Malpractice Claim Costs Stable into 2014

Malpractice costs may not be as scary for physicians as they once were — the cost is growing at the slowest rate in at least 14 years, according to a report.

The Aon/ASHRM Hospital and Physician Professional Liability Benchmark report estimated that in 2014 medical malpractice will represent $0.60 per every $100 of hospital revenue, which is an average of $135 per hospital admission.

"We project zero growth in the number of malpractice claims," Erik Johnson, health care practice leader for Aon's Actuarial and Analytics Practice and author of the analysis, said in a statement. "Health care professional liability claims are subject to a complicated set of geographic, societal, and technological influences. These forces are largely in-check, resulting in a low inflationary environment for medical malpractice."

The report projects the loss rate for hospital general liability is $119 per occupied bed equivalent and the average claim will be $36,000 in 2014. Aon and ASHRM expect the frequency of claims will be 2.97% per class 1 physician. The severity of claims is projected to be $203,000 per claim.

The projected loss rate for obstetrics claims in 2014 is $171 per birth making it one of the costliest specialties in term of malpractice just like it was in 2013.

Loss rates will vary greatly around the country, though, with Florida’s projected loss rate at $7,440, which is far higher than second place Pennsylvania with just $4,720. Meanwhile Indiana has the lowest projected loss rate for 2014 at just $800.

"Risk management involvement and investment in patient safety have translated into improved medical malpractice results,” Ron Calhoun, managing director of Aon Risk Solutions Health Care, said in a statement. “Hospitals are focused on containment of traditional risks such as medical malpractice while they take on new opportunities introduced by the Accountable Care Act and the transition from fee-for-service models and into outcome-based models."