Healthcare Consolidation on the Rise: What Does This Mean for Malpractice Claims?

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Healthcare Consolidation on the Rise What Does This Mean for Malpractice Claims - Moghim Medical ConsultingOne of the most predominant trends of the last few years in the health care industry has been the merger of organizations, from major health insurers to regional hospitals, the enthusiasm for acquiring competitors has never been higher.  While healthcare consolidation hasn’t always benefited the consumer, it has often put provider organizations in a more secure position.  This is especially true with regards to malpractice claims.

From 2005 to 2015, there were 409,088 medical malpractice claims filed in the United States, resulting in 148,909 payments. Almost all of these payments were the result of out-of-court settlements, as only about 0.33 percent of malpractice cases end in a trial. The average malpractice compensation for inpatient cases was $363,000, and $290,000 for outpatient cases.

While malpractice litigation has had a chilling effect on the practice of medicine, the recent wave of consolidation may help protect providers.  As the number of physicians operating independently diminish due to merger with hospitals or provider networks, there will be fewer physicians without the backing of large organizations. A survey by Merritt Hawkins found that only 35 percent of physicians characterized themselves as independent in 2014, and this number continues to decline at a steady pace.

These larger corporate entities pose a much less appealing target for malpractice attorneys for a number of reasons. These larger organizations possess greater financial resources to conduct protracted legal battles. Not only can this sustainability deter many actions from being filed, but it also raises the likelihood that the outcome is more favorable to the defendant, i.e. settlement, earlier resolution or smaller payout.

The legal defense teams hired by these companies are not only more resourced, but typically possess extensive experience and can better advise embattled doctors. For years, the principal evidence in a malpractice case is often the testimony of the physician, but stronger corporate safeguards are likely to eliminate any unnecessary communication between parties.

Finally, as the size of these medical organizations grow, there is less likelihood that plaintiffs will be able to hire medical experts to support their cases.  It is already quite difficult to find a physician willing to testify against a colleague, and this resistance should only strengthen as fewer physicians will risk earning the ire of large provider organizations. Some companies may even go so far as to prohibit testifying in malpractice cases.

There is also a political effect of health care consolidation. As medical organizations grow, they are more willing and capable of influencing lawmakers through lobbying efforts. This renewed involvement in the political arena is likely to yield dividends for the health care industry that pays out billions of dollars each year in malpractice awards and legal fees. We have already seen powerful groups like the health insurance lobby influence legal initiatives like the recent American Health Care Act; other lobbies with a vested interest could push through tort reform that would make malpractice claims almost impossible to litigate except in the most egregious circumstances.

Article Written by:  Robert Moghim, M.D., – CEO Moghim Medical Consulting Inc.

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