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Physician Employment And Legislative Trends Top Issues For Hospital Risk Managers, According To Annual Aon/ASHRM Report

CHICAGO, Oct. 17, 2012 /PRNewswire/ -- The health care field is undergoing a fundamental change in the way care is delivered and financed, reshaping the risks organizations face on a daily basis. According to the 13 th annual Aon/ASHRM Hospital and Physician Professional Liability Benchmark report, released today by Aon Risk Solutions, the global risk management business of Aon plc (NYSE: AON), hospital risk managers are grappling with greater physician integration and changes in state legislation that influence professional liability costs.


State LegislationNew types of state legislation are emerging as the Affordable Care Act is implemented. Two states recently enacted laws that address professional liability, or medical malpractice, and are focused on delivering quick and fair compensation to patients suffering a medical injury.  
  • Massachusetts enacted a law that adopts a mandatory 180-day cooling off period, where providers are given the opportunity to disclose the event, offer an apology and negotiate compensation.
  • New Hampshire lawmakers passed an act establishing an early offer alternative in medical injury claims. The program provides patients the option to settle medical liability claims within 90 days of injury.

"These states are at the forefront in changing the environment for health care providers as the laws move away from traditional tort reforms, such as caps on non-economic damages, and move toward restructuring the patient/provider relationship," said Erik Johnson, Health Care Practice leader for Aon's Actuarial and Analytics Practice and author of the analysis. "This legislative trend shares a synergy with the health care reform legislation in that they are focused on innovations that would promote efficiencies and unlock savings that are currently ingrained within the system."

Physician Employment TrendsHospitals are employing more physicians and using their own self-insurance facilities to provide medical malpractice insurance coverage. Hospitals point to cost savings, streamlined claim defense and uniformity of risk management practices as important benefits of such a strategy. The self-insurance of employed physicians also involves unique challenges, such as consideration of physician tail and prior acts coverage. According to survey respondents, the majority of health care systems provide tail coverage for physicians leaving the organization, but most (67 percent) do not respond to claims related to prior acts occurring before the physician's employment. 

"The ability to mitigate, transfer and/or manage the current traditional risks facing health care providers should be considered an assumptive core competency of health care providers and their business partners," said Ron Calhoun, managing director of Aon Risk Solutions' Health Care Practice. "The new health care landscape will be impacted by a range of developments, such as new alignments across all providers and care settings, and among multi-hospital and multi-physician groups; payer-provider links for risk sharing; data integration and patient management; and financial and data transparency. IT infrastructure and process improvement will be critical to success."

Dominic Colaizzo, chairman of Aon Risk Solutions' Health Care Practice adds, "This challenging environment increases the pressure on health care providers to seek the most appropriate and cost-effective insurance programs."  

Aon Risk Maturity Index InsightData from Aon's Risk Maturity Index, a risk management capabilities diagnostic tool, indicates that hospital systems are at a more advanced level of risk maturity than other industries. These systems score higher than the global average on several components of risk maturity such as casualty/liability risk management strategy and employee engagement.

Hospital systems on the leading edge of the risk maturity scale also incorporate operational and financial risk information in decision making and governance processes. This includes on-going strategic planning and the evaluation of significant opportunities, such as new product development and new market entry. These organizations set themselves apart through their ability to revisit key decisions and strategic outcomes and leverage lessons learned.  

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