Tort crisis gamble: Physicians weigh odds of going bare

A tactic first implemented nearly 20 years ago is getting a second look.

By Tanya Albert amednews correspondent — Posted April 5, 2004

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Berwyn, Ill. -- Along a stretch of 1950s-style brick buildings in west suburban Chicago, a bright white banner with "Patients First" in bold red lettering catches the eye. The solo physician's motto: "Fees so reasonable you don't need insurance."

And neither does the doctor running the 6-month-old family practice.

Family physician Mark Macumber, MD, gave up his medical liability insurance last year after realizing he would need to shell out $40,000 to continue seeing patients at a city health clinic, a service he did in addition to his full-time employed position.

"I'm not advocating everyone should do it, but it is drawing attention to a problem," Dr. Macumber said. "As long as we keep paying the premiums, companies will keep charging them."

"Going bare" is not an option for every physician, but an increasing number are considering it, despite some obstacles.

At least 13 states require physicians to carry liability insurance in order to keep their medical license or to qualify for state liability reforms such as caps, according to the American Medical Association and state medical societies.

Also, hospitals often require that minimum levels of insurance be held by physicians on their medical staffs, and health plans typically require insurance of their panel members.

AMA policy allows each hospital medical staff to determine for itself whether it will require liability coverage for member physicians.

And some Florida physicians, particularly those in high-risk specialties, have gone bare since the last liability crisis in that state nearly two decades ago. Now as rates there once again skyrocket, family physicians and internists are joining the ranks of those gone bare.

"This is extremely mainstream [in Florida] and it will be mainstream across the U.S.," said physician financial adviser Marc Singer, with Singer Xenos Wealth Management in Coral Gables, Fla. "It's logical."

Self-insurance better for some

Physicians in South Florida in the mid-1980s were believed to be the first in the nation to drop their insurers and insure themselves. At first the idea was considered unusual, but today it's fairly commonplace there.

An estimated 3,000 to 5,000 of Florida's MDs and DOs have gone bare, according to Florida Dept. of Health statistics and financial adviser estimates. A 2003 American College of Obstetricians and Gynecologists professional liability survey found that nationally, 5.1% of ob-gyns reported not being covered by liability insurance, but the rate was 33.3% among Florida ob-gyns.

Favorable homestead exemption laws may have helped physicians make the choice to forgo insurance. But to go bare, doctors still must prove to the state that they have $250,000 to cover an award. Also, because so many physicians in Florida have gone bare, hospitals allow physicians without insurance to join their medical staffs, and health plans allow the uninsured physicians on panels.

Singer and his business partners say that a physician paying $40,000 or more annually for $250,000 in insurance should consider self-insuring.

"A physician may be able to afford it, but is it worth it?" Singer asks.

His logic: If a doctor were sued once every six years, he or she would have already saved $240,000 in premiums. That's close to a $250,000 policy limit.

There also is more pressure on the plaintiff to settle when a bare physician is sued.

"Negotiations start from zero and go up. They don't start at $1 million and come down," Singer said.

Internists and other specialists who traditionally haven't been lawsuit targets are beginning to feel more susceptible as other doctors in the state have gone bare. That's one reason South Miami, Fla., internist Steven Pabalan, MD, and others in his group are considering forgoing insurance.

"We've talked to a number of physicians who don't have insurance and they sleep fine at night," he said.

Pioneering in Illinois

Indeed, Dr. Macumber is sleeping just fine.

Unlike doctors in South Florida, health plan panels and hospital medical staffs won't work with him because he is uninsured. But he's carved out his own niche.

When he gave up his full-time job as an employed physician to go it alone in the working-class town, he decided to offer his services at a rate that the uninsured would be able to afford.

He charges $40 for a level III office visit, about one-third the going rate in the Chicago area. He figures he needs to see about 15 patients a day to meet his bills and earn an income.

He has patients sign a waiver acknowledging that an insurance company won't be there to pay out if they sue him. Dr. Macumber, who is still paying off student loans, has a mortgage and drives a 1996 Toyota Tercel, also explains to patients what he is doing and why.

So far, he is seeing about eight patients a day and breaking even. About 75% of the patients don't have health insurance. The other 25% do have insurance, but come to him for other reasons, such as a desire for privacy.

Dr. Macumber, who has a lawyer on retainer, plans to open a second location, in the northwest corner of Chicago, this spring.

He's enjoying offering his skills to patients who otherwise wouldn't receive care, and he doesn't miss dealing with HMOs and other health plans.

"It's back to the basics," Dr. Macumber said. "It's almost like being a country doctor, but I'm in Chicago."

He's met with politicians to talk about liability and the uninsured. He's also fielded calls from physicians in Illinois and other states who are interested in what he's doing.

Some have already taken preliminary steps.

The medical staff at Provena St. Joseph Medical Center in Joliet, Ill., overwhelmingly voted to ask hospital trustees to allow physicians to go without insurance and still keep their privileges. At press time, the trustees had not voted. Ob-gyn Russell Khater, MD, who sees patients at the hospital, said he hadn't decided that he would go bare. But he said physicians want the option.

"There's no real light at the end of the tunnel," Dr. Khater said. "We need any safe harbor possible."

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What the states say

At least 13 states require physicians to carry a minimum level of liability insurance for licensure and/or to qualify for state liability reforms.

Require insurance for licensure

Colorado, Connecticut At least $500,000 per incident and $1.5 million aggregate annually.

Kansas At least $200,000 per incident and $600,000 aggregate annually.

Massachusetts $100,000 to $300,000 coverage or an equivalent bond.

Missouri Minimum $500,000 insurance to be on a hospital medical staff in a county with more than 75,000 people.

New Jersey, Wisconsin Minimum $1 million per occurrence and $3 million aggregate annually (or a letter of credit in some instances in New Jersey).

Pennsylvania Amounts vary based on the year the policy was renewed.

Require insurance for reform protections

Indiana Minimum $250,000 per occurrence and $750,000 aggregate. Physicians can also file and maintain surety bonds with the insurance commissioner in these amounts.

Nebraska At least $200,000 per occurrence and $600,000 annual aggregate to qualify for state cap.

Nevada Minimum $1 million per occurrence, $3 million aggregate annually to qualify for state cap.

New Mexico At least $200,000 per occurrence or $600,000 cash deposit with state insurance superintendent.

New York A minimum $1.3 million per claimant and $3.9 million for all claimants to qualify for the state's excess liability pool.

Sources: American Medical Association and some individual state medical societies

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Before you bare it

Here's a checklist of things to consider. Experts also recommend consulting with a financial planner and/or attorney.

  • Is going bare legal in your state?
  • Could you keep privileges at area hospitals, and if not, how would that affect your practice and income?
  • Could you remain on health plan panels? If not, can you get by on a cash-only arrangement with patients?
  • Are you paying more than $40,000 annually in liability insurance premiums? If so, some financial advisers advocate going bare and self-insuring.
  • Will you be able to sleep at night knowing you don't have a safety net?

Sources: Singer Xenos Wealth Management in Coral Gables, Fla., and interviews with physicians who have gone bare

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External links

Information on Patients First and family physician Mark Macumber, MD (link)

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