The New York Times
Around the country this summer, at least half a dozen hospitals have closed obstetric wards, others have curtailed trauma services, and a string of rural clinics have been temporarily shuttered as a result of soaring costs for medical malpractice insurance.
Mercy Hospital in West Philadelphia closed its maternity ward on Friday, and the Largo Medical Center, near Tampa, Fla., plans to do so in December.
In the last few weeks, the only trauma center in Las Vegas closed for 10 days; the Central Florida Regional Hospital in Sanford, Fla., reduced surgical procedures for five days; and a handful of rural clinics across Mississippi sat empty in the summer heat for part of a week. All the closings were because of problems with malpractice insurance.
Increasing malpractice costs over the last two years have led doctors to order batteries of costly exams and limit risky procedures; many doctors decided to retire early. Now the costs are directly affecting medical institutions and the care they deliver to patients, according to interviews with hospital administrators in many states.
In all, more than 1,300 health care institutions have already been affected, according to a survey by the American Hospital Association. The survey, released in June, found that 20 percent of the association’s 5,000 member hospitals and other health care organizations had cut back on services and 6 percent had eliminated some units. Many of those units are obstetric wards, where medical mistakes have historically led to expensive jury awards and settlements.
“It is likely that this is going to get much worse,” said Carmela Coyle, the senior vice president for policy at the hospital association. “We’re likely to see more closures of services.”
So far no deaths have been attributed to the cutbacks, but hospitals say risks to patients are rising.
“Our trauma system has basically fallen apart,” said Sam Cameron, the chief executive of the Mississippi Hospital Association. “There is a so-called Golden Hour in which a patient with a serious head injury needs to see a specialist like a neurosurgeon, and in some areas of our state that service is no longer available.”
In West Virginia, two hospitals closed maternity wards and several hospitals no longer have either neurosurgeons to treat head injuries or orthopedists to mend broken bones, said Steven Summer, the chief executive of the West Virginia Hospital Association.
In New York City, many of the biggest hospitals have kept their insurance prices down by creating their own nonprofit insurance companies. No reductions in service have been reported in the city or elsewhere in the state.
Steven M. Visner, an insurance specialist at Ernst & Young, the consulting firm, said many hospitals had inquired about starting their own insurance companies. But it takes more capital than many of them have, he said, and exposes the institution to greater risk than buying coverage from a commercial carrier.
The New Jersey Hospital Association says insurance costs in the state have nearly doubled in the last year. Gary Carter, the chief executive of the association, said that although most services were being maintained, some New Jersey hospitals say specialists are balking at taking on-call duties in emergency rooms.
“But this is just beginning in New Jersey,” he said. “We’re expecting to see hospitals increasingly cutting back on services.”
Insurance costs have also risen sharply in Connecticut, said Ken Roberts, a spokesman for the Connecticut Hospital Association. But he said the association had received no reports of service curtailments.
Around the country, hospitals say they are cutting services both because the high cost of their own insurance is overwhelming and because specialists, unwilling to bear the new costs for insuring their practices, are becoming scarce.
Some specialists, for example, have abandoned life-long practices and started anew in states where malpractice insurance prices have yet to escalate. Many obstetricians and surgeons are restricting themselves to low-risk procedures. Still other specialists have become consultants, providing advice but leaving actual treatment to others to avoid medical malpractice insurance altogether.
The costs have become truly staggering. Premiums for doctors have doubled and tripled, in some cases, rising to as high as $200,000 a year for obstetricians in Fort Lauderdale and Miami. But even those prices begin to look mild compared with gargantuan insurance bills for hospitals.
In Philadelphia, for example, the cost of malpractice insurance at Thomas Jefferson University Hospital, which operates several hospitals, doubled this year, to $32 million. As a result, on June 30, Jefferson closed the maternity unit in its Methodist Hospital in South Philadelphia and cut 270 jobs at Thomas Jefferson and at the Jefferson Hospital for Neuroscience.
In June, the Brandywine Hospital closed its trauma center, which served the southwestern suburbs of Philadelphia, and the Paoli Hospital, also near Philadelphia, closed its paramedic unit, said Andrew Wigglesworth, the president of the Delaware Valley Health Care Council.
