Rallying the Troops

September 15, 2001

The story of one physician's battle with the rising cost of professional liability coverage


When E. Stephen Emanuel, MD, delivered his last baby in January it was a clear indication that medicine in Southeastern Pennsylvania is in trouble. That's because, like so many other physicians working in states that have not enacted tort reform, Emanuel cannot afford to practice medicine in a high-risk specialty anymore.

When he began practicing more than 30 years ago, Emanuel paid $100 a year for malpractice coverage. His latest invoice, a whopping $63,500, is a $16,500 increase over last year's rates. Nationwide, in 2000, the average malpractice insurance increase was 11.5 percent, and went as high as 40 percent, according to the Medical Liability Monitor report, "Trends in 2000 Rates for Physicians' Medical Professional Liability Insurance." So, Emanuel has taken on a fight against exorbitant malpractice premiums, calling the situation in Pennsylvania "a major disaster."

Thanks to people like him who are not afraid to speak out, strides are being made, although there is still much to be done. If the debate is not settled, his fear is this: Will Pennsylvania and other states fighting this cause have medical care in the future?

Now practicing office-based gynecology only - and still paying $29,000 for malpractice coverage - Emanuel spoke with Physicians Practice Digest about his campaign and thoughts on being pushed from a career he loves.

PPD: You were a practicing OB/GYN for many years. What made you choose that specialty?

Emanuel: I've been a practicing OB/GYN for about 33 years. My father was a physician in the Philadelphia area - in fact, he practiced in Philadelphia for about 52 years. He was a urologist and, before the discovery of penicillin, he was the biggest syphilologist in Philadelphia.

I went into medicine, too, but I wasn't sure what was going to happen with the military draft after my internship, so I had enlisted in the Navy for a two-year stint and tried to decide if I wanted to be a urologist or an OB/GYN.

When I got out of the military I did my residency at Albert Einstein Medical Center and went into private practice in September of 1967.

PPD: When you started your practice, was malpractice a big part of how you ran your business? What has changed?

Emanuel: Well, I went into a partnership with another physician. That first year, my medical malpractice rate was $100. Last year, it was $47,000. And this year, on January 28, I got my bill for the year 2001 and it was $63,500.

By law, to hold a medical license in Pennsylvania you are required to carry $1.2 million of insurance. With our managed-care near-monopolies in this area, and with salaries and rent and so forth, my entire revenue would have been falling below what my costs were. It seemed a little difficult to be a physician and have to pay for it.

PPD: What's behind the high rates for coverage in Pennsylvania?

Emanuel: Well, we have to find a different kind of funding for this CAT Fund because it is a catastrophe. [Editor's Note: Pennsylvania physicians are required to pay a surcharge, on top of malpractice premiums, to support the Catastrophic Loss Fund, or CAT Fund, which covers malpractice awards that exceed private coverage. The Pennsylvania Medical Society reports the surcharge rose 25.7 percent for most physicians in 2001.] Every year, the amount we have to put in to replenish the CAT Fund goes up.

Also, we have an abundance of Philadelphia lawyers who like to change venue to the City of Philadelphia. I practice in Delaware County; I delivered my babies in Montgomery County. But the City of Philadelphia, Philadelphia County, gives malpractice awards that are higher than those anywhere in the entire state of California. No matter where the physician practices, the cases get tried in Philadelphia, because the juries there give astounding awards.

We also have to get caps. Forty-six states have had tort reform and caps - they set limits as to where they can go with some of the nebulous aspects that are brought into malpractice cases - nonexpert witnesses, for example.


Malpractice is a terrific misnomer. It sounds like we've done erroneous things when that's the furthest thing from the truth. Anyone who has a bad result may sue for malpractice no matter what the etiology of it.

PPD: So what did you decide to do?

Emanuel: I delivered my last two babies on January 30, and I told all the patients who were still pregnant and expecting me to deliver them that I could no longer afford it. Some of these patients were women I had delivered from their mothers, and now they wanted me to deliver their children.

Others, I had delivered their first babies, and they wanted me to continue delivering them. I referred them on to other doctors that I had seen through their residency and felt very comfortable referring them, but it was a very tearful situation.

They found places, but doctors here are having a very hard time making enough money to support their own families.

