Joining a large physician group practice offers numerous benefits, such as increased patient volume, stability, and collaborative support. However, one aspect that requires careful attention is your malpractice insurance coverage.
Whether you’re transitioning from a solo practice or another group, understanding how malpractice insurance works within a large group practice is crucial for protecting both your career and your patients.
In this article, we break down the key considerations for doctors when it comes to malpractice insurance, ensuring you’re fully informed before making the move.
Understanding Medical Malpractice Insurance
Medical malpractice insurance is essential to protect physicians from the legal costs and damages associated with claims of negligence or malpractice. There are two primary types of coverage:
- Claims-Made Policy: This type of policy covers claims filed while the insurance is active. Once the policy ends, any claims filed after that period won’t be covered unless you purchase tail coverage.
- Occurrence Policy: With this type of coverage, the policy covers incidents that occurred during the policy period, even if the claim is filed after the policy ends. This eliminates the need for tail coverage but may come at a higher premium.
Each policy type has its pros and cons, and it’s important to determine which option works best for you in the context of your new group practice.
For a deeper comparison of both policy types and how they affect large physician groups, you can read this practical guide on Claims-Made vs. Occurrence Malpractice Insurance for large physician groups.
How Group Malpractice Policies Work
In a large group practice, malpractice insurance is often purchased under one comprehensive policy that covers all physicians. This shared policy typically reduces administrative burdens and may lower premiums. However, it’s important to understand how it affects your individual coverage. Some things to keep in mind include:
- Shared Liability: With a group policy, all physicians may share liability. This means that if a claim is made against one member, it could affect others in the group.
- Tail Coverage: If you’re transitioning from an individual practice, ensure that your past activities are covered. This is where tail coverage comes in, which protects you for any claims that arise after you’ve left your previous practice.
Key Considerations for Doctors Joining a Large Group Practice
1. Review Entity Coverage
When joining a larger medical group, make sure to thoroughly review the malpractice insurance policy the group provides.
While many large groups offer malpractice insurance as part of the employment contract, it’s important to understand whether the policy is claims-made or occurrence-based, what the coverage limits are, and any exclusions.
2. Learn How the Policy Is Managed
Malpractice insurance premiums calculation and coverage limits can vary based on your medical specialty. Specialties like surgery or obstetrics tend to have higher premiums due to the nature of the work. Ensure that the group’s policy aligns with your specific specialty and consider whether additional coverage might be needed to protect you from specialty-related risks.
3. Plan for Tail and Nose Coverage
Doctors moving from a claims-made policy to a group policy need to ensure there are no gaps in coverage. Some groups require doctors to buy tail coverage when they join; this extended reporting endorsement protects prior acts but must usually be paid within a short period after canceling the old policy.
When switching carriers, a new policy with nose coverage may substitute for tail coverage. Tail coverage can cost double or more of the final annual premium, and nose coverage may increase premiums by 10 to 30 percent.
4. Evaluate the Insurer and Policy Terms
The reputation and financial stability of the insurance carrier matter. Be sure to evaluate the insurer’s size, ratings, and track record of defending claims.
Additionally, carefully review the policy terms, including any clauses that may limit your control over how claims are settled. For example, some policies require your consent before a settlement can be reached, while others may not.
5. Align Coverage Types and Limits
When multiple doctors join under a single group policy, their previous coverage may differ. Aligning coverage often requires decisions about policy type. Physicians with occurrence policies may simply stop paying the old premium and rely on the new coverage.
Those coming from claims-made policies may need to purchase tail coverage or opt for a new claims-made policy with an earlier retroactive date. Groups should also review per claim and aggregate limits and ensure that individual limits do not exceed the corporate policy limit.
The common limit of one million dollars per claim with a three-million-dollar aggregate may be sufficient, but higher limits provide more protection.
6. Communicate and Seek Expert Advice
Large physician groups consist of individuals with different preferences and risk profiles. When some members do not want to join a group policy, the group may need to find compromise solutions, such as purchasing separate tail coverage for each doctor’s prior policy.
Consulting an experienced advisor is essential. Working with a financial professional who has expertise in malpractice insurance can help align policies, manage billing, and address risk management questions.
7. Consider Additional Coverage Needs
Malpractice insurance is only one part of a large practice’s risk management program. Other policies that large medical groups may require include workers’ compensation, general liability for accidents at the office, property insurance, directors’ and officers’ liability, HIPAA liability, and insurance for billing errors.
Disability insurance protects the practice if a key income generator becomes disabled, and employment practices liability coverage shields the organization from allegations of discrimination or wrongful termination.
Wrapping Up Your Coverage Decision
Joining a large physician group offers many advantages, but it’s essential to review the malpractice insurance implications carefully.
Understanding how group policies differ from individual coverage and the steps needed to align your personal coverage with group needs is critical. By evaluating your insurance options, asking the right questions, and consulting with an expert, you can ensure that your malpractice coverage meets your needs, protects your career, and provides peace of mind for your future.
At PLI Consultants, we specialize in helping doctors navigate the complexities of malpractice insurance, offering expert guidance to ensure that your coverage fits your needs, both individually and within a group setting.
