What criteria should you look for in a malpractice insurance carrier? How much coverage do you need? Should you purchase additional coverage in the event of physical losses such as fire or stolen property? What about life or disability insurance? It’s time to update your insurance policies and prepare for financial security.
You have worked long and hard to build a successful practicereaching many important milestones in your career: Graduating from college, beginning practice, opening your first office and seeing your first patients to name a few. Yet one important future milestone is yet to be achieved-financial security.
As a DC looking toward securing a financial future, you must examine more than items that affect the bottom-linesuch as patient count, cash flow, overhead, etc. You should also closely examine financial decisions such as purchasing malpractice insurance, financing programs (for example, buy-versus-lease decisions), adding other types of insurance (such as business owners protection, long-term disability, employment practice liability, life, etc.) and participation in educational programs. If left unattended, all that may be left of your practice are a few memories and a never-ending heartache of what might have been.
Malpractice Insurance
One of the most critical decisions for any DC involves the purchase of malpractice insurance. You must protect your patients and your assets in the event that an unfortunate incident occurs. In today’s litigious society and in the world of managed care, malpractice insurance is a necessity.
Even the most cautious of practitioners can find themselves on the receiving end of a malpractice allegation. A large number of all chiropractic malpractice suits are initiated more than a year after treatment, according to NCMIC Group data. Amazingly, some are actually initiated more than five years after treatment. This is a key reason why, as a practitioner, you should not only own a malpractice policy, but you need to keep your policy current without a lapse of coverage.
However, while most chiropractors understand the need for protection, some DCs instinctively believe that if they are careful and conscientious or think if they provide low-risk treatment, their patients will never sue them. Unfortunately, such an attitude simply doesn’t agree with the facts. According to NCMIC Group data, statistics indicate four out of every 100 insured chiropractors in the United States have a pending malpractice claim against them. Because many of the suits are completely without merit or foundation, being properly protected cannot be overemphasized.
Once you have made the decision to purchase malpractice insurance, choosing the type of coverage (claims-made or occurrence), the desired liability limits and the best carrier are among the most important choices that you will make to protect your practice and your professional reputation in the years ahead. In determining the malpractice insurance carrier, as well as the liability limits, practitioners should base their insurance purchase on three key areas:
- Financial stability.
- Reputation within the profession.
- Ease of accessibility.
Financial Stability
The New York Times recently reported that 60% of the costs involved in a malpractice suit are related to court costs and legal fees. With this in mind, it is critical that the insurance company you choose has the resources to provide you with expert legal counsel throughout the litigation. A good way to check is to assess a company’s financial position.
It is important to establish that the company you are considering is stable: Look at company assets; ask to review a copy of the annual report or summary; check on complaints or problems through your state insurance department and find out how long the company has been serving the chiropractic profession. By spending a little time initially investigating the company, you can save much anguish should a claim arise in the future.
Another consideration is whether the malpractice insurance carrier is admitted or licensed by your state’s insurance department. The “admitted or licensed” status is important because it indicates that the company has voluntarily subjected itself to state regulation. This measure protects you by providing access to the company’s annual statements, rate information and policy filing as a matter of public record. A “licensed” carrier is required to have on file with the insurance department for each state rates and forms they are utilizing. The state insurance department will review rates to make sure the rates being charged by the insurer are adequate, not excessive, and not unfairly discriminatory.
Reputation in the Profession
It’s always important to choose a malpractice carrier that has more than simply a passing interest in your profession. Look for companies that support chiropractic research and educational programs, take an active role in state and national professional organizations and are generally knowledgeable about chiropractic issues facing the profession today and into the Twenty-First Century.
You should be wary of choosing an insurance company and policy based solely on rates. A number of companies get into the malpractice insurance business with the intention of making a lot of money quickly. Unfortunately, these carriers often know very little about the insurance business or chiropractic and often fail within a few years. They lure DCs in with bargain ratesthen when the claims start to come in, there may not be adequate surplus or assets available to pay any settlement or judgment and legal expenses. The DC can be left unprotected with his or her financial future at risk. In short, all things being equal, make sure that the company you choose offers competitive rates that are consistent with the kind of coverage that is best for you.
How Much Coverage Do You Need?
Once you have chosen a malpractice carrier, the next step in securing your financial well-being is determining the liability limits you need to protect your practice. Although one of the most frequently asked questions is about coverage, there really is no “set” answer. That’s because the choice of liability limits is a personal one; however, many managed care organizations require you to be insured and carry specific insurance limits to be eligible to participate in the managed care group.
When you choose the limits of liability for your policy, remember it is stated in two parts. The first part is the per claim coverage; the second, or aggregate limit, is the maximum amount payable per policy year.
Examples of coverage are:
- $100,000/$300,000
- $200,00/$600,000
- $250,000/$750,000
- $500,000/$1,000,000
- $1,000,000/$3,000,000
- $2,000,000/$4,000,000
When deciding on how much coverage you need, it may be wise to consult your accountant, lawyer or other business advisor. There is not a predetermined formula to use, but remember, you have at risk all of your business and personal assets, as well as your reputation and the goodwill of your practice. Furthermore, having adequate coverage in the event that an unfortunate incident occurs will provide both you and your patients with peace of mind.
Financing Programs
How much money do I need to fund my practice? How and where am I going to get it? Financing your practice and the debt that may accumulate are important issues that need to be addressed in the quest for financial security. Issues regarding financing your malpractice insurance premium, borrowing for equipment, buy-versus-lease equipment decisions, credit-card interest rates and the like are some of the other issues that weigh heavily on even the most established practitioners.