I'm at a stage in my life where my children are all grown and on their own and doing well. I don't need to do this, but I sure don't like to be squeezed out of it after 33 or 34 years of practice - as I said, my father practiced for 52 years here. He never even had to carry malpractice insurance.

I did buy malpractice insurance for office gynecology; that is all I am now allowed to do. Even that is $29,000, with the add-on for the CAT Fund.

I no longer will accept any managed-care insurance. Our payments by them are only around half of what collectable fees were 8 to 10 years ago. I'm not afraid to say that, at least in my practice, that was a major part of why we can't afford to practice in this state.

PPD: Did you have to lay off staff?

Emanuel: I have an office manager and one part-timer. As it got to the point where I was hardly taking anything at all home, I diminished my staff. It has been an ongoing thing. In fact, for the last two years, I've felt like this is more a hobby than a vocation. This year, when the numbers crossed, I decided I couldn't afford to fund my hobby.

I really care for my patients, and they really care for me. I give them a lot of my heart and my soul. And they know that. We'll see if that covers expenses, though.

PPD: What does this mean for the future of medicine in Pennsylvania?

Emanuel: We have had a major disaster in this area; doctors are leaving Pennsylvania in droves.

OB/GYNs are leaving; they are dropping obstetrics and dropping surgery.

The neurosurgeons and orthopedic doctors here have malpractice bills that are in the range of $80,000 to $100,000. We have orthopedic doctors who have dropped their surgical insurance so that some of the trauma centers in this area are on very tenuous ground. We can possibly expect some people not to survive auto accidents because the ambulances won't have a place to take them.


At the main hospital where I work, Lankenau Hospital, the OB/GYN department, up until recently, was almost totally full of doctors who had come through the residencies here. Of our 12 residents this year, not one of them plans to stay in this area because of this situation.

As the numbers of doctors diminishes, it just means the amount the remaining physicians have to pay into the CAT Fund gets larger. When the next bills come out, in July and January, we're going to have an even greater outflow of doctors from this area. And no one wants to come in here to fill the vacancies. It's getting tough.

We feel that kids not even out of high school will see what a financial burden they are going to have if they go into medicine in this state, and will not even think about it.

Once, this area was the mecca for medical care. Philadelphia has six medical schools and fine hospitals. Now, I really am afraid that Southeastern Pennsylvania is an area that's not going to have medical care. I hope I'm overly pessimistic.

PPD: We've heard that physicians are getting patients involved in backing tort reform. It's interesting because, traditionally, those opposed to tort reform have positioned themselves as being on the side of patients. How has this new strategy been working?

Emanuel: It's hard to say how effective it is, but I've been very, very active with that. We have a sign in the office - my manager removed all the magazines and reading material in the office except this 4x6 poster explaining everything that I've told you. The patients had nothing else to read in the waiting room.

Many, many of my patients have told me about - or even sent me copies of - letters they've sent to the legislators and to the governor. But we're told the trial lawyers are putting a lot of money into defending the system as it is.

PPD: It seems unusual to see physicians fighting together for a cause.

Emanuel: It's very difficult to get doctors together to fight this. Family physicians have now joined our cause. Though they aren't paying the same high rates, they are affected because it's almost impossible for them to find specialists to refer their patients to.

We have been led to believe that we have federal laws hanging over us - that even if we discuss fees among two doctors we'll have a $350,000 antitrust fine and jail sentence. But doctors are getting together a lot more.

We're getting several hundred, even a thousand or so, to go to Harrisburg. Of course, the first time we did it five years ago, 2,000 doctors took a day off and went to the capital. The Philadelphia press covered it by asking the head of the Philadelphia Bar Association what she thought of the doctors' march on Harrisburg. She replied, "Oh, you mean the Millionaire Man's March on Harrisburg." That sort of deflated us a bit. It's not true, and our intentions weren't made clear.

We have a lot of CEOs in this area - even CEOs of hospitals - that have been taking million dollar salaries. I think the public thinks physicians are making the same thing. It's far from the truth. We feel like we have nobody on our side.

We are the only ones who are really for the people, looking out for their best interests, and we're the ones being beaten on the most.

This article originally appeared in the September/October 2001 issue of Physicians Practice.