Testimony of David Packo, M.D., FACEP
on behalf of
Ohio Chapter of the American College of Emergency Physicians
and Ohio Chamber of Commerce
Select Committee on Quality Health Care
September 24, 2002

Good morning and thank you Mr. Chairman and members of the Committee for allowing me to testify. My name is Dr. David Packo and I am here as a representative of both the OH Chamber of Commerce and the OH Chapter of the American College of Emergency Physicians (OH ACEP). OH ACEP represents almost all of the over 1000 emergency physicians in this great State of Ohio.

As most of you are aware, federal law (EMTALA) requires any and all patients that come to the emergency department to be provided a medical screening examination regardless of ability to pay. Most visits are completed at the time of the medical screening examination and those that are not must be appropriately stabilized per the same federal legislation. No other physicians are required to provide such care under EMTALA.

Emergency Departments are the ultimate safety net, we are open 24 hours a day, seven days a week, all year round. Approximately one-half of all our care is "uncompensated" care due to the federal law. Emergency departments are not part of the Hospital Care Assurance Program that provides reimbursement to hospitals to help offset uncompensated care. Most emergency departments are separate entities and contract with hospital to provide emergency services.

I am here not only as a provider of healthcare, but also as a small businessman and purchaser of healthcare. My group, like most physicians groups, is a small business. My particular group which has been in existence since 1992 and is headquartered in Canton, OH is made up of over 250 physicians and 200 non-physicians in 7 states, although about three-fourths of our people are here in Ohio. We purchase health insurance just like any other small business. The only difference is that I am intimately involved in the healthcare industry and what is occurring on the medical liability front on a daily basis.

The facts show that Medical liability costs have increased exponentially over the last few years. Both the number of cases and the costs of cases have increased. The average paid claim for all specialties has increased 62% from 1990 ($236,807) to 1999 ($384,282), while the proportion of awards topping $1 million has increased from 34% in 1996 to 52% in 2000. The average jury award is now $3.5 million. All of this has occurred despite data showing greater than 80% of all lawsuits filed are "non-meritorious". Maybe most significant, 70% of jumbo plaintiff awards go to attorney fees and administrative costs.

Not surprisingly, the cost of liability insurance has also risen dramatically. Over the last 3 year period, my group has experienced an 800% increase. Three years ago we paid $1 per ER patient visit. It increased to $3.50 per patient last year, and is $8 per patient on our new policy starting on Oct 1st. These increases are occurring despite the fact that we have the most exceptionally good risk management history of any group in our industry.

Ohio is considered one of the 10 worse states in regards to medical liability. Although there are a couple cities such as Miami and Philadelphia where liability insurance can cost over $20 per patient, Cleveland and Cuyahoga County in general is not far behind. There have been many individual physicians and groups who have either had to retire from the practice of medicine or sold their practices to another group.

All of this is on top of decreasing reimbursement from Medicare and commercial insurers who mirror the Medicare payment percentages.

Over the last several years, we've seen a decrease in the best and brightest going into medicine. Last year was the fifth straight decline in medical school applicants (1996-46,968 to 2001-34,859). Today over 1/2 of all applicants are accepted.

We have also seen physicians who should be in the prime of their careers and with the most expertise retire because of the hassles of practicing and the cost to practice. Physicians, who threatened with fraud when simply trying to follow the extremely cumbersome Medicare coding rules, have found it easier to quit. The liability crisis has simply added to these woes.

The fact is, we need help. We need help in reducing the medical liability coverage. We need help in purchasing medical insurance for our employees and their families. We need help in keeping our small business alive. I plead that we work towards a solution before its too late, and the delivery of healthcare suffers any more.

Mr. Chairman and members of the committee, thank you once again for allowing me to testify. I would be extremely happy to answer any questions you may have.