An insurance company started last year by the Kansas Medical Society has quickly proven to be popular with Kansas doctors, says a Lawrence physician who serves on the company's board of directors.
In fact, the Kansas Medical Mutual Insurance Co. surpassed its first-year policy goal after less than six months, Dr. Donald Hatton said Thursday from his office at Reed Medical Group in Lawrence.
"We are quite pleased," said Hatton, a Kansas University graduate who has practiced medicine in Lawrence since 1974, when he completed his residency at the Kansas University Medical Center.
KaMMCO, formed to provide a non-profit market for malpractice insurance for Kansas doctors, now has a total of 452 policies in force, he said. The first-year goal was 300.
By the close of its first year, KaMMCO should have more than 800 policies in force, Hatton said.
KaMMCO's long-range goal is to have 1,000 to 1,500 policies in force a figure the insurance company's officials feel will enable them to withstand losses, he said. There are about 2,250 full-time practicing physicians in the Kansas Medical Society. Some 2,800 doctors currently have active practices in the state.
HATTON, WHO last month succeeded Dr. Carol Moddrell as chief of staff at Lawrence Memorial Hospital, has been involved with KaMMCO from the beginning.
During his 1987-88 term as president of the state medical society, Hatton said, the society's executive committee decided to try to form a malpractice insurance company for its members.
Legislation passed last year in Topeka allowed formation of the company, he said. KaMMCO offers malpractice insurance for nurses and other professionals who work for doctors, not just the physicians themselves, said Hatton.
Jerry Slaughter, executive director of the Kansas Medical Society and secretary of KaMMCO, agreed that there's a great need to rein in malpractice insurance costs.
"It's certainly one of the fastest growing and most costly aspects of running a practice now," he said Friday.
HATTON SAID, "From the medical society's point of view, we knew it wasn't going to solve the whole problem of medical malpractice. But we had gotten tired of insurance companies coming and going and seemingly having us over a barrel and at their whim. We decided to become a stabilizing force on the market."
KaMMCO aims to offer doctors insurance that "that won't cost them an arm and a leg," he said.
KaMMCO's rates started out fairly high, he said, to make sure the company began on solid financial ground.
But Slaughter said KaMMCO has already begun scaling down its premiums.
"Our rates now are comparable to the others in the market. We're not the lowest, we're not the highest," he said. "We believe that ultimately, we'll be the lowest in the marketplace."
Hatton said KaMMCO also hopes to contain malpractice costs better than regular insurance companies do.
FOR EXAMPLE, KaMMCO officials plan to strive for early settlements in cases where they feel the doctor is at fault. Dragging cases on for years only increases costs, he said.
At the same time, he said, KaMMCO plans to be more aggressive in protecting doctors who are unfairly charged with malpractice.
"We'll have a case tried when we feel very strongly that malpractice hasn't occurred," he said.
With KaMMCO's 12-member board of physicians and its claims department, Hatton said he hopes the company will be better able to determine which cases to try and which to settle.
With their personal experience in medicine, he said, KaMMCO officials also will be more qualified than those at other insurance companies to advise policy holders how to reduce their risks. That should lead to lower premiums over the long run, he said.
BESIDES HIS capacity on the board of directors, Hatton serves as chairman of the KaMMCO's underwriting committee. The committee evaluates applications with help from an experienced insurance underwriter and Insurance Management Associates.
KaMMCO contracted with the Wichita-based firm last year to handle the insurance end of the business.
"We couldn't have gotten KaMMCO off the ground in this short a time without their expertise," Hatton said.
Committee members also obtained underwriting manuals from other physician-owned companies and adapted guidelines for their own use, he said.
Even before KaMMCO was formed, doctors could see some positive signs on the malpractice front, according to Slaughter.
While individual claim payments are still high, the number of claims has been tailing off for the last year and a half, he said.
"I DON'T know if it's a long-term trend," he said. "We're cautiously optimistic."
KaMMCO covers $200,000 per claim, and up to three such claims per year. Losses above that are covered by the state's Health Care Stabilization Fund, which all doctors are required to pay into each year.
One concern among doctors is the high cost of the surcharges that support the state fund, Hatton said. For example, the surcharge rate was set at 125 percent of the basic medical malpractice premium in 1988.
The stabilization fund is tentatively scheduled to be phased out in 1994, Slaughter said. The phase-out won't be official until the Legislature takes final action, he said, probably during the 1991 session.