Implementing medical staff malpractice insurance requirements

Hospitals have recently begun to explore and adopt medical staff membership criteria that go beyond simply determining a practitioner's ability to practice medicine. Medical competence and expertise will always play a central role in medical staff membership decisions. However, the increasing competition among hospitals for patients with the attendant pressure to contain health care costs has caused hospitals to consider business factors in the composition of their medical staffs. To ensure their own survival, hospitals need to be efficient and sensitive to the financial dynamics of the industry as they determine the composition of their medical staffs. One response to the new business reality of health care by hospitals is the adoption of minimum medical malpractice insurance requirements for medical staff members. In large part, hospitals have adopted these requirements at the insistence of certain insurance carriers. Although there has not been much litigation over this issue, a handful of cases has held that such requirements are reasonable because they help to protect the hospital's assets and to ensure that patients have a source of funds for recovering damages caused by malpractice. These courts have recognized that it is a board's duty to protect the financial well-being of the hospital and that such requirements help to satisfy this duty. This article will describe the case law that upholds such requirements, analyze the problem regarding practitioners who cannot comply with a hospital's insurance requirements because such coverage is not available to them, and discuss the problems and possible resolutions regarding adoption and implementation of such a requirement.