How Much Do ER Patients Pay to Protect Themselves from Malpractice of ER Doctors? You Won’t Believe It.

Team Health Holdings, Inc.  is a physician-founded, physician-led outsourced healthcare professionals staffing organization.  Based in Knoxville, TN, it purports to be "the largest providers of [Emergency Department] staffing and management services in the United States, based upon patient visits and revenue."  

The company serves  "approximately 550 hospital clients and their affiliated clinics in 46 states with a team of approximately 6,100 healthcare professionals, including physicians, physician assistants and nurse practitioners."  It. provided care to 7.6 million patients in emergency rooms alone for the calendar year ending December 31, 2008. 

The outlook for this business looks good.  Here is how Team Health describes the future demand for its services:

According to the American Hospital Association, ED visits increased at a compound annual growth rate of approximately 3%, from 92.8 million in 1997 to 120.8 million in 2007, and the average number of patient visits per ED grew at a compound annual growth rate of approximately 4%, from approximately 19,300 to approximately 27,000 over the same period. As the baby boomers and older generations above 55 years represent a larger percentage of the population (approximately 23% in 2008 and projected to be approximately 29% in 2020, according to the U.S. Census Bureau), the demand for ED services is likely to increase.

Interesting stuff, isn’t it?  But why am I reporting it here?

Because the company also tells us how much money it pays for professional liability coverage.  How much do they pay?  Well, in 2008, the company paid $15, 247,000 in professional liability costs.  How much was its revenue that year?  $1.331 Billion (revenue does not include billings deemed noncollectable)..  Note:  General and administrative costs were 10 times higher than professional liability costs.  The company spent three times more money on interest than it did on professional liability insurance.

What was the percentage of professional liability costs in relation to revenue?   1.2%

What was the average collected revenue for each of the 7.6 million patient the company treated in 2008?  $175.  

On average, what amount did each of the 7.6 million patients pay to protect themselves from malpractice of a Team Health employee?    $2.10.

These are the numbers that gave rise to  the "crisis" in Tennessee which has compelled the state’s emergency rooms and their doctors to raise the burden of proof in medical malpractice cases involving EDs.  And this is why these same special interest groups support of cap on damages for pain, suffering, disfigurement, loss of enjoyment of life in personal injury cases, loss of consortium in death cases, and punitive damages in all cases to a total of $1,000,000.

If this happens, what will happen to the cost a patient bears to protect himself or herself from malpractice in an ED?  Will it drop 10% (21 cents)?  Will it drop 15% (31 cents)?  Will it drop enough to pay for a newspaper that you can read while your child is waiting to be seen by a doctor   in the emergency room?  Sorry, the insurance industry makes no promises that that emergency room visit costs will drop if patient rights are limited and, the providers make no promises that charges will decrease if insurance costs decrease.

If facts made a difference to the Legislature, the debate would be over.  

For the record, I am not making these numbers up.  They were included in a Prospectus submitted to the Securities and Exchange Commission in December 2009.   The link may not work.   If it is broken go to and search for filings for Team Health Holdings, Inc.   Thanks to T.Robert Hill of Jackson, TN for letting me know about the filing.

By the way, if the company really wanted to save consumers money, it would live within its means and stop paying so much money in interest..  Each patient paid $6.30 per visit for the company’s interest.  Get rid of the interest and each patient saves $6.30, three times more money than they would save if the company paid no professional liability costs whatsoever.