Chapter 1: How Business Insurance Protects Allied Health Practitioners
Part 1: Which Common Risks Threaten Medical and Healthcare Professionals?
From a risk management perspective, healthcare professionals experience some of the most complex work environments. Why? The liabilities and regulations in the medical field are varied, intricate, and rigorously enforced. Whether you're a primary care doctor, phlebotomist, or animal assisted therapist, you must adhere to federal laws and state licensures just to open a practice. Then there are ethical codes, safety precautions, and standards of care to observe.
Solid risk management planning means identifying these threats, assessing and deciding which ones necessitate action, and deciding what action to take. As you build a business protection plan for your private practice, it's important to know where your vulnerabilities lie. Usually, those vulnerabilities are closely linked to the details of the work you do.
Here are some aspects of your medical practice to consider when building your risk management plan.
- Confidentiality. As a healthcare practitioner, you're charged with the safekeeping of your patients' sensitive health information — and that's not only an ethical responsibility, it's also a legal one. You keep your patients' records private out of respect for how that information could affect the patients' autonomy, relationships, and livelihood. Plus, there's the Health Insurance Portability and Accountability Act, or HIPAA , to consider. HIPAA defines exactly which information can be released and to whom. Practices that violate HIPAA (through cyber leaks or mistakes on your part) face fines and penalties. Data Breach Insurance can help ensure that your sensitive information is protected from cyber attacks or online leaks — but we'll delve into that in the next section.
- Malpractice. As a healthcare practitioner, no matter your area of expertise, you always face some risk of a malpractice suit. If you misdiagnose an ailment or make an oversight in your treatment and that mistake causes physical harm or financial losses to a patient, they might sue. To avoid the risk of litigation, many healthcare practitioners employ "defensive medicine." For example, a physician may order a test or perform a procedure primarily to ensure that all bases have been covered so the patient cannot allege negligence. Some states require that all allied health professionals carry a minimum amount of Malpractice Insurance in order to practice in the first place (more about that in later sections).
- Consent. For treatment to be legal, patients must provide informed consent. If a procedure is performed without proper consent, you could be charged with assault. The first instance of such a case was the landmark 1914 New York Court of Appeals case, Schloendorff v Society of New York Hospital [PDF] . The case involved a physician who removed a malignant tumor against the wishes of his patient and was charged with battery. Ever since that ruling, it's been illegal for physicians to perform an operation without a patient's consent, lest they be guilty of assault. Regardless of the nature of your patients' ailments, if they are the appropriate age for giving consent, it's necessary that they understand their options and that they sign waivers before you move forward with your recommended treatment plan.
- Compliance. Depending on your profession, your state may have an in-depth licensing process you need to complete before you can practice medicine there. Laws vary based on your location and field; however, if you're a doctor, all states mandate that you be licensed. Some states have recently passed legislation that allows medical boards and medical directors of managed care organizations to make medical and treatment decisions across state boundaries. You'll want to check with your state's medical board to see if you need a license to practice before you begin offering your services to the public. (For more on this topic, see the insureon blog post "Liability Issues for Therapists who offer distance therapy .")
- Personal liability. If you are the sole proprietor of your medical practice, there is no legal distinction between you and your business. That means if you're successfully sued for malpractice and you don't have enough in your business coffers to cover the costs, your personal finances and assets can be collected to settle the judgment. To separate your personal and business assets in the eyes of the law, you can establish your practice as a limited liability corporation (LLC). If you prefer to be a sole proprietor, Malpractice Insurance can pay for lawsuits.
- Business liability. Whether you're a sole proprietor or independent contractor, offering your services to patients opens your business to liability risks. For example, if you own your medical office, that space becomes a liability when someone slips, falls, and breaks a leg. You need General Liability Insurance to cover the claim if they sue for damages. Plus, there's property damage to consider. If a fire destroys your premises, would you have the funds to cover the high costs of repairs and equipment replacement? If you don't have adequate Property Insurance, you run the risk of never recovering from a disaster and closing your business doors for good.
But even if you take all the requisite precautions and safety measures, your healthcare practice could still be sued. Though medical malpractice suits only succeed 25 percent of the time, settlements and judgments in such cases are higher than in most other tort cases. That means if you're on the losing end of such a case and you don't have adequate risk planning in place, you could be faced with millions of dollars in debt. Check out this helpful infographic by AboveTheLaw.com to learn more about the American tort system and how the high rate of litigation affects your medical practice.
You could face assault charges for failing to obtain patient consent.
Next: Part 2: Which Insurance Policies Meet the Needs of Sole Proprietors and Independent Healthcare Practitioners?