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Physician Extenders or Liability Expanders?

By Kevin Quinley
January 01, 2018

A heightening shortage of physicians, particularly family care specialists, drives growing reliance on physician extenders. For health care services to serve an influx of patients, so-called “physician extenders” now carry out functions previously performed by doctors. Anyone who has worked in management understands the concept of delegation: It lets managers exercise control through the efforts of others. Similarly, in the medical realm, delegation is manifested by the prevalence of physician extenders.

From a risk management standpoint, though, concerns arise that so-called physician extenders can become liability expanders. To maximize efficiency in health care delivery and optimize a medical practice's or hospital's ability to deliver care to as many patients as possible, there lies the risk of additional legal liability. This arises in the form of medical malpractice claims, lawsuits, settlements and judgments. The aim of this article is to examine factors driving the growth in physician extenders, identify liability “hotspots” and offer tactics for health care providers to use in managing professional/medical liability risks.

The Trend

The Affordable Care Act (ACA) triggered an influx of patients into the health care system. This strains an under-supply of doctors, prompting increased use of physician extenders. While this practice helps meet demand for health care, it creates new liabilities. It also creates a need to embrace risk management to address liability risks.

First, a definition: “Physician extenders” include health care professionals other than MDs who provide medical services, freeing up physician time and energy. Examples include physician assistants, nurses, midwives and nurse practitioners. The idea is that wisely deploying such medical professionals “extend” the ability to treat as many patients as possible without compromising care levels.

Not only does health care reform trigger an influx of new patients into the medical system, but physician supply falls well short of demand. More and more medical school graduates opt not to practice medicine. Some are becoming entrepreneurs in medical technology or biotech companies. Others head to jobs at hedge funds, or join consulting firms.

One medical recruitment firm, in a 2016 survey of over 17,000 medical students, determined that 13.5% intended to pursue nonclinical jobs. That represented a spike from 9.9% four years earlier. “Doctors Without Patients,” Business Week, 9/11/17. Those seeking nonclinical career paths cite work/life balance issues, repaying medical school debts, and the headaches of dealing with third-party payers. Experts project that by the year 2030, the U.S. doctor shortage will reach 100,000. This intensifies pressure and need for physician extenders.

Avenues of Liability Attack

Theories of liability that plaintiffs may assert against physician extenders and/or supervising positions include:

Negligent hiring: Plaintiffs may assert that the physician, medical practice or hospital was negligent in vetting physician extenders. This would include deficient reference checks, verification/validation of appropriate credentials and licensing, criminal record checks, etc. In cases of alleged errors or omissions by a physician extender, expect plaintiffs to investigate the hiring and credentials of the physician extender.

Failure to supervise: Some courts expect physicians to oversee and appropriately supervise a physician's assistant or a nurse practitioner's activities. If a plaintiff alleges that physician extenders exceeded the scope of their authority, allegations may arise that the physician or hospital failed to adequately monitor the physician extender.

Failure to obtain informed consent: If an adverse medical outcome occurs, expect a claimant to explore whether or not the informed consent form specifically delineated the possibility of any procedure or treatment on the part of a physician extender. Many patients are distracted and anxious when completing informed consent forms. Others may later allege that they were on medication and did not fully understand the import of what they were signing. Still others may claim that the form was one of many they were told they had to sign in order to have a needed procedure. Make sure that informed consent forms include, among other things, acknowledgment that certain functions and health care activities may be performed by a physician extender.

Failure to follow applicable state statutes or regulations: Each state has rules concerning permissible actions of physician extenders. Physicians, risk professionals and practice managers must be aware of state statutes addressing the range of permissible and impermissible actions that physician assistants, nurse practitioners, midwives, etc., can perform. Awareness of legal constraints is a starting point to implement written protocols to ensure that physician extenders do not exceed the scope of their authority. If a physician extender fails to follow limitations set by state statute, expect plaintiff attorneys to seize upon this as an indicator of liability.

Vicarious liability: In many settings, any error or omission by a physician extender is imputed to the physician who was or should have been supervising the health care professional. Some courts may rule that an agency relationship exists between the physician and allied health care providers.

Risk Management Tips

Here are seven risk management tips to mitigate financial exposure to the medical practice or hospital due to the use of physician extenders:

1. Conduct due diligence in screening physician extenders. Verify required certifications, work histories, and recommendations from past professors or employers. Also verify educational background.

2. Exercise appropriate supervision. Know the applicable state regulations and statutes governing the jurisdiction's requirements for oversight. For example, some states require that a supervising doctor be physically present in the facility where the physician extender is employed, or have some degree of availability. Further, some laws may delineate a specific ratio of supervising physicians to physician extenders. Another provision in some regulations governs physician review and cosigning charts. Bottom line: establish systems for effective and meaningful supervision.

3. Repair systemic weaknesses. There is a problem if adequate systems are not in place for working with physician extenders. This includes not having a written list or description of procedures and activities that physician extenders can perform. Best practice: Have written guidelines or policies delineating the specific activities that physician extenders can perform; if you don't have them yet, prepare them now.

4. Fine-tune chart and co-signing review. Review patient charts for quality assurance purposes and routinely cosigning notes of physician extenders. In addition, a sound practice is to have a minimum number of annual hours of continuing medical education that physician extenders must take.

