Prometheus 6

As I said yesterday.

Malpractice Costs Up 150% Since 1999, Hospitals Say
By THOMAS J. LUECK

The cost of medical malpractice insurance in New York City, Westchester County and on Long Island has risen by nearly 150 percent since 1999, creating severe financial strains that have limited patients' access to such specialties as obstetrics and gynecology and made New York a "crisis state" for doctors, according to a report released yesterday by a hospital trade group.

The trade group, the Greater New York Hospital Association, which represents medical institutions in New York, New Jersey, Connecticut and Rhode Island, said its analysis had focused on 34 hospitals in and around New York City. On average, it said, the hospitals have been billed for malpractice premium increases of 27 percent a year for five years.

"The increasing cost of malpractice insurance has become a pressing burden for New York's financially fragile hospitals," said Kenneth E. Raske, the association's president.

Now, here's the thing.

We need to remember the economic rationale behind law suits. You sue when someone fails and the cost of their failure doesn't fall on them. A law suit shifts the burden to the responsible party. Punitive damages is for egregious failure, avoidable failure or intentional failure. Now, how do you set a limit on the cost of failure before the failure occurs? How to you even set a value on the damage cause by, say, a child dying of brain damage? There are cases that are purely punitive, and should be.

Humans being human, of course, you have folks trying to game the system and I suppose folks feel limiting the amount to can receive in any settlement removes an economic incentive to to do. But the limits are peculiar because there's no limit on economic damages planned...if you lose a loved one you're capped at $250,000 but if you lose $500,000 because you couldn't attend a meeting you can get that all back. And besides, if you're actually concerned about health care rather than people who didn't deliver the health care properly, the incentives are applied in the wrong place.

Since 2000, the number of insurers providing malpractice insurance to New York area hospitals has fallen to four from six, the association said. It said the New York insurers, compared with those in other states, had had some of the worst financial results, paying out $1.44 in claims for each dollar collected in premiums.

And it said many of the nation's largest malpractice awards, some exceeding $90 million, had occurred in New York City. Although such awards are routinely reduced before the cases are settled, the study listed huge settlements reached in recent years, including one for $50.1 million in Manhattan in 2002 and another for $10.6 million in Brooklyn in 2000.

If there's so many failures you can't afford to pay for them, you can pay less…or fail less. Insurance companies advertise about programs to improve your driving or fire safety you can implement in exchange for lower insurance rates. Why not do the same thing for hospitals? Give them the incentives to eliminate the factors that cause error (primary of which, in NYC anyway, is a critical understaffing of hospitals…talk to the union reps, they'll have the figures at their fingertips). That way we get lower premiums AND better health care.

And that is what we want, right?