Doctor’s offices and clinics

Doctor’s offices and clinics

Surrago, James


You probably don’t like going to the doctor’s office any more than the next person. But, if you need one, doctors usually are not hard to find. More than 189,000 doctors’ offices and clinics operate in the United States. Those establishments represent $4.9 billion in annual insurance premium, employ nearly 1.7 million people and have a countrywide loss ratio of 66%.

(Offices of dentists, chiropractors, optometrists or podiatrists are excluded from these figures. Together, they number another 170,000 establishments and account for $1.3 billion in annual premium.)

Although employment in this sector grew 2.6% between 1994 and 1998-and is expected to grow another 5.3% between 1998 and 2001-the number of insurable establishments, or practices, has declined slightly. The primary cause for the decline is that similar practices have begun to combine with larger practices to drive down overhead costs and spread them over a larger patient base, as well as to control expenses in light of continuing public criticism of growing medical costs.

The number of medical practice establishments in 2001 is expected to be about 186,000, down from 189,000 in 1998 and 198,500 in 1994. Not surprisingly, the size of the market, as measured by premium dollars, is also expected to shrink, albeit marginally-from $4.9 billion in 1998 to about $4.8 billion in 2001. Still, countrywide the average premium per account is a healthy $25,687.

Nearly 92% of practices are small-with fewer than 20 employees. Countrywide, small practices account for $2.6 billion in premium, or 53% of the total, with an average premium of $15,043 per account. Medium-sized accounts-that is, those employing between 20 and 99-number a little more than 14,000, or 7.5% of all practices, and account for $1.4 billion, or 29.7%, of the $4.9 billion market in premiums. The average premium for medium-sized accounts is $101,000. Large and jumbo risks-those employing more than 100-account for the remaining 17% of the $4.9 billion market.

In the Rough Notes Midwest region, 28,000 doctors’ offices and clinics employ 287,000 and represent $745 million in 1999 written premium. The loss ratio on this business was 62.1%, 4 points better than the countrywide average. This sector is relatively less important to the Midwest region’s economy than to the rest of the country. The $745 million in premium represents 3.3% of the region’s total property and casualty insurance market, while countrywide this segment accounts for 3.8% of the market. Nearly all accounts in the Midwest region (99.1%) are in the small and mid-sized categories, and 75% of the total industry premium is in medical malpractice.

More than three-quarters (77%) of the total $4.9 billion market is in medical malpractice premiums. Workers compensation represents 10.2%, general liability 9.8%, property 1.7%, and inland marine 1.2%.

Information on this and other niche markets is available from ISO by e-mail at or by calling toll-free: (800) 888-41S0 ((800) 888-4476).

James Surrago is vice president, data management and information services, of the Insurance Services Office.

Copyright Rough Notes Co., Inc. Feb 2001

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