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Risk Management - What's it worth?

Fri 21 March 2003

MDA National states it's position on offering rebates for participation in risk management activities.

Over a number of years, medical indemnity insurers in the United States have offered a variety of premium discounts to doctors who participate in risk management programs. This has attracted less than half of the membership in most organisations and as a result, many insurers have ceased offering discounts as they have found them to be ineffective.

In the main, rebates have been factored into annual subscription increases ensuring that the doctor continues to carry the cost of the risk management programmes despite the appearance of a rebate for undertaking such activities.

The concept of offering a rebate for risk management activities is a relatively new phenomenon in Australia. It has now been adopted by a number of Australian MDOs. MDA National has examined the option very carefully. This review has been made in the context of the new requirements by government to provide an insurance policy in place of discretionary indemnity from 1 July 2003. Meeting the legislative requirements will incur significant administrative costs. As we are a mutual organisation all costs are ultimately borne by members. Our annual subscriptions are determined on actuarial advice and the fee structure does not contain a significant profit margin other than that actuarially assessed as being required to meet prudential margins.

Therefore, in an effort to contain additional outlays, Council has decided that MDA National will not be providing any per capita incentives for participation in risk management programs. This decision will be reviewed in twelve months

Similarly, several organisations have approached MDA National for financial support to establish their own risk management programmes. While the Association has a strong commitment to risk management and believes it should be regarded as a component of best practice, at this time we are unable to provide funding beyond our own education programs.
MDA National has resisted the temptation to use rebates as a marketing ploy that will be incorporated in to the membership annual subscription. While Members may perceive rebates as a reward for 'good' behaviour, an alternative being considered instead is a model where sanctions may be imposed for non-involvement in risk management activities.