditures that exceed their financial guidelines to maintain a profitable practice, the question they ask themselves is: “Why am I trying to do this all alone?”

Enter the white knight, the hospital looking to purchase their physician medical practice and relieve them of all of the stress of worrying about that bottom line and putting in endless hours or adding services to make up for the reductions they face in the future just to make ends meet.

Can This Be a Healthy Decision?

It’s understandable that we all want to enjoy our job and work in a position that affords us the opportunity to enjoy our life and the fruits of our labor, but is this wave of change going to change things in ways we may not perceive till they occur? And how should you handle your medical liability insurance once you’re aligned so tightly with an entity that may perceive you as just another face in the crowd.  Can you maintain your medical liability coverage separate from the hospital and still take that position that seems so inviting?  What happens when you don’t stay separate?  And ultimately who controls your future when you place your destiny in the hands of the hospital that employs you?

The Benefits of Keeping Your Current Medical Liability Insurance Policy

Those questions should be asked when you are taking these steps and the answer may effect how you take these steps in order to fully protect yourself.  Many physicians in the beginning stages of employment can negotiate for their medical liability insurance to remain separate from the hospital.  In doing this, you allow yourself some control over the destiny of costs, policy language, deductibles, and settlements.

Let’s face it if you are closely aligned with the hospital policy, you have the same counsel and you are handled in the same way that the large hospital will be handled: or will you?  Do you have control over any aspect of something that may have an effect on you for the rest of your career?  The single biggest issue when physicians and surgeons switch from a private medial practice to an employed position with the hospital is their tail coverage policy.

Most hospitals require physicians to purchase a tail policy from their medical professional liability insurance company prior to starting their employment with the hospital. This is very expensive for physicians as liability insurance companies charge, on average, 250% of the physician’s current premium. Prior acts coverage for Obstetricians and Gynecologists can mean a $250,000 premium for their tail policy. Maintaining your physician’s liability insurance policy that is already in force allows the physician to keep their prior acts covered and avoids the expensive tail premium.

In many cases you have the ability to ask that you maintain your current coverage with the current liability insurance carrier.  This separates counsel, issue of consent to settle and gives you the control of your future.  When a case is settled against a single physician the effects on your future medical liability insurance premium can follow you for up to ten years.  If YOU hold the consent to settle and YOUR policy appoints separate counsel, YOUR best interests are in the foreground and YOUR destiny is in YOUR hands.

Continuity of coverage can also be negotiated and tail costs can be included in your contract so than when you leave you are not saddled with the expensive tail premium or you can simply take that tail with you to the next position because it’s YOUR coverage and it would continue forward.  Simple consideration of how you perceive your future and whether you think you will ever go back into private practice can save you a great deal of heartache and allow you the ability to break those ties that bind you to the employed hospital situation should things change later on.

Conclusion

By accepting coverage through the hospital, physicians and surgeons lose control of which policy features are selected. Physicians also do not get to choose which medical professional liability insurance company insures them. Nearly all physicians will be named in at least one malpractice claim. As a physician, knowing that you are going to be directly involved in a lawsuit at some point in your medical career, don’t you want to know who is going to cover you and the policy associated with the coverage? Cheap coverage or worse, the carrier becoming insolvent can leave a mark for the rest of your medical career. Consider the fact that you wish to control your destiny and hold on to your own medical liability insurance policy when you are looking at taking an employed arrangement, you may thank yourself in the future.

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