Hospitals hiring physicians or acquiring group practices. We partner with hospitals and health systems to ensure the incoming physician has quality tail coverage and minimize the expense which helps both the hospital and the individual.
Whether your system is willing or able to assist the incoming physician with some or all of the tail insurance expense, or not you are onboarding a new physician and the tail expense can be a huge obstacle. Reduce tail cost sometimes make the ultimate difference in a fair market value proforma estimate of whether or not compensation demands can be met.
There are a multitude of reasons a hospital or health system should NOT cover a newly hired physician’s prior acts in their captive or self-insurance vehicle. We don’t have enough space to address the issues here but a careful financial analysis is a good start, followed by a lengthy discussion with the legal department about federal Stark and Anti Kick Back laws, “consideration” and “reimbursement” related to tail insurance expense.</p>
If your hospital purchases first dollar commercial malpractice coverage for employed physicians and wraps the self-insured program around and is excess to commercial coverage consider your alternatives. Many a bad faith situations have arisen from such arrangements.
If your strategy is to cover a new physician’s prior acts exposure via your captive insurance company and “save” the expense of tail insurance, be aware that the entire balance sheet of your hospital is now at risk for liability created prior to that physicians employment. Hard cost savings is easy to quantify – potential liability is not but ultimately you will be paying every dollar of defense and indemnity of any claims so consider carefully if your funding is adequate and if assumption of liability is prudent.