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Hospitals use Vermont captives to manage rising medical malpractice risk
Risk & Insurance reports Vermont captive officials say hospitals can control claims and retain more funds when risk management improves, even as malpractice payouts rise in severity.
Hospitals and health care systems are increasingly using captives to manage medical malpractice risk, aiming to strengthen patient safety while gaining more control over claim handling and incentives, according to Risk & Insurance.
Richard Wells, assistant chief examiner at the Vermont Department of Financial Regulation, Captive Insurance Division, said the value of a captive is that it gives hospitals control over their claims and the ability to manage them, with successful risk management tied to retaining more funds for patient-focused programs.
Risk & Insurance also highlighted that medical malpractice is a major cost driver, with claims increasing in severity across the country. Tom Hayden, vice president of risk and insurance services at Children’s Hospital of Philadelphia, said the trend is not driven by more frequent claims, but by worse outcomes.
The report points to a Commonwealth Fund estimate that medical malpractice costs U.S. health care systems more than $55 billion annually, and frames captives as a way for health systems to stabilize costs and focus on granular risk and spend decisions as liability pressures mount.