Everyone has heard of what is called the “butterfly effect”; as the Wikipedia article on the subject explains, “In chaos theory, the butterfly effect is the sensitive dependence on initial conditions under which a small change in a state of a deterministic nonlinear system can result in large differences in a later state. The term is closely associated with the work of mathematician and meteorologist Edward Norton Lorenz. He noted that the butterfly effect is derived from the metaphorical example of a tornado’s details (exact time of formation, exact path taken) being influenced by minor disturbances such as a distant butterfly flapping its wings several weeks earlier. Lorenz originally used a seagull causing a storm, but was persuaded to make it more poetic with the use of butterflies and tornadoes in 1972. Lorenz discovered the effect when he observed series of his weather model with initial condition data rounded in a seemingly inconsequential way. . He noted that the weather model would not reproduce the test results with the unrounded initial condition data. A very small change in the initial conditions had created a significantly different result.
And this concept came to mind recently while reading an article by Tanya Albert Henry, news writer at the American Medical Association, titled “Nearly 30% of medical liability insurance premiums increased in 2021.” In that article, published on the AMA’s website March 30, Henry wrote, “After nearly a decade of fairly stable rates, the proportions of medical liability insurance premiums that have increased from year to the other over the past three years have reached record highs. unprecedented since the turn of the century. In 2019, the share of premiums that increased from 2018 jumped to 26.5%, almost double the 13.7% that had increased between 2017 and 2018. Then in 2020, the share of premiums that increased increased again when more than 30% of premiums change. were in an upward direction. And in 2021, almost 30% of premiums increased compared to 2020,” she wrote.
Indeed, Henry noted, doctors in some states have seen staggering increases in the Medicare rate between 2020 and 2021, from 20% in Oregon to 29.6% in Missouri, to 41.7 % in West Virginia, at a staggering 58.9%. in Illinois. And she noted that, of the 12 states that experienced rate increases of 10% or more during that one-year period, “eight of those 12 states experienced significant premium increases in at least the last two years: Illinois, Missouri, Oregon, South Carolina, Kentucky, Michigan, Texas and Georgia. As Henry wrote, “The numbers are broken down in an AMA Policy Research Perspectives report published in March, “The prevalence of medical liability premium increases not seen since the 2000s continues for the third year in a row.” And she quoted AMA President Gerald E. Harmon, MD, as saying, “The medical liability insurance cycle is in a period of rising premiums, compounding economic hardship for struggling medical practices.” during the last two years of the pandemic. Rising premiums may force doctors to close their practices or abandon vital services. This is detrimental to patients, as higher medical costs may reduce access to care.
Meanwhile, in another sector of the healthcare industry, Angela Rivera, principal of The Chartis Group, the Chicago-based consulting firm, wrote last year in a report titled “Skyrocketing Cybersecurity Insurance Costs and Rise of Attacks: 4 Considerations Senior Healthcare Executives Should Know”, that, “According to a leading company in the field of commercial risk management solutions, premiums are expected to increase by 20-50% throughout 2021. However, given that healthcare is a high-risk industry, some healthcare systems have already reported increases of 50-100% for the same or less coverage.As actuarial data on the financial impact of cyberattacks is limited, healthcare companies companies are tightening cyber insurance policies and revising pricing strategies to cover their own risk.
Rivera told readers of “Faced with the facts: a cyber incident is ‘when’, not ‘if'”, writing that “the day will likely come when your organization suffers a cyberattack or major breach: even organizations most reliable have succumbed to this inevitability.These types of incidents typically create a new urgency with leadership and most often result in an assessment of what could have been done differently.In some cases, this heightened awareness leads leaders to invest in new technologies that could have significantly minimized the risk. It is important to recognize that insurance companies do not pay for the cost of upgrading or installing internal security systems after a cyber event,” said “Therefore, waiting for the pressure to invest in security mitigation technology after an event has occurred will likely end up c Cost your organization significantly more, considering the total cost a healthcare organization incurs due to an incident.”
How are these two seemingly unrelated developments/trends actually related? Here’s how. This continued and dramatic increase in medical malpractice liability insurance continues to convince many physicians in private practice to shun solo practice or even small group practice for the financial protection of large group practice or employment. directly by hospital health systems, and in some cases even health plans. The financial risks are simply too great now, and physicians in the United States are less and less willing to fight for the “independence” of practice, while continuing to take such practice-killing risks. Meanwhile, smaller, self-sustaining hospitals, faced with the potentially catastrophic impact of a successful ransomware attack, are finding that remaining self-sufficient or independent is increasingly worth the financial risk, and are taking refuge in the arms of multi-systems. -existing hospitals, in order to be able to survive cyberattacks that kill the system. The costs of cybersecurity insurance are simply getting too high for smaller, standalone, independent hospitals.
Thus, these two insurance developments, while technically independent, speak to a very important reality in today’s healthcare industry: being small, as an individual clinician or as an organization, just isn’t viable in many situations now, in US healthcare. The financial risks, whether it’s medical malpractice insurance for practicing physicians or cybersecurity insurance for patient care organizations, are becoming overwhelming. And while many people regularly decry the “corporatization of health care in the United States,” the days of “Marcus Welby, MD” are well and truly over now. Of course, some doctors are getting nostalgic for the days when a doctor could “drag a shingle” and happily practice in isolation as a solo practitioner. But even as the landscape of medical malpractice has inexorably changed, every other element of medical practice has changed as well. No solo practitioner could engage in strong care management, in part because the staff that that physician would have to surround himself with to execute care management would simply be financially exorbitant.
But physicians in large primary care and multispecialty groups are thriving in the work of population health management and care management, and they are finding that some of the burdens on them are at least partially alleviated, as physician assistants and nurse practitioners, nurses, case and care managers, clinical social workers and dietitians provide them with the multi-faceted support they need and address their patients’ chronic disease issues in ways that extend their caring abilities.
And, perhaps analogously, former stand-alone hospitals, as they join multi-hospital systems, are moving into team-based organizations with large, highly skilled healthcare IT teams, including IT security teams, and benefit from being part of these large integrated health systems. . Which autonomous hospitals can afford to engage in the most advanced healthcare IT security strategies: behavioral monitoring, advanced network segmentation, and Security Operations Center (SOC) engagement? When it comes to small stand-alone hospitals, the straightforward answer is virtually none.
The reality of the current healthcare landscape in the United States is therefore this: consolidation is progressing, not only for purely strategic reasons, but also because the cost calculations around these two different types of insurance are inexorably changing, which makes being small and detached far less viable than ever – and, increasingly, over time, probably totally unsustainable. The world is moving on, and smallness and detachment are becoming more and more impossible. As the Wikipedia article states, “While the ‘butterfly effect’ is often explained as being synonymous with sensitive dependence on initial conditions of the type described by [Edward Norton] Lorenz in his 1963 paper (and previously observed by Poincaré), the butterfly metaphor was originally applied to work he published in 1969, which took the idea one step further. Lorenz proposed a mathematical model of how tiny movements in the atmosphere scale up to affect larger systems. Yes this.