The possibility of a medical malpractice lawsuit raises costs for hospitals, according to researchers from Duke University and the Massachusetts Institute of Technology (M.I.T).

“They found that the possibility of a lawsuit increased the intensity of health care that patients received in the hospital by about 5 percent — and that those patients who got the extra care were no better off,” according to an article published earlier this year in The New York Times.

Doctors, such as radiologists, are petrified of missing a diagnosis, writes Gloria Gonzalez in Business Insurance. “Diagnosis-related failures are the single largest root cause of claims at 33%, resulting in indemnity payments slightly higher than the next five highest categories combined.”

These large pay-outs are costly for insurers, but the current regulatory/legal set-up is far from the only issue when it comes to medical malpractice hurting insurers’ bottom line. Cost of operations is a MAJOR factor, according to the American Academy of Orthopaedic Surgeons.

“Another component to (medical malpractice) premium determination is the insurance carrier’s cost of operations. Underwriting operations, loss-prevention departments, claim departments, and expensive information technology systems, in combination with distribution, marketing, and corporate management costs, ultimately add to premiums. Companies have looked at various ways to limit the expenses of marketing directly to customers to avoid commissions and other costs associated with third-party underwriting and claims service administrators.”

Insurers’ hands are obviously tied when it comes to changing governmental regulations or convincing patients to be less litigious. Perhaps the easiest way for insurers to lower medical malpractice costs and streamline the process is to obtain a single core policy administration system that is both flexible and configurable. Medical malpractice laws change, depending on the state (in the U.S.) or region, and the marketplace evolves quickly – with new regulation constantly coming down the pike.

Business users require the ability to create or modify medical malpractice products via a single software system, without coding. This significantly improves speed-to-market and lowers operational costs. A single system will empower carriers to quickly make changes to existing products, launch new lines of business and capitalize on the latest trends…all while lowering costs.

It’s almost business malpractice not to consider this upgrade…

For more information, please check out our one-page Spotlight document: 4 Tips for Turning Medical Malpractice Complexity into Opportunity.


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John Pettit

John Pettit John Pettit is the head of Sapiens’ North American P&C Insurance Platform, with nearly two decades of experience in the P&C insurance market. He previously served as the founder, CEO and president of Adaptik Corporation, a North American insurance software firm that was acquired by Sapiens.