by your side - magmutual | the policyowner difference · · 2015-01-23each of these stories...

By Your Side

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December 31 2001 2002 2003 2004Physician Policyholders 12,089 14,938 15,983 17,440Gross Written Premium* $ 132,702,816 $ 218,502,761 $ 289,838,240 $ 362,413,173Total Assets* $ 654,347,615 $ 848,648,303 $ 994,187,458 $ 1,154,559,108Claim Reserves (Net) $ 252,657,244 $ 291,431,000 $ 299,516,000 $ 339,640,000Claims Paid* $ 76,356,347 $ 114,058,180 $ 139,548,273 $ 160,744,632Policyholders’ Surplus* $ 177,226,433 $ 172,023,733 $ 174,210,607 $ 182,175,088Claims Reported 1,869 2,322 2,861 2,785

Physician Policyholders/Owners Total Assets* in millions

* Figures represent consolidated results for MAG Mutual Insurance Company and subsidiaries prepared under Generally Accepted Accounting Principles (GAAP) basis.

Amount Reserved for Pending Claims (Net) in millions Claims Paid in millions

Financial Highlights MAG Mutual Insurance Company is rated A- Excellent by A.M. Best

2001 2002 2003 2004

200

150

100

50

0

160.7

2001 2002 2003 2004

1,250

1,000

750

500

250

0

1,154.6

2001 2002 2003 2004

400

300

200

100

0

339.6

MAG Mutual 2004 Annual Report | 1

Financial Highlights . . . . . . .Inside cover

Opening Message Contents Our Mission . . . . . . . . . . . . . . . . . . . . . .1

Chairman’s and President’s Message . . . . . . . . . . . . . . . 2-3

Physician Advocacy . . . . . . . . . . . . . . . 4-5

Physician Profiles . . . . . . . . . . . . . . . 6-11

Risk Management . . . . . . . . . . . . . . 12-13

Board of Directors . . . . . . . . . . . . . . 14-15

Code of Ethics About MAG Mutual . . Inside back cover

These days, a physician can’t have too many friends. After all, the number and complexity of issues facing physicians and their practices today are unlike anything experienced in the profession in the past. And the competition for your time and attention has never been more intense.

This annual report, however, is worth a few minutes of your time. It recounts the stories of several of our physician policyholders who have worked through personal and practice issues that challenged their ability to keep their patients first.

There’s the story of the physician who had to deal with the hurricanes that ravaged Florida. Another about a opthalmologist whose practice overcame financial hardship. And another about a family-medicine practitioner who served our country in the war in Iraq.

Each of these stories underscores the enormity of the challenges that can rise up to confront the men and women who practice medicine. They also serve to illustrate our central promise to each and every policyholder: MAG Mutual will always be by your side.

You already understand this truth as it applies to liability protection and litigation. Standing up for our physician policyholders when you need us most is the foundation of all that we do. But as the stories in this annual report attest, MAG Mutual is by your side in other ways, large and small.

All of us at MAG Mutual want you to know that when it comes to the uncertainties that you face every day, there is no uncertainty about where we stand. We stand with you.

Where we stand

MAG Mutual is dedicated to helping physicians and others in the medical community focus on providing quality patient care. Working together, our companies develop and provide innovative business, financial and insurance solutions to help those we serve meet their professional, business and personal goals.

On the cover: Three doctors who overcame major personal challenges with MAG Mutual by their side. From left: Dr. Peter Gordon, Dr. Charlotte Elenberger and Dr. Philip Marler. See their story inside.

The words on the cover of this 2004 Annual Report and the physician stories inside reflect what sets MAG Mutual apart – not just from other insurance companies, but also from other companies that offer products to physicians. MAG Mutual is, and has always been, about serving our physician member-owners.

A promise to be “by your side” is a big com-mitment. But it’s one we keep, every day. We use our resources to help you with the daily challenges of protecting your reputation, practicing quality medicine, managing your office and achieving your practice and personal financial objectives. But we go beyond our products and services: we’re your advocate on the many political, economic and regulatory issues facing physicians practicing medicine.

Never has our promise been more evident than our support for tort reform. We dedicated significant resources to assist the medical and business commu-nities reach the goal of passing meaningful reform. Despite facing negative public relations and factual distortions from those in opposition, our belief that tort reform is absolutely necessary for patients, phy-sicians and the healthcare system will not change.

The coalition of the medical and business orga-nizations in Georgia worked together and “turned the corner” of public opinion in 2004. While no law passed in 2004, in February 2005 Georgia’s legislature passed and the governor signed into law, a strong tort reform bill. MAG Mutual’s pledge to Georgia legislators and policyholders is to reduce premiums by 10%, as soon as the Georgia Supreme

MAG Mutual. By your side.

2 | MAG Mutual 2004 Annual Report

Court upholds the law, and to return any excess premium collected from the date the legislation was enacted.

We don’t know how long the legal challenge process will take, but we are confident that claims experience will improve, so for 2005, we will not raise medical liability premiums in Georgia. Therefore, for Georgia policies renewing on or after May 15, 2005, medical professional liability insurance rates will not increase. Individual policyholders may see fluctuations in their actual premiums due to changes in their practice, claims experience, etc., but the base rates will not increase.

2004 was also a year of “turning a corner” for MAG Mutual Insurance Company, as our financial results improved from a loss to a modest profit, rate increases moderated dramatically in all states, and we maintained the long-term financial security you need and expect. Our A.M. Best A- Excellent financial rating for 2004 is just one indicator we’re doing the right things for your protection.

