IP - Professional Liability and Medical Malpractice 3-5pgs not including title pg

Malpractice Insurance

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One of the complex business functions that a doctor's office or health care facility must

perform relates to the avoidance, reduction, or transference of risk associated with

operating a business, and in particular, a medical practice business. This presentation will

provide an overview of insurance in general and discuss some specifics of medical

malpractice insurance.

Overview of Insurance

Insurance is a contractual relationship between two parties, the insured (the individual or

organization who purchases an insurance policy) and insurer (organization issuing the

insurance policy). The basic purpose of insurance is for the insurer to be financially

responsible to a third party in the event the third party seeks to obtain reimbursement for

negligence, fault, or other incident. The contractual relationship is detailed in an insurance

policy outlining the responsibilities of each party. In general, the insurer has obligations of

payment of any claims for the specific type of coverage (such as medical malpractice or

general liability) detailed in the policy. However, it is important to note that policies often

contain language of what they will not cover also, or "conditional coverage" provisions.

The main obligation of the insured is to pay a premium for the insurance policy—usually a

monthly, quarterly, or annual payment. The insured also has the responsibility to ensure

that it adheres to other specific provisions generally related to issues of reducing risk (for

example, operating within one’s scope of practice).

Medical Malpractice Insurance

Medical malpractice insurance, otherwise known as medical professional liability, is a

specific type of insurance that pertains to coverage of risk associated with negligent act(s)

and omission(s) related to the provision or failure to provide proper health care services.

Physicians and other independent medical practitioners who operate a medical practice can

purchase their own professional liability insurance. Facilities often purchase large umbrella

medical malpractice insurance for all medical care workers within the facility. The

individual practitioners or a facilities’ risk manager must assess what types of insurance is

needed and the amount of insurance needed. There are many factors that determine this,

including, but not limited to the following: what the state laws require of licensed

individuals and facilities, insurance requirements of any contracts the individual or facility

may have (e.g., managed care contract), the type of medical care provided, and the amount

of risk (i.e. financial loss) the individual or facility can handle on its own or needs to

transfer in the event that a lawsuit is filed against them.

Given that all aspects of health care are always in a state of change, health care

practitioners and facilities alike must frequently assess what the risk factors are in the

environment and make determinations about whether they have the proper general liability

Malpractice Insurance

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and medical malpractice insurance. Examples of some of the current factors that need to be

considered include implementation of new technology, use of new medications, and

potential restrictions placed on practitioners by health plans.