The tug of war for the future of medical cover
South Africa has always been a country that is renowned for the quality of its healthcare. However, over the past few years, soaring costs have plagued the medical industry making it an industry that is experiencing challenges for both patient and insurers alike.
Added to this is the threat of massive legal action in the cases of medical malpractice suits that could be brought against doctors. This is apparently increasing at such a rapid pace that many hospitals are now closing maternity and neo-natal wards because of the costs of insurance.
The harsh reality
Sam Baleson, a Legal Risk Advisor at Aon South Africa, reports that a combination of the high-risk nature of obstetric and gynaecological disciplines; an increased and heightened awareness of potential litigants of their rights; and lawyers offering services on a contingency (no-win no-fee basis) are all factors that contribute to a high pressure pot that is bubbling over at an alarming rate.
“Damages can take the form of patrimonial loss – a reduction in a person's financial position, such as in the case where the claimant incurred medical expenses – or non-patrimonial damages, damages that cannot be related to a person's financial estate, but compensation for example pain and suffering,” says Baleson.
An issue of quantum
Medical Malpractice Claims of this nature average, and can easily be in excess of R10 million. Factors that contribute to such high quantum claims include, but are not limited to:
- Extended prescription: it must be kept in mind that the normal prescription period does not run against a minor. For example, if there is negligent conduct by an obstetrician during the birth that causes a child to suffer damages, the child's claim will only prescribe three years after he/she turns 18; and
- Injury to mother: A mother can bring a claim for medical malpractice if the doctor's carelessness caused her injury prior to or during birth.
The high payments
“The South African Society of Obstetricians and Gynaecologists (Sasog) says the cost of insurance is expected to climb to R800 000 in 2017. This is because the Medical Protection Society (MPS) has experienced a drastic increase in the number and quantum of legal claims since 2009. With the exception of a few, other insurers have declined to quote on providing cover to such specialists, entirely,” says Baleson.
The failure of existing medical risk products are reflected, he noted, in the announcement that the Life Midmed Hospital in Middelburg, Mpumalanga, is to shut down its neonatal Intensive Care Unit and its obstetrics ward, because of specialists quitting in the face of soaring medical malpractice insurance. Similarly, in Worcester, in the Western Cape, all four obstetricians in private practice recently announced their refusal to do future deliveries, due to sky-rocketing insurance premiums.
According to the statistics of the South African Society of Obstetricians and Gynaecologists, the cost for medical risk insurance for an obstetrician has soared from R180 000 in 2013 and is expected to pass R800 000 next year.
Local relief
In the face of rocketing medical indemnity risk premiums, a crisis that is driving some practitioners out of the profession, Constantia Insurance Company (Constantia) has developed South Africa’s first home grown medical indemnity insurance product, EthiQal, which is based on occurrence cover as opposed to retroactive cover.
FAnews spoke with Constantia CEO Volker von Widdern who said that it is very important that clients understand the difference between these types of cover, especially when it comes to medical insurance.
Feet on the ground
Currently, South African medical practitioners who have occurrence based cover have to rely on faceless staff based at overseas call centres. These staff members have little understanding of the unique pressures that health professionals in South Africa face.
“EthiQal is underwritten by a team of experts, based in the main centres of the country. These people will coordinate responses and support doctors while providing access to the best legal firms in response to litigation, especially in the light of the unprecedented boom in contingency-based litigation that is making some specialisations unviable,” says Von Widdern.
While this is the first company to offer such a product locally, there is definitely scope for many other companies to climb on board and offer protection in this area.
Editor’s Thoughts:
The question remains: is this a risk insurers want to consider? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
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