What Is an Acceptable Annual Increase in Malpractice Premiums? The Physician Perspective

• Objective: To determine what annual increase in malpractice premiums would be acceptable to academic physicians at a large institution. • Methods: All 270 full-time physician faculty in the department of medicine at Johns Hopkins University School of Medicine in 2004 were invited to participate in this study. A contingent valuation approach was used to assess willingness to accept a specified increase in annual premiums. The median acceptable malpractice rate increase was calculated using logistic regression and assessed the influence of faculty characteristics using multivariable regression. • Results: 197 (73%) faculty responded. Thirty percent were female and two thirds were clinicianinvestigators. The median acceptable annual increase in malpractice premiums was 6.4%. Clinician-educators were more likely than clinicianinvestigators to accept any of the proposed annual increase in premiums (odds ratio [OR], 3.23 [95% confidence interval {CI}, 1.18–8.87]). Compared with their younger counterparts, older male faculty were more willing to accept any of the assigned rates (OR, 30.3 [95% CI, 2.53–361.22]). Older female faculty were 90% less likely to accept any suggested rate increase compared with older male faculty (OR, 0.10 [95% CI, 0.02–0.59]). • Conclusion: Academic physicians believe that small annual increases in malpractice rates are acceptable. Knowing what physicians judge to be acceptable is relevant for understanding the frustration associated with recent rate increases and may be pertinent to efforts aimed at moving toward a resolution of the malpractice crisis. The impact of increased malpractice premiums has been widely publicized, especially during the 2004 election year. Higher rates have led some physicians to limit their patient practices, relocate, or retire early [1–5]. Rising rates and fear of litigation have led some physicians to practice “defensive medicine,” which causes overutilization of resources (eg, unnecessary consultations and testing) and reduced care (eg, avoidance of high-risk procedures, refusal to treat certain patients) [6]. Malpractice rates have risen steadily at many academic medical institutions in recent years such that premiums now account for an increasing percentage of income generated from patient care activities [3,7]. Rates increased nationally in 2001–2002 by 15% for physicians in general surgery, internal medicine, and obstetrics/gynecology but totaled over 100% for these same specialists in certain states [8]. To avoid loss of physician services, some hospitals have provided medical malpractice subsidies to their clinically active physicians [9]. To offset incurred costs, leaders at academic medical institutions are considering a variety of plans to decrease malpractice expenses [3]. Strategies may include asking faculty with limited clinical involvement and those whose practices fail to generate positive income to stop providing medical care. Whatever decisions are made, academic institutions and their clinically active physicians will need to work together in addressing this issue given its potential impact on salaries, expenses, and patient care. Given all of the factors that contribute to malpractice premiums and the potential direct effects of increased rates on clinical faculty, we conducted this study to better understand what annual increase in malpractice premiums would be judged as acceptable by physicians in the department of medicine at a large academic institution.