NJ sees 250% increase in its malpractice premiums

New Jersey hospitals’ medical malpractice insurance premiums jumped an average of 250% in the past three years, and 65% of facilities said skyrocketing insurance rates are driving some physicians out of the practice of medicine.

Those findings were among the results of a new survey by the New Jersey Hospital Association (NJHA) to gauge the effects of rising medical malpractice insurance rates on the state’s health care industry.

Survey is a wake-up call’

More than half of NJHA’s 106 member hospitals responded to the survey, and their responses provided a sobering study of escalating costs, reduced availability of insurance, and ultimately, worries that patients may experience difficulty accessing certain health care services," says Gary Carter, NJHA’s president and CEO.

"We should consider this information a wake-up call," Mr. Carter says. "The fact that malpractice insurance is becoming more expensive is no great surprise. But we should be alarmed that these skyrocketing prices are driving many physicians out of medicine and threaten to have far-reaching effects on our state’s health care system."

According to the survey, seven out of 10 New Jersey hospitals experienced increases in their professional liability insurance premiums last year. The average hospital saw its premium jump from $373,328 in 1999 to $942,539 this year, which is an increase of 252%.

In other findings, the survey showed:

  • 78.2% of hospitals said their physicians had experienced sizeable increases in their medical malpractice insurance premiums.
  • 74.5% of hospitals said they have had one or more physicians dropped from coverage entirely.
  • 64.8% of hospitals said they have had physicians cease the practice of medicine or plan to leave practice because they were dropped from coverage or could not afford the premium increases.

Respondents said OB/GYNs and surgeons were the types of physicians who most often reported dramatic malpractice insurance price hikes. In this survey, only hospital executives were surveyed.

Their responses included reports on malpractice insurance premiums for physicians within their facilities. Respondents were asked about the impact rising rates have had on their hospitals. Many cited the overall fiscal impact on hospital budgets.

Taking a hit to the bottom line’

One hospital administrator called the impact a "direct hit to the bottom line, which means less money for salaries, equipment, supplies, building maintenance, etc."

The survey also asked respondents’ opinions on the potential future impact of skyrocketing medical malpractice insurance rates. The most common response? A loss of ability for hospitals to provide specialty services to their communities.

Betsy Ryan, NJHA general counsel, says the survey results send a loud warning that increasing malpractice premiums will hurt patient care.

Too many physicians will leave

"These survey responses make it clear that what’s at stake is much more than hospitals’ bottom lines and physicians’ earnings," Ms. Ryan says.

"Without relief from these rapidly escalating premiums, more and more physicians will be driven out of health care, and hospitals will face difficult decisions about what services they will — and will not — be able to provide. It’s the patient who will feel the ultimate impact," she explains.