Survey: Medical Malpractice Premiums Jump 50 Percent; Average Cost Tops $1.4 Million Per...

Business Editors & Health/Medical Writers

PRINCETON, N.J.--(BUSINESS WIRE)--Jan. 28, 2003

A new survey by the New Jersey Hospital Association shows that the average Garden State hospital experienced a 50 percent increase in medical malpractice insurance costs in 2002, bringing

The multi-year trend shows that the average hospital's premium has skyrocketed by 207 percent since 1999.

A full 100 percent of the hospitals responding said their rates had increased in 2002, despite the fact that 14 percent had reduced their coverage levels in an effort to rein in costs.

The findings were based on a survey of all of New Jersey's 119 hospitals conducted in December. The survey yielded a response rate of 46 percent of the state's acute care hospitals.

"This survey confirms our worries that the crisis is not only deepening but also reaching into every corner of the state," said NJHA President and CEO Gary Carter. "Each and every hospital in New Jersey is struggling with this problem."

Carter cited one finding that he found particularly troubling: a growing reluctance by physicians to treat charity care patients. One-third of the hospitals said the medical malpractice crisis has made physicians think twice about treating charity care patients because it could make them more vulnerable to medical malpractice claims and rising rates.

Like physicians, hospitals also must purchase medical malpractice insurance that covers their staff plus any physicians employed by the hospital. Hospitals report that the growing premiums are cutting into their operating budgets and threatening to drain money away from other areas of the hospital. The survey shows that hospital medical malpractice insurance premiums, as a portion of total hospital operating budgets, have nearly doubled in the last four years.

"We've already seen the impact of this crisis in the physician community, with doctors closing their practices or dropping high-risk services," said Carter. "Now it's clear that hospitals are facing tough choices, including the possibility of eliminating services or cutting staff to cover the growing costs of insurance."

In fact, the survey revealed that one out of every 10 hospitals has been forced to lay off staff because of rising malpractice insurance rates.

The survey also found that:

-- One out of every four hospitals - nearly 27 percent - has been forced to increase payments to find physicians willing to cover the Emergency Department. Physicians are increasingly reluctant to take on such assignments because of the greater liability exposure.

-- Hospitals report that more and more physician specialties are being hit by the crisis. While a previous NJHA survey in March 2002 found that OB/GYNs and surgeons were primarily affected, the new survey finds a deepening impact for neurologists/neurosurgeons, radiologists, orthopedists, general practitioners and emergency physicians.

NJHA, based in Princeton, is a nonprofit trade organization committed to helping its members provide accessible, affordable and quality healthcare to their communities.