18 Dec New York Hospital-Owned Malpractice Insurer, HIC, Acquired by TDC: What Could This Mean?
The Doctors Company (TDC) announced their agreement to purchase Hospitals Insurance Company (HIC) and FOJP Service Corporation on November 27,2018. TDC, the largest physician-owned medical malpractice insurer in the country, paid $650M under the terms of the deal, which is expected to close in 2019 and is subject to regulatory approval.
The sale presents an important opportunity to financially strengthen HIC’s current owners – Mount Sinai Health System, Montefiore Health System, and Maimonides Medical Center – with the proceeds being split 50%, 25% and 25% respectively. By divesting their ownership in HIC, each facility will benefit from a significant cash infusion. While there are many questions to be answered about how this will look if/when approved by NYS Department of Financial Services, the purchase aligns the State’s goals of expanding competition among medical malpractice insurers and stimulating the strength of State-governed admitted insurers (HIC and TDC are both admitted).
The big question is how this sale will affect HIC and TDC’s filed rates with the State. Since HIC is an admitted insurer, their rates are filed and approved by New York. This filing is done with the understanding that HIC can only insure providers who work at a facility owned by HIC. HIC rates, which are tied to hospital affiliation, are extremely competitive making it hard for other insurers (both admitted and non-admitted) to compete. Alternatively, TDC has state-filed rates that are not competitive in many cases (this ignores the TDC Tribute Plan which is a tremendous advantage TDC offers its physicians). With TDC purchasing HIC, it is uncertain if the current HIC rates will still be available to providers now that HIC is no longer owned by the hospitals.
While more specifics have yet to be revealed, this sale is further proof that TDC is committed to New York physicians and facilities. If the sale is deemed acceptable by NYS, additional competition and the expansion of the medical malpractice insurance market will benefit all healthcare providers and facilities.
Phalanx Healthcare Solutions is a New York based medical malpractice insurance consultant specializing in insurance and reinsurance solutions for physicians, physician organizations, and healthcare systems. For more information, visit our web site at www.phalanxllc.com.
We have included descriptions on the three entities below for more information.
About The Doctors Company
Founded by physicians 40 years ago, TDC is committed to advancing, protecting, and rewarding the practice of good medicine by assisting hospitals and practices of all sizes manage the complexities of today’s healthcare environment by providing expert guidance,resources and coverage.
TDC is rated “A” (Excellent) by A.M. Best and is the largest physician owned medical malpractice insurer in the country, insuring 80,000 members and having over $4.8B in assets. This transaction is a key step forward in TDC’s New York market expansion strategy.
About HIC
Hospitals Insurance Company (HIC), is a New York State licensed insurance company. HIC providing coverage and services to some of the most prestigious and well known healthcare organizations in the NY metropolitan area including long-term care facilities,physicians and healthcare professionals throughout New York State. Since 1987,the company has served the insurance needs of the medical community with a strong commitment to personal service, competitive rates, and financial security for its policyholders. Founded more than 35 years ago, HIC writes$180M in premium volume, with assets of $1.6B and surplus of over $850M.
About FOJP
FOJP is a leading risk management organization serving a group of hospitals,long-term care facilities, and social service agencies in metropolitan New York.
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