Hospital Groups Acquiring Physicians’ Private Practices, How It Affects Liability

April 20, 2011 by matray

side note: Is a hospital-focused healthcare system the future of American Medicine? And if so, what are the liability implications? This is a great look at what looks to be the future of healthcare delivery in the United States. Physician-owned and operated medical practices appear to be going the way of the dodo. Across the U.S., hospital systems are buying out private medical practices at a rapid pace. Between 2005 and 2008, the percentage of medical practices owned by hospitals soared from 25.6% to 49.5% according to the Medical Group Management Association’s 2008 Physician Compensation and Production Survey ( In 2010, for the first time, the number of new physicians who joined hospital-owned practices exceeded the number of first-year practitioners who became employees of medical groups owned and operated by physicians. Smaller physician practices are struggling under the strains of the recession and a rapidly evolving regulatory climate. Facing reductions in government reimbursements, an increase in the number of patients who are unable to afford their medical bills, uncertainty over the health care reform law, and the impending expense of the federal government’s urging providers to purchase electronic health records systems, many physicians in private practice are succumbing to hospital systems’ offers of economic certainty, reduced hours and therefore better quality of life, more resources, and the ability to devote more of their time to patient care. Hospital systems are on a private practice buying binge in anticipation of health care reform and the resulting need for an increased supply of doctors as more people obtain health insurance and seek primary care. Financial incentives created in the reimbursement scheme also support an integration of primary care physicians and hospitals. For example, the payment system for hospitals incentivizes efficiency because payment amounts are based on diagnosis codes, not necessarily the duration and scope of a hospitalization; however, the fee-for-service payment system for physicians does not necessarily induce the same amount of prudence. Hospitals have an improved ability to eliminate duplicative tests and provide patients with faster care where they control the physicians managing that care. Saying Goodbye to Private Medical Practices: Pros and Cons from a Liability Perspective • Impact of Electronic Health Record Systems On the advent of electronic health records systems’ major role in healthcare management, physicians and hospital risk managers need to remain cognizant of the threat of lawsuits, the importance of documentation in medical claims, and practice thorough and defensive documentation. Plaintiffs’ lawyers are seizing the opportunity provided by the rapid adoption of electronic health records systems – along with the associated risks and challenges – to argue that doctors are letting these electronic systems perform the evaluating and thinking in lieu of the physician’s more thorough clinical analysis. (more…)

Posted in Risk management issues | Leave a comment
New York Gov. Cuomo Proposes Malpractice Damage Cap As Means to Shore-up Budget, Loses Fight with Assembly

April 7, 2011 by matray

Declaring New York State “functionally bankrupt” in February, newly-elected Gov. Andrew Cuomo proposed a $132.9 billion budget that would reduce year-to-year spending for the first time in more than a decade. Key to his proposal was slashing the state’s projected healthcare spending, specifically cutting $2.85 billion in Medicaid funding for this fiscal year and $4.6 billion in the 2012-13 budget. New York has the most expensive Medicaid system in the nation, currently serving one in four New Yorkers and costing more than twice the national per capita average. In order to cleanse New York’s Medicaid program of inefficiencies and waste, Cuomo appointed a Medicaid Redesign Task Force in January of 2011, which consisted of lawmakers as well as representatives of labor and healthcare interests. The task force issued 79 recommendations for the approval of the Governor and Legislature. The recommendations included establishing a $250,000 cap on non-economic damages in cases of medical malpractice as well as creating a Neurologically Impaired Infant Medical Indemnity Fund to compensate brain-damaged infants. “This comprehensive and consensus proposal achieves the dramatic reform this state needs to reduce costs without jeopardizing patient care,” Cuomo said. “This approach was not about making cuts but redesigning a program whose costs are unsustainable.” The unexpected endorsement of a non-economic damage cap by a governor from the Democratic Party elicited immediate condemnation from patient-rights advocacy groups and the New York State Bar Association, which testified that capping damages would “unjustly discriminate against accident victims who suffer the most devastating physical and psychological losses.” The Cuomo Administration countered that the $250,000 cap on non-economic damages is necessary to improve the predictability of future awards and settlements, decreasing the cost of medical professional liability insurance for the state’s physicians and hospital system, which would help them better adjust to other cuts in the Medicaid system. “Gov. Cuomo’s proposal reflects the fact that preserving quality and access in medicine, while reducing cost, will require fairness in the civil justice system,” said Cecil Wilson, MD, president of the American Medical Association, in support of the governor’s push for tort reform. “Every dollar spent on the broken medical liability system is a dollar that cannot be used to improve patient care.” After a month-long, often-contentious debate that pitted Gov. Cuomo’s office and the Republican-controlled State Senate against the State Assembly’s Democratic-majority, the parties ultimately announced an agreement for the 2011-2012 budget that excluded any cap on non-economic damages. The plan to create an indemnity fund for neurologically injured infants, however, did remain in the budget.

Posted in MPL company news, Tort reform | Leave a comment