Putting Medical Malpractice Insurance Costs in Perspective

An article by Robert Heath in Monday’s  Washington Post   gives us some of the financial details of the practice of Dr. Robert Hardi, a D.C. gastroenterologist.

Dr. Hardi has about 4500 patient visits per year and performs about  1150 procedures.  He works about 47 weeks per year. 

Thus, Dr. Hardi has about 5650 patient contacts per year, and each of those contacts presents an opportunity for a claim to be asserted against him (because each presents the possibility of making an error or omission that could result in injury).  The cost of Dr. Hardi’s malpractice insurance is $45,000 per year.  The amount of his insurance coverage was not disclosed in the article.  The cost of his malpractice insurance per patient contact is $7.96.

(Note:  in Tennessee an interventional gastroenterologist would pay  a gross amount $13,993 for a $1million / $3 million policy and $16,684 for a $2 million / $4,000,000 policy.  The actual cost is likely to be 20% less.  Thus, the cost per patient contact would be less than $3.50.)

In other words, Dr. Hardi’s patients pay $7.96 each time they go to the doctor for an office visit or procedure to allow Dr. Hardi to purchase insurance to protect himself from the economic consequences of any error he might make that rises to the level of medical negligence and that results in an injury to his practice.  It also protects him from a patient who makes an unmeritorious claim, because his malpractice insurance will pay the costs of defending any claim. 

I don’t know what Dr. Hardi charges for an office visit but I am quite sure it varies depending on the complexity of the visit and the actual services rendered during that visit.   In Massachusetts office visits for gastroenterologists  cost between $198 – $351.  If that is true in Dr. Hardi’s practice,  the cost of the malpractice insurance is between 2.5% and 4.5% of the cost of the visit.

Let’s say that the AMA’s dreams come true: a cap of $250,000 is  placed on damages for pain and suffering, joint and several liability is abolished (in those few places where it still exists) and the entire wish list is granted. If that were to occur tomorrow, no one believes, and certainly will not guarantee, the malpractice insurance rates will drop 20%.  The drop in malpractice insurance rates, if any, will be less.  Assuming a 20% drop, however, the cost per patient contact is reduced from $7.96 to about $6.35, or about $1.61 per visit.

What patient in his or her right mind would agree to restrictions on the right to trial by jury  or making difficult medical malpractice cases even more difficult for a patient to save  the cost of a large cup of coffee at McDonald’s per doctor office visit?  

Permit me to add one thing.  This post is not intended to pick on Dr. Hardi.   The article in the Post did not indicate that Dr. Hardi was complaining about the amount he paid for malpractice insurance or that he had any problem with a legal system that holds everyone – including doctors – responsible for the harm they cause.  I wrote this post because we rarely get an opportunity to know how many patients doctors actually see and thus have difficulty translating the annual cost of malpractice insurance to a cost per patient contact.  What the article reveals is that at Dr. Hardi’s office – and many, many others, I assume –  each patient pays less for malpractice protection per contact with a doctor  than he or she pays for a full price movie ticket. 

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