In today’s ever-changing world, it is extremely important for you to assemble a core group of financial advisors to help you navigate through the maze of financial issues facing practitioners today. The most financially astute and successful chiropractors typically work closely with an accountant, lawyer and financial/estate planner. These advisors can play key roles in providing the practitioner with the information needed to make critical financial decisions that will affect their fiscal future. However, these people serve only as ‘advisors’ and the final decisions relating to your monetary future are up to you.
In addition to estate planning and tax issues, practitioners are faced with daily business-related issues that may involve obtaining information from other types of industry-related professionals. Some of these decisions may include:
- Locating financing for equipment purchases
- Choosing between an equipment loan or lease arrangement
- Locating financing for malpractice insurance premiums
- Locating loans for other business needs
- Locating a credit card to use for business or personal needs
These day-to-day business decisions can have a lasting effect on your financial future and should not be taken lightly. At times, the cost of doing business for even the most experienced of practitioners can be somewhat overwhelming. It is important that you work with knowledgeable people who understand your business. Look for an organization that offers a variety of custom-fit financial products and services that can help you achieve financial security. Seek out organizations that are committed to working closely with you to provide information on business-related issues that can help you make decisions regarding your financial future.
Additional Types of Insurance Protection
Business Owners Protection Insurance (BOP)
Protecting your business is another financial planning issue to consider. As with the professional side of your practice, the business side has a liability risk that can be covered by insurance. One way you can protect your practice is by purchasing Business Owners Protection (BOP) insurance. This commercial property liability insurance provides protection in the following ways. For example, if you are responsible for your premises up-keep, in the event that a patient is injured on the premises and a claim is brought against you, BOP insurance would cover you. The policy can also protect you for physical losses that might occur during the course of your business; for example, building loss as a result of fire, stolen property, lost income if your practice has to be temporarily shut down because of a loss, etc.
Many doctors do not have insurance in place to thoroughly cover the risk on the business side of their practices because their policy is not specifically designed for chiropractic. BOP is an important addition to your insurance portfolio and provides protection at a very reasonable cost that may help to ensure your financial future. With the coverage in place, you gain financial stability and help in recovering from losses that could otherwise devastate your practice. You also get back to work, your staff gets back to work and the flow of economic activity can resume.
Long-Term Disability Insurance
Another type of insurance need that many practitioners overlook is long-term disability insurance. Have you thought of what would happen to your practice income, and ultimately your personal income, in the event that you suffer a disabling condition? Needless to say, your lifestyle would change dramatically if you were no longer able to provide economic support for you and your family.
One way to provide the needed protection is by purchasing long-term disability insurance. This insurance provides you with protection against loss of income that can result if you are ill or injured and unable to work. Payment is in the form of a monthly benefit and most long-term disability plans coordinate with other disability programs, Social Security and workers’ compensation programs to provide you with security and income.
Disability insurance is an important addition to a practitioner’s financial portfolio because it protects the doctor’s income, indemnifies and provides rehabilitation support in the event that the doctor develops a disabling condition. However, not all long-term disability plans are affordable. Premiums, coverage and acceptance vary widely by company, if you qualify to purchase the coverage at all.
Employment Practice Liability Insurance
Employment Practice Liability Insurance (EPLI) protects you from employment-related claims if you are sued for discrimination, harassment or wrongful termination. Before selecting an EPLI insurance carrier, look for financial stability. Be certain that the carrier you choose not only offers the security of the product, but risk management counsel as well. In addition, when reviewing the EPLI policy, make sure the language within the policy clearly defines employment practice liability and the types of coverage offered. The aforementioned issues, once only alleged in a corporate environment, are being seen even more in physicians’ offices with one or more employees.
Life Insurance
One of the most elementary forms of insurance, many practitioners simply don’t carry enough life insurance for themselves or their family members. A must for all practitioners, an up-to-date life insurance policy will go a long way in helping protect your business and family in the event of your death. Once you make your purchase decision, choose between term or whole life products as you formulate your financial program. A qualified insurance agent can help explain the differences to you before a selection is made. In short, a life insurance policy helps you in maintaining peace of mind and security for you and your family.
Continuing Education Programs
Yet another financial planning tool used by several practitioners is the investment of time, energy and in some cases, money in continuing education programs. Today’s litigious environment-in tandem with restrictions presented by the changing health care environment-bring new challenges to the chiropractic profession that ultimately involve protecting one’s financial security. That’s why it is important for all DCs to stay current with new developments and embrace sound risk management strategies that will create a safe and healthy environment in which to treat patients. To address these critical challenges, practitioners should take advantage of continuing education programs and seminars related to contemporary issues and changes in clinical or professional protocols.
In short, the more knowledge a practitioner retains, in theory, the better they will become by reducing the possibility that they may lose their practice as a result of a malpractice lawsuit. Many companies offer a variety of educational programs for students and practicing doctors designed to instruct them in sound risk management practices. Many of these seminars discuss a variety of risk management strategies and techniques and provide an overview of chiropractic malpractice issues. Some programs focus on clinical information designed to decrease practice risk and enhance patient care.
It’s Up to You
Ultimately the decisions regarding your financial future are in your hands. As a successful practitioner, it is extremely important for you to take the necessary steps to protect your hard-earned practice. I encourage you to put the same amount of time and energy into protecting your investment as you have in building it. It’s not too late to begin your assent to the next career milestone financial security.
