Medical establishment insurance: Know all about professional indemnity policy

Medical establishments act as the biggest hedge against life risks, they save people during medical emergencies. Did you ever think that medical establishments (hospitals) may be at any kind of risk? Well yes, they run the risk of claims made by their patients about any kind of wrong treatment, unnecessary treatments/tests, or some form of negligence; that led to eventuality or other complications during treatment given to the patient. Know more about Medical establishment insurance: All about professional indemnity policy.

What exactly is a professional indemnity policy?

Professional indemnity risks provide a hedge against the costs that may be incurred by the medical establishment; instead of expenses incurred in this regard.

To elaborate, a PI policy coverage includes costs like:

1. Court fees,
2. Cost of defense/lawyer fee and 
3. Out-of-court settlements OR
4. Any other settlements that one may incur if the court adjudges that the hospital has to compensate the complainant. 

Thus, the phenomenon of patient complaints is not new at all, it is almost inevitable that at some point every hospital may face such an issue. So, most establishments avail of a professional indemnity policy to protect their cash flow.

So, here’s a roundup of the nuances of this policy that can come in handy to medical establishments while they avail of the policy. 

1. Importance of availing medical establishment professional indemnity policy

Any insurance policy is a hedge against potential risk. Now, since all types of medical negligence are penalized with severity by all countries including India, professional indemnity plans have a role to play. These PI policies cover:

1. 1. independent doctors,
   2. medical professionals,
   3. medical establishments including hospitals, laboratories,
   4. independent clinics and nursing/ support staff employed in the medical establishment.

So, professional indemnity plans ensure that the hospital does not suffer a huge dent in its cash flow which could potentially create stress on its operations. Since the operating cash flow is critical to any hospital, most hospitals realize this; and avail adequate cover to manage these situations.
There is a growing trend, especially with the onset of social media to express displeasure or accuse hospitals of negligence, malpractice, or mistakes. Not only do such posts garner public support, but there are also groups/forums which guide them with the entire legal procedure; making it convenient for the patient / related person to lodge a formal complaint.

Read more: What are the factors to consider while selecting DPI insurance providers?

Such increased instances of complaints of perceived negligence, malpractice or mistakes require to be managed seamlessly, these insurance plans help the hospital fend off these situations effectively.

2. Need for a professional indemnity plan:

A professional indemnity insurance policy is necessary to protect medical establishments against these situations:

1. 1. Increased instances of formal complaints of perceived negligence, mistakes in treatment, or malpractice whilst administering treatment.
   2. Medical negligence, mistakes, or malpractice is subject to severe fines by courts – the compensation could range from a few lakhs to multiple crores.

3. Features of a professional indemnity plan:

Since these insurance policies are drawn upon the hospital, the beneficiary would be the hospital in the event of any formal complaint lodged against the hospital for medical negligence, malpractice, etc. The hospitals pay the premiums and it is a tax-deductible business expense.

Thus, a  PI policy offers coverage for the below expenses related to the litigation:

1. 1. 1. Any financial or legal liability about the litigation would include a lawyer’s fee
      2. Court fees, costs towards litigation, and settlements 
      3. Settlements and sitting fees of competent lawyers can be quite huge, the hospital’s PI policy

Choice of medical establishment’s PI policy

Many companies offer medical establishment PI policies in India with almost similar features but at varied premium pricing. So, it not only covers all types of hospitals, but it also covers individual doctors, specialists, lab technicians, nursing staff, and support staff. 

Also, a cover of Rs. 25 Lakhs would cost approximately Rs. 4500 per annum. Thus, the premium of the medical establishment PI policy is dependent on a few factors including:

1. Doctor specialization and experience:
   

   A doctor handling life-threatening conditions could see litigations seeking settlements running into crores. Thus, it is important to avail coverage to manage these types of claims.

2. AOA: AOY ratio:
   

   Anyone accident as a ratio of any one year refers to a claim settlement to the maximum of one accident during any year. Typically, a 1:1 ratio is considered to be doctor friendly, it is unlikely that a single doctor could face more than 1 litigation in a single year. The maximum claim is still subject to the total amount of coverage.

3. Location of the hospital:

   The medical costs vary based on the location of the hospital, urban hospital care costs are higher than rural hospital care costs. Hence, the location could be a detriment for the premiums to be paid towards the medical establishment’s professional indemnity.
   

4. Riders:

   Many of these policies offer add-on covers like litigation claims against nursing staff, services offered by support staff, radioactive treatment, and other critical treatment procedures

Exclusions to medical establishment professional indemnity policy

There are some exclusions applicable across all PI policies, if you are availing of a policy, then you should specifically take note of these exclusions to ensure that they align with your requirement. Some of the exclusions that are commonly applied across most medical establishment’s PI policies are:

1. Fraudulent / Erroneous and illegal Actions of the policyholder
2. Wilful or deliberate negligence by the policyholder
3. Cosmetic procedures or weight loss-related treatments
4. Treatments carried out under the influence of drugs or alcohol
5. Pre-existing claims before the purchase of the policy
6. Claims incurred before or after the policy term

Therefore, it is always advisable to hedge your risk, for it may come in handy when the worst-case scenario pans out. The premium is a small cost to incur for any litigation expenses that one may incur in the future.