Every physician group executive knows that claim experience, whether excellent or poor, will have a corresponding impact on medical professional liability renewals. Individual physicians keep track of their own claims since medical malpractice claims are very personal in nature, but the group may not maintain deep insight into claim trends and their impact on renewals. Mid-size to large physician groups with loss experience must utilize detailed claim analytics packages to address common trends, optimize renewals, and review the feasibility of captive & loss-sensitive insurance programs.
The first advantage of implementing periodic claim trend review is gaining insight into crucial frequency and severity metrics. This means understanding how often claims occur and how much money is paid or incurred. After an initial review, physician group leadership and the board risk management committee can decide how to address claim trends that are high in frequency and/or severity. For example, a sizeable Florida-based radiology group discovered that a lung cancer misdiagnosis was driving their claim severity over the last five years. Since then, they now place more emphasis on lung cancer detection within their clinical peer review committee. Documentation of any new or existing clinical risk management-related initiatives is paramount because it’s critical to bolster the risk management narrative with as much detail as possible.
Additionally, profitability measures in the analytics package will illuminate leadership to an underwriter’s methodology in pricing the group at renewal. The group should work with their broker to craft the right story around severe claims, severity/frequency trends, and the clinical risk management narrative as referenced above. Regarding appropriate deductible/retention selection, the broker should always provide data showing the historical and projected out-of-pocket impact at various deductible levels and structures (also called loss stratification.) From there, leadership can make an informed decision congruent with their risk appetite and optimal cash flow.
Historical claim analytics and future loss projections (loss pick) are crucial for a larger physician group when considering loss-sensitive (high deductible) or captive programs. Most, if not all, captives will not provide options without this data. As we continue to experience a hard medical professional liability market, many physician groups are evaluating loss-sensitive programs and captives with the prospect of enhancing cash flow. Of course, a laser-like focus on loss avoidance and reduction is required to experience the financial upside of these alternative risk transfer arrangements.
Physicians who need help navigating the complexities of medical malpractice claims should lean on experts who have proven success helping clients. Contact us today to learn more about how our claim analytics can help optimize your medical malpractice renewals.