Hospitals may help with malpractice premiums--carefully.(Practice Trends)

BALTIMORE -- Will the hospital you have privileges at help you pay your rising malpractice premium? Possibly, but there are barriers that may prevent it, Gerald Griffith said at a forum sponsored by the American Health Lawyers Association.

Hospitals have a vested interest in making sure malpractice premiums are affordable, said Mr. Griffith, a Detroit lawyer. That's because exorbitant premiums "result in physicians leaving the community or discontinuing portions of their practice. Physicians often ask what hospitals can do to help them."

To help out, hospitals can start up or affiliate with a captive insurance company, risk retention group, or commercial insurance program; they can issue a "true subsidy" for a premium that the physician is already paying; or they can make some fee-for-service arrangements in which the physician is employed by--or contracted to--the hospital and is therefore eligible to have his or her premiums paid. Each of these options has advantages and disadvantages, Mr. Griffith noted.

Due to some states' insurance laws, captive plans--those financed by the hospitals themselves--may have to be based outside the hospital's home state or even its home country, he said. But the cost-saving features of such plans can keep the hospital's costs below those of the commercial market.

For example, the plan may require the physician to agree to a joint defense with the hospital in the case of a lawsuit, as long as no conflict of interest is involved. Or it may require the physician to waive consent for a settlement, in which case "the doctor would be advised as to how the case is going" but would not be allowed to decide not to settle.

The hospital may require the physician to participate in some sort of risk management program.

True subsidies have advantages but can only be used in particular situations without running afoul of federal laws, Mr. Griffith explained. One place true subsidies can be offered is to recruit doctors in health ...