THA: Texas Hospitals See Benefits of Liability Reform

The Texas Hospital Association (THA) reported that nearly a year after the passage of sweeping medical liability reform, Texas hospitals are seeing a significant drop in their liability costs and using the savings to reinvest in their communities.

According to a study released by the THA, some hospitals began to see a drop in their premiums in 2004, with an average decrease of 8 percent. For the upcoming 2005 renewal period, a significant number of hospitals have reported either a decrease or a leveling off of their premiums. An overall 17 percent decrease was reported by Texas hospitals for the period 2004-2005.

“The positive benefits of the comprehensive tort reform measures passed in 2003 are beginning to materialize,” said Richard Bettis, CAE, president/CEO of THA. “Patients across the state have better access to health care services, and hospitals have more resources to invest in caring for their communities instead of defending themselves against frivolous lawsuits.”

Although hospitals experienced a flurry of lawsuit filings prior to the effective date of the new law, nearly 40 percent of those cases were dismissed, and the number of cases filed since then has dropped 70 percent. As the number of lawsuits and size of judgments continues to decrease, professional liability premiums for hospitals will continue to decline also, Bettis predicted. This enables hospitals to recruit new physicians and specialists and, ultimately, expand access to health care services.

“I see the benefit of medical liability reform firsthand in my hospital and community,” said Dan Stultz, M.D., president/CEO of Shannon Health System in San Angelo and chairman-elect of THA. “My hospital is beginning to see a savings in its overall liability costs, and our ability to recruit physicians—particularly specialists—has improved dramatically.”

According to the study, many hospitals have indicated that they plan to reinvest their financial savings in patient care. For those hospitals indicating a focused activity for these savings, more than half plan to maintain or expand their patient safety programs or enhance patient services and access to care. Other hospitals will focus their savings on maintaining/updating medical equipment, subsidizing various reimbursement shortfalls, or maintaining/expanding coverage for uninsured/underinsured patients.

“Texas hospitals appreciate the leadership of Gov. Rick Perry, Lt. Gov. David Dewhurst and Speaker Tom Craddick in making medical liability reform a reality. These leaders helped develop an approach that gained bipartisan support, and Texans are benefiting from their efforts,” Bettis said. “THA’s study shows that tort reform is beginning to lower liability insurance costs, which in turn, provides resources to enhance patient care.”