New Physicians: The Hidden Expense of Medical Malpractice Insurance, Part 1

The first of three parts, this series addresses issues every new doctor should be aware of.

Each year at the end of summer, we find a fresh crop of recently licensed physicians seeking positions within medical groups and establishing their own new practices.  If you’re one of them, congratulations!  All that hard work is finally going to start to pay off!

Whether coming on with an existing group or hanging out your own shingle, you’re about to be barraged by a stream of unanticipated and unfamiliar details, things left for “Later” while you were focusing on your medical education.  Here’s a bit of practical knowledge to help avoid potential pitfalls in your blossoming career.  Protect yourself by understanding your medical malpractice insurance options. Professional (Medical) Malpractice insurance is an essential part of any practice or business.

Consider these scenarios, which every new physician can learn from:

1) If you’re joining a Group, be sure to review your contract and understand the financial implications of cancelling an insurance policy, should you choose to leave the group.

Here’s the scenario:  Dr. Smith completes Residency and goes to work for ABC Medical Group.  ABC Medical Group agrees to provide the doctor with medical malpractice insurance coverage while part of the Group.  Unfortunately, Dr. Smith quickly becomes unhappy with ABC Medical Group and decides to take another job offer, (or set up a new practice which is better able to serve patients.)  Pursuant to the terms of the contract between Dr. Smith and ABC Medical Group, Medical Malpractice insurance coverage ends once Dr. Smith leaves the group.  The contract is silent on the issue of coverage for lawsuits that arise from patient contact while with ABC Medical Group, though the suit wasn’t filed until after doctor left the practice.  Only when the suit is filed does Dr. Smith realize there was no protection against litigation once they parted ways.  To remedy this and help poor Dr. Smith, ABC Medical Group’s insurance carrier offers Dr. Smith an extended reporting policy (often referred to as tail coverage) which can be purchased for a mere $8,000 (which must be paid in full within the next 30 days).  Dr. Smith did not anticipate this expense, and now has to figure out how to come up with an extra eight grand in a month.  Not the best news of the season.  Had the new doctor gotten a free consult with Presidio ahead of time, potential pitfalls like Tail Coverage would have been brought up, saving a lot of stress and eight thousand dollars.

Check back for the next installment, Long Term Strategy!

New Physician Malpractice Insurance Article Series

Part 1 – New Physician Insurance Scenarios
Part 2 – New Physician Insurance Strategy
Part 3 – New Physician Insurance Risk