5. Reinforce open communication among staff. Allow physician extenders access to supervising physicians. A medical practice's culture must be such that a physician extender feels free to communicate without being seen as an annoyance or burden. Liabilities arise when physician extenders err due to worries about “bothering” doctors or fear of being viewed as incompetent for asking questions.

6. Avoid granting excessive autonomy to physician extenders. Workloads — combined with human nature — may lead busy doctors to delegate increasing responsibilities with decreasing oversight, so long as the arrangement seems to work. It takes but one instance of a patient adverse outcome and plaintiff lawyers will place this under the microscope and second-guess with the benefit of hindsight. The antidote is to comply strictly with written duties and responsibilities assigned to the physician assistant and regularly reassess the quality of a physician extender's work.

7. Understand the applicable standard of care for physician extenders. Some states hold that physician extenders must meet the same standards of care as supervising physicians. Other states hold physician extenders to a lower standard of care and expect them to meet the standard of similarly certified and trained physician extenders.

Insurance Coverage Considerations

Structuring a risk management and insurance protection program for physician extenders includes the following considerations:

1. Confirm that physician extenders are included in the policy. Make sure that the physician extenders are covered under the professional's medical liability insurance policy, either by endorsement or by qualifying as “additional insureds.” When staffing changes occur, make sure that the insurance coverage extends protection to the non-physician health care providers.

2. Reassess coverage limits for adequacy. The larger the medical staff, the greater potential for communication lapses. The more complex any system, the greater potential for error. Thus, it is important to review current insurance policy limits for medical professional liability, and consider whether using physician extenders merits an increase in financial protection.

3. Ask whether it is a “duty to defend” policy or a “reimbursement” policy. If the former (a duty to defend policy), the insurance company must defend any claim against the physician extender. If the latter (a reimbursement policy), the professional is responsible for selecting a defense law firm and seek later reimbursement from the insurer as the defendant incurs and pays legal fees. Clearly, the preferred method is a “duty to defend” policy, but such policies may be more expensive.

4. Ask whether legal fees are within or outside of the insurance limit. In medical professional liability policies, it is not unusual for defense costs (legal fees, expert fees, etc.) to erode the insurance limit. These are often called “wasting” or “eroding” policies. The more money spent on defense, the less financial protection is left to pay claims. Tip: Seek policies offering defense costs outside the policy limit. Again, this option may come with a higher premium. The risk/reward calculus is a factor for the professional to weigh, ideally in conjunction with a risk manager or insurance broker.

5. Know how the policy defines “loss.” Does “loss” mean any occurrence that could conceivably give rise to a claim? Does it mean an actual claim or demand for money damages? Does it mean a lawsuit? Does the insurance policy and coverage require reporting of incidents, even if there is no demand for money damages?

Separate Coverage or Bundled with Employer's Policy?

While physician extenders may try to ride the coverage coattails of employers, legitimate reasons drive reasons for physician extenders procuring their own separate, professional liability (medical malpractice) insurance policy.

The reasons for favoring separate liability coverage include the hazards of sharing limits: Typically, a physician extender insured under an employer's policy will share the policy limit with the physician, hospital, and other health care providers. In “shotgun” lawsuits, plaintiff attorneys name as defendants every professional who had any involvement with the patient's care, in order to maximize recovery. This scenario heightens the odds of finger-pointing among defendants, which helps plaintiffs make their case.

The insurer may prioritize the named insured's interests as opposed to the physician extender. However, if the physician extender has his or her own medical malpractice liability policy, this is not a factor. The client is the physician extender as the named insured under that separate policy.

Coverage portability is another concern. As physician extenders change jobs, coverage under the prior medical practice's or hospital's policy will not move with them. Therefore, for continuity of coverage, the physician extender should consider having his or her own medical professional liability coverage. If the physician extender faces a licensing complaint, he or she will need to defend that and incur legal fees. Many medical malpractice policies for doctors and hospitals exclude coverage for payments incurred to address such complaints. The physician extender desiring this coverage has a better chance of getting it by buying his or her own separate coverage.

Claim communication benefits are another factor. If the physician extender relies on coverage provided by the hospital or medical group, insurers may handle claims internally or hire a third-party claim administrator. In either event, the flow of claim communication may be from the claim-handler to the hospital administrator or medical practice manager. The physician extender may be left out of the communications loop regarding significant developments in the claim. By contrast, if physician extenders have their own policy, they are the client and much more likely to be informed with regard to salient developments in the claim, decisions to defend versus settle, etc.

Conclusion

None of this implies that using physician extenders should be avoided. Some can make the case that their judicious use reduces risk. To the extent physician extenders free up doctors to focus more on value-added tasks commensurate with their skills and training, that is a rational use of health care resources. Physician extenders need not become liability expanders. Implementing sound risk management strategies, coupled with thoughtful insurance coverage, will mitigate the financial impact of adverse patient results and provide a safety net for a medical practice and the position extender.

*****

Kevin Quinley, CPCU, is Principal of Quinley Risk Associates, a risk management consulting firm in the Richmond, VA, area. He is a member of this newsletter's Board of Editors and is the author of Bulletproofing Your Medical Practice: Risk Management Strategies That Work. Reach him at www.kevinquinley.com or at [email protected].

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