Medical Malpractice: Insurance Costs Increased But Varied Among Physicians and Hospitals.

The cost of medical malpractice protection for physicians and hospitals consists primarily of premiums for purchased insurance. For hospitals, however, the costs of malpractice also include contributions to selfinsurance trust funds and payments made from general revenues and reserves for uninsured malpractice losses. Malpractice insurance is but one of a number of expenses incurred by physicians and hospitals in doing business. Its cost can be put into perspective by viewing it individually and in comparison to total expenses and income. To obtain data on malpractice insurance costs, GAO asked 1 leading insurers in all states and the District of Columbia to provide premium quotes for selected physician specialties as of July 1, 1985, and 2 a notionally representative sample of nonfederal hospitals about the sources, coverage limits, and costs of their malpractice insurance. GAO also obtained and analyzed data from the American Medical Assocation on physician gross income and practice expenses, including malpractice insurance, for self-employed physicians and from the American Hospital Association on hospital total expenses and net revenues. GAO analyzed the hospital data in terms of cost per inpatient day, a commonly used measure for hospitals.