Many obstetrics units have struggled financially because of growing competition and reduced payments from the federal government and private insurers. That was true of the obstetrics unit that closed on Friday at Mercy Hospital in West Philadelphia.
“We had been subsidizing the program because we had the resources,” said Gavin Kerr, the chief executive of the Mercy Health System. “But as the malpractice premiums increased, that dramatically shrunk the resources.
“There are other obstetrics programs in the community,” Mr. Kerr added, “but you want to have a baby as close to home as you can, in as comfortable a place as you can.”
Concern for the safety of mothers grows when maternity wards close. Since early July, when the Atmore Community Hospital in southern Alabama shuttered its ward, women have had to travel 15 miles, to Brewton, Ala., for a hospital with an obstetrics department.
The roots of the crisis are complex. The insurance companies, President Bush and the American Medical Association largely fault the rising cost of awards in malpractice lawsuits. From 1995 to 2000, the average jury award jumped more than 70 percent, to $3.5 million, and a few claims since then have run to more than $40 million, according to Jury Verdict Research in Horsham, Pa.
J. Robert Hunter, the insurance director of the Consumer Federation of America, attributes the soaring premiums to insurance companies’ mismanagement. The insurers acknowledge that through most of the last decade they dropped premium prices while battling for more business from doctors and hospitals, depending for profits on financial reserves and returns from booming equity and bond markets. Now, with Wall Street in a slump, the insurers say they must increase prices to survive. Mr. Hunter and other consumer advocates say the price shock is intolerable.
Mr. Bush and the A.M.A. are campaigning for a federal law that would limit claims for pain and suffering to $250,000 in each malpractice case. The medical association is also urging state legislators to take similar action. Already this year, lawmakers in Pennsylvania and Nevada have imposed lawsuit limits, and Gov. Ronnie Musgrove of Mississippi is expected to call a special session of his state legislature to confront malpractice insurance costs.
Advocates of reducing the amount insurers have to pay for medical mistakes often cite California as a model. In the 1970’s, California set a ceiling of $250,000 for jury awards for pain and suffering, and malpractice insurance prices have not soared there. But Harvey Rosenfeld of the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif., says patients have suffered. Because of the cap on payouts, he said, many lawyers refuse to represent malpractice victims, making it difficult for them to pursue claims.
Joanne Doroshow, the executive director of the Center for Justice and Democracy, a national consumer group based in Manhattan that focuses on the civil courts, says the threat of high jury awards helps keep doctors and hospitals practicing at their best.
Though many doctors find Ms. Doroshow’s reasoning offensive, and nearly all favor limiting jury awards, some acknowledge that the pressure to avoid any claims that could push their insurance costs even higher is causing them to adopt practices that enhance patient safety.
“We can’t control what the insurance companies are charging us,” said Dr. Craig Miller, the chief medical officer for Baptist Health Care in Pensacola, Fla., which operates the community hospital in nearby Atmore, Ala. “And we can’t control whether there is going to be tort reform. But we can control whether we are creating a safe environment. And we have a lot of patient safety initiatives.”
Dr. Miller said the new safety procedures did not help Baptist Health Care with its insurance costs this year. They rose nearly 70 percent, to $2 million, for less coverage than before. But he said that if the hospital group had not demonstrated its concern for safety, it might not have been able to find an insurer to provide coverage at all.
In the town of Waterville in central Washington, surrounded by wheat fields and orchards and home to about 1,000 people, a rural clinic known as Douglas County Hospital District No. 2 shut down for a week in late May.
The clinic’s insurer quit the malpractice business because of heavy losses and, at first, no one else would provide coverage. Finally, the clinic’s insurance agent obtained a policy. But it cost $50,000 — four times more than last year.
To finance coverage, said Elonna Rejniak, the clinic’s office manager, the local government is going to ask voters in November to approve a special, one-time tax on their homes and businesses.
“It’s an increase in maintenance and operating costs because of the insurance increase,” she said.