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As the cost of medical liability insurance continues to spiral out of control, both physicians and hospitals are grasping for solutions through legislation, regulation and each other. Joining together with the state’s hospitals, the Ohio Hospital Association (OHA) Board of Trustees last week approved the creation of a new hospital-owned medical malpractice liability insurance company for physicians and hospitals to help stabilize the Ohio medical malpractice market.
The new endeavor is intended to steady Ohio’s wobbly medical liability market by introducing a new option from a viable, trusted source – Ohio hospitals. Insured physicians and hospitals will still pay an actuarial-based market rate on their premiums.
“This venture is not designed as a quick fix. Benefits of our new company are long-term – to provide stability and predictability in the medical liability market over time, “ said James Castle, OHA President and CEO. “Ohio’s citizens deserve to have access to the best quality care available. This endeavor will help ensure the availability of physicians and hospitals for all Ohioans.”
The new company will have enough assets to cover a portion of Ohio physicians and hospitals’ medical malpractice insurance needs, leaving the majority of coverage to insurance companies already operating in Ohio. Plans are for the new company to provide $25 million in capital. The OHIC Insurance Company, currently the largest medical liability insurer in Ohio, provides about $90 million in insurance for Ohio doctors and hospitals each year. About 70 Ohio hospitals are insured through OHIC.
OHA will partly fund the new venture with a $10 million dollar investment, with remaining investments coming from Ohio hospitals. OHA’s contribution comes from the sale of OHIC, originally created by OHA in 1978 to provide Ohio hospitals with medical malpractice insurance. OHA sold OHIC in 1997. The same model used in creating OHIC is being utilized for the new business.
With ownership lying in the hands of OHA and Ohio hospitals, the company will be provider-focused, enabling open communication and a good working relationship between the company and its insureds. Though rate decreases are not expected, the new company will help halt the steep rise in liability premiums in the long-run.
As an Ohio-licensed company, the new venture will be covered under the Ohio Insurance Guarantee Fund through the Ohio Department of Insurance, which provides additional safeguards to participating physicians and hospitals.
OHA anticipates the company will be licensed and ready to sell insurance by December to meet the Jan. 1 liability insurance renewal deadline for many physicians.
In the coming weeks, OHA will be taking a number of initial steps to further the creation of the new company including filing an application for a license with the Ohio Department of Insurance. OHA will also offer a circular to hospitals and conduct regional meetings to provide hospitals more information about the company and their potential involvement.
Additionally, OHA will be contracting with a third party administrator to run operations of the company. An eight-member Board of Directors and physician advisory committee will soon be elected to govern the new business. Until that time, the OHA Executive Committee and chair of OHA’s Medical Malpractice Task Force will serve as officers of the board.
Creation of a medical malpractice company was one of several options under consideration by the OHA Board of Directors over the past several months to address the medical malpractice crisis in Ohio.
The Ohio Hospital Association was established in 1915 and currently represents approximately 170 hospitals and 40 health systems throughout Ohio. OHA's mission is to provide leadership by working with member hospitals to meet the health care needs and improve the health status of the communities they serve. Visit OHA’s Web site at www.ohanet.org. For information on top health care issues, visit the online OHA News Media Center at www.ohanet.org/media/.
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