Benefits from tort reform to CHRISTUS Health, and to the people we serve, have been immediate and substantial.  In our first excess insurance renewal after tort reform, we saved eighteen percent.  Our insurers directly told us these savings were the result of their evaluation of Texas tort reform.  We believe our second post-reform renewal this June will yield even larger reductions.

Because we are confident in the ability of the reforms you passed to restrain claims severities we have taken on much greater self-retained funding of medical malpractice claims.  That yields even greater savings in our insurance costs.

Between taking a larger self-retention and direct cuts from our excess insurers, we have reduced our excess insurance costs by over $10 million (see Exhibit A).

In addition to those annual savings, very modest assumptions by our actuary for tort reform’s impact are yielding another $10 million annual savings from funding of our health care centers self-retained medical malpractice exposure.

All told, we are saving over $20 million per year from tort reform.  (See Exhibit A).  We have every reason to believe these savings will continue and, perhaps, even grow.  Excess insurers are returning to Texas and many new providers are bringing new capital to our market.  The impact of these competitive forces should be only in its beginning stages.

Our own experience is leading us to expect significantly reduced claims frequencies.  (See Exhibit B).  If these reduced frequencies hold and we realize expected reductions in claims severities, we will have further savings in our self-funded malpractice costs.

CHRISTUS Health recognizes that tort reform creates an obligation to the legislature and people of Texas to use our savings wisely.  We are meeting our obligation by improving patient care and safety in each of our communities.

CHRISTUS Health’s self-funding for medical malpractice is achieved through a captive insurer, Emerald Assurance.  Emerald is funding $4 million for loss prevention initiatives that we’re calling Emerald Innovations.  These include $400,000 to fund equipment to insure safe movement of patients.  Nearly, $2,000,000 is dedicated to provide testing and monitoring for our newly hired registered nurses to improve clinical competency, critical thinking and interpersonal skills.  We have dedicated another $500,000 to insure that within two years all our labor and delivery nurses will be certified for expertise in interpreting fetal monitor strips.  Finally, we are funding a variety of single hospital initiatives aimed at developing “best practices” that can be shared throughout our System.

Our Texas hospitals are putting their direct savings from tort reform to good use.  CHRISTUS Spohn will be using some of its savings from tort reform to build a new community clinic and to develop a diabetes excellence program.  Other hospitals are making similar improvements.  When I asked one of our regional CEOs about tort reform’s impact, he told me: 

“Our insurance allocation was reduced about $5.5 million … while I can not say that we targeted a specific area for those dollars I can say that our self pay patient population (90% of which becomes free care) has increased 100% over this time last year or about 12 million dollars at our hospital alone.  There is no doubt that if we did not have the reduction in insurance costs we would be in much worse financial condition than we are.”

These are very challenging times for health care.  Thanks to the legislatures reforms, CHRISTUS Health is meeting the challenge to provide increased charity care and improve the safety and health of our patients.  Tort reform is improving health care for all the people of Texas.