"From the physicians' perspective, it's a given that we are going to assume the liability, and they really don't care how we do it," says Stephen Clarke, vice president for physicians services.
Anne Arundel protects itself with a contract caveat around the tail coverage, Clarke notes. "If the doctor leaves in a short time, they would have to reimburse us for the cost of the tail."
Bob Reilly, the system's chief financial officer, says before making an employment offer, Anne Arundel analyzes each physician's claims history and, based on risk, decides whether to cover the physician through its captive, continue to cover the physician through the existing commercial carrier, or not to cover the tail at all for those with a less-than-stellar malpractice track record.
"In the initial hiring phase or employment phase, there is certainly a background check of claims. If a doc has a high number of claims in the past, there is a lot more scrutiny of that physician as to whether or not to bring them on. It may also change the arrangement of the tail where we may say the doctor has to pay his or her own tail," he says.
Anne Arundel also considers the standard level of risk for each specialty when deciding how to cover the tail.
"For certain specialties, such as obstetrics, we make the decision to leave them with their own carrier and see how things go over time before we decide to bring them into our own captive," says Clarke. "For low-cost tails like primary care, we pay it and are done with it.
"We know how much more risk we are assuming based on underwriting and actuarial tables, and often we issue a certificate of insurance [through our captive], and they are off and running," he adds. "We've very deliberately managed the process, and we've been fortunate in terms of our claims experience and our ability to deal with claims that do arise."