As malpractice insurance renewal and non-renewal notices arrive in the mail, many physicians who, in the past, did not concern themselves with the reality of rising premiums, are now weighing whether to continue coverage. Unaffordable premiums were a problem for high-risk specialists such as obstetricians and neurosurgeons who, in South Florida, have been bare for years. For most lower risk doctors, the insurance premiums were “rational” and thus, it seemed justified to pay them. But now, as the year-over-year premium increases have compounded, it makes sense to revisit the issue of when to go bare for traditionally ‘immune’ specialties such as Internal Medicine and Pediatrics as well as hospital-based practices such as Anesthesia and Radiology. Review: Why Doctors Went Bare By going bare, doctors save on the premium cost and become their own risk managers. If physicians are sued, they can use a portion of those saved premiums to hire an attorney and offer a reasonable settlement.

Many of our bare physician clients feel strongly that they are not sued as often as those who carry liability insurance. If sued, it is believed those cases may be settled faster and cheaper. Conversely, high policy limits may be the bait that attracts plaintiff attorneys. It is more difficult for lawyers to try to collect on a judg-ment by attaching physician assets than it is to obtain a check from a malpractice insurer. Moreover, if physicians properly protect their assets, it is virtually impossible for attorneys to collect. Since plaintiff attorneys work on contingency, there is not much incentive to sue bare doctors. Going bare discourages lawsuits by lowering a physician’s financial profile.

Doctors had been reluctant to go bare because health insurers and hospitals required malpractice coverage for affiliation and privileges. This situation has changed. Most South Florida hospitals and plans have altered their bylaws and rules to allow for bare doctors. What is the Tipping Point? Is It Flexible? In the past, our rule of thumb was if premiums rise to $40,000 or more annually, consider going bare. If you are sued once every 6 years, you will have $240,000 in saved (and hopefully, properly invested) premiums to draw upon. We still feel that this is an appropriate “line in the sand”. However, a doctor’s total cash inflow should now become part of the discussion. A family practitioner earning $100,000 may not be able to afford a $20,000 premium. A surgeon earning $400,000 may be able to afford a $100,000 premium, but it may not be worth paying for only $250,000 of coverage. We are seeing an increase in lower risk physicians going bare for this reason. In our experience, bare doctors end up financially better off self-insuring rather than paying premiums. This includes physicians who have had multiple lawsuits. Any doctor considering going bare should speak with a colleague who has dropped coverage. With hindsight, virtually all consider it the right decision.

Conclusion Before going bare, it is critical to assure that all of your assets are pro-tected. We suggest you meet with an expert financial planner and/or attorney to review your situation. We at Singer Xenos feel that as more doctors in Florida go bare, it will lead to a dramatic change in our malpractice system. In time, the trend of suing doctors for malpractice may no longer be a lucrative endeavor.