Dominican Hospital parent weighing change in malpractice coverage

SANTA CRUZ -- An increase in malpractice insurance coverage is under review by Dominican Hospital's parent, Catholic Healthcare West, sparking concerns among doctors locally and across the state.

The review comes as hospitals nationwide face pressures to cut costs.

Catholic Healthcare West is the largest hospital company on the West Coast, with 40 locations, so a change in its policy could set a precedent and have far-reaching consequences, doctors say.

"Any upward change in the coverage requirement will raise premiums and will raise costs for everyone," said Dr. Peter Sokolove, president of the California chapter of American College of Emergency Physicians. "A letter is going out today to CHW expressing our opposition."

Most of the discussions have taken place in meetings closed to the public, but an Aug. 2 letter from Dustin Corcoran of the California Medical Association, which represents 35,000 physicians, to Catholic Healthcare West's chief executive officer, Lloyd Dean, explains why doctors are worried.

According to Corcoran, Catholic Healthcare West was considering requiring medical staff members at Dominican Hospital to carry malpractice insurance for $2 million per occurrence and $6 million per year.

That is double what most California doctors have now and nearly triple what Indiana doctors have, $750,000 per occurrence.

Doctors could face an increase of 30 percent to 40 percent in their insurance premium,

which could force many of them to limit or close their practices, according to Corcoran.

If this requirement were to apply to all 8,000 physicians with medical staff membership at Catholic Healthcare West hospitals, the cost to physicians would be "devastating," according to Anna Parks and Dr. Brian Potts of the California chapter of the American Association of Emergency Medicine, editors of the chapter's news service.

The extra cost would be a particular burden for physicians who work in a practice with 10 or fewer doctors.

"It's a threat to small groups," said Dr. Donaldo Hernandez, president of the Santa Cruz County Medical Society.

"We like having these small groups," he added, citing the quality of care.

"No way could we afford it," said Dr. Jeannine Rodems, the medical society's president-elect, who has a family practice at the Cedar Medical Clinic with Dr. Drusilla Lee.

"Whether you're in a small, medium or large group, it's adding to the cost of providing for patients," said Sokolove, a physician at a busy emergency room in Sacramento.

He pointed out that emergency physicians are mandated to see every patient regardless of the ability to pay.

"The average ER physician gives $150,000 in uncompensated care a year," he said. "There are cuts by federal, state and private payers. No one wants to reimburse for care that is so essential for our patients."

Unchanged in 25 years

The California Medical Association said there hasn't been a response from Catholic Healthcare West, but CHW spokeswoman Tricia Griffin provided a statement to the Sentinel.

"Like other hospitals across the country, CHW is re-evaluating the minimum requirements for medical liability coverage that corporate medical groups contracting with us carry," the statement said. "In some cases, these requirements have not been modified in 25 years, and in that time medical care has grown more complex and carries greater risks."

The statement said the contracts under evaluation are not between Catholic Healthcare West and individual physicians, but between CHW and corporate medical groups, especially those providing services in high-risk specialties.

At Dominican Hospital, this would include doctors in the emergency room, radiologists, anesthesiologists and pulmonologists working in the intensive care unit.

The contract with the doctors that provide emergency services is the first to expire, providing an opportunity for review.

Dr. Greg Whitley, a member of that physician group, said he could not comment due to negotiations.

Is coverage adequate?

Corcoran, representing the California Medical Association, contends the existing malpractice coverage requirement is adequate because the average payout is less than $200,000.

"Very few claims exceed $1 million so requiring higher limits doesn't make sense," Sokolove said.

Corcoran reviewed 20 years of claims data and found 1.1 in 1,000 claims result in a settlement or verdict against a doctor that is more than $1 million.

His worry is that higher policy limits "will invite larger settlement demands" and "pad the coffers of trial attorneys," weakening the state's medical malpractice reform law, which caps awards for pain and suffering at $250,000.

Looking to cut costs

In California, the health care sector faces a double whammy of state budget cutbacks and looming federal health care changes.

Hospitals expect leaner days, thanks to reports citing unnecessary hospitalization and avoidable complications as reasons health care costs so much.

A hospital system in Atlanta cut 5 percent of its workforce through layoffs and attrition; a system in South Carolina cut jobs and closed a community health center.

Catholic Healthcare West signed a contract in July with CEP America, a Emeryville company owned by its more than 1,500 emergency medicine physicians, for two hospitals in Ventura County.

CEP America, which supplies physicians to nearly 80 hospitals, boasts its wait time to see a provider as 20 minutes below the national average.

Friends and colleagues

In Santa Cruz, a group of about 14 doctors who provide those services to Dominican Hospital face competition, according to Hernandez, a hospitalist at Dominican.

A subcommittee is reviewing the options to give a recommendation to Dr. Nanette Mickiewicz, Dominican's president and chief executive officer, who will make the decision.

"These are our friends, our colleagues," said Hernandez. "Our kids go to school together. How do you extract the emotional aspect? It's near impossible."

He said this contract could set a precedent for negotiations with other doctor groups when their contracts expire, radiologists, pathologists, hospitalists, neonatologists, physicians working in intensive care and anesthesiologists.

In Santa Cruz County, emergency room physicians face a special challenge because a disproportionate number of people with addiction or mental health issues are frequent visitors to the hospital's emergency department.

Seattle, facing a similar situation, invested $2 million on a home for homeless alcoholics that saved $4 million in one year. Santa Cruz County hasn't had the resources to do something similar.

Hernandez questions whether a change of emergency room doctors would change the emergency room patient mix.

"I have a healthy skepticism it would change," he said.