We continue to provide medical professional liability insurance to a growing number of physicians – nearly 17,500 at year’s end. In fact, MAG Mutual is now the largest mutual medical professional liability insurer in the Southeast. We are physician-owned and physician-led, and our mission is to offer medical malpractice insurance to physician members at the lowest premium possible.

Also in 2004, our focused efforts to manage claims were successful and of course, our winning legal defense teams are always by the side of the physician. Our claims management and defense

preparation, always involving the physician, is one of our core strengths and our results show it. We win 83% of the cases that go to trial and close more than 80% of all claims without an indemnity payment.

Last year, more policyholders learned about and began taking advantage of the services and products we offer to our physician owners through our subsidiaries. From billing and transcription services, accounting, tax and practice management consulting, business and personal lines of insurance, group health insurance and retirement planning, we’re helping more physicians than ever meet their practice and personal financial objectives.

Please take a few minutes to read about a few of the physicians we insure, how our Risk Management team helped a particular South Carolina clinic and review your company’s 2004 financial report. We’re proud to be working by your side and look forward to another successful year in 2005.

Roy W. Vandiver, M.D.Chairman

Thomas M. GosePresident



The power of a unified voice

When Georgia Gov. Sonny Perdue inked his signature on tort reform legislation in February 2005, physician practices across the state looked to a brighter future. But that single moment was really the culmination of years and years of hard work to build support for a critical issue.

In fact, tort reform could not have been achieved in Georgia without widespread, prolonged advocacy. Physicians invested countless hours of their time organizing, networking and communi-cating the need for change.

The breadth and depth of this effort – and the successful outcome – offer a valuable lesson: The more physicians get involved in issues that impact their livelihood, the more likely they are to reap the benefits of change.

“Many physicians simply feel they don’t have the time or expertise to participate in the political process,” says Michael Greene, M.D., president of the Medical Association of Georgia in 2003. “The message I give physicians is that legislative decisions will be made, whether you’re involved or not.”

The constraint of time is perhaps the greatest reason many physicians don’t get involved in advo-cacy. “That’s especially true of young physicians,” says Willie Adams, M.D., a MAG Mutual board member. “Young physicians already struggle to find time to start a practice and a family.”

Dr. Adams, a gynecologist, personifies physi-cian activism – he’s an elected official. In 2004, the people of Albany, Ga., elected Dr. Adams mayor of their city. His investment of time stems from a be-lief that public service is a moral obligation. “There’s a proverb that says, ‘To whom much is given, much is expected,’” Dr. Adams says. “It’s inexcusable for

1 | Participate in organized medicine: Join your statewide medical society.

2 | Listen and talk: Get to know elected officials and talk to them. Support their candidacy.

3 | Give: Allocate time for advocacy, or if you don’t have the time, write a check to those who lead the charge.

3

Above: Gov. Perdue signs the Georgia tort reform bill. Opposite page: Physician advocates in action in Georgia and Florida.


those of us who have been given so much to acquiesce and not give something back.”

While not every physician can match Dr. Adams’ investment of time and energy, the doctors who work to shape public policy issues and effect change believe every physician must participate in some way.

“We understand that not every one of the 15,000 or so physicians in Georgia can come up and testify on an issue,” Dr. Greene says. “But every one of us can become a part of organized medicine, and many can serve in leadership roles. In my view, membership to organized medicine isn’t optional – it’s mandatory.”

Aside from joining a statewide medical association, physicians can represent their profession in the com-munity by speaking to groups and sharing their per-spective on the practice of medicine with their patients and others. “We believe it’s important to know who your legislative representatives are, and to talk to them,” says Al O’Connell, president of the Florida Medical Group Management Association. “If you can’t talk to them individually, then the next best option is to belong to an organization that speaks for the physician.”

“One of the easiest places to get involved is in your hospital,” says Sandy Easley, M.D., a North Carolina OB-GYN and past president of the state’s

OB-GYN society. “At the hospital level, there are myriad issues involving credentialing, quality of care and the hospital-physician relationship. The point is that getting involved doesn’t have to be such a daunting task. It takes some time, some commitment, but it’s an extension of what you do.”

Beyond time constraints, many physicians may not be inclined to get involved in the political pro-cess because they don’t fully appreciate the impor-tance of advocacy in the legislative process.

“Physicians are trained in medical school to make decisions based upon facts,” says Daniel Hanks, M.D., a MAG Mutual board member and president-elect of the Medical Association of Georgia. “Physicians have a tendency to say, if we put out the facts, the decision makers will act. But we know that it’s not just the facts but the other dimensions of advocacy that often lead to the outcome. We’re playing the game on their field. We have to be smart enough to play their game.”

In addition to changing perspectives on the political process, many leaders in the medical com-munity believe that physicians should view their in-volvement as advocating on behalf of their patients, not just advancing their own positions.

“Many times, a doctor is the one person who can speak for his or her patients as an advocate,” says John Antalis, M.D., current president of the Medical Association of Georgia and a MAG Mutual board member. “Unfortunately, if you ask most physicians, this idea is not really emphasized in medical school or residency. It’s talked about, but it’s never emphasized.”

Dr. Adams agrees: “Doctors have their finger on the pulse of the people. We listen to patients and their problems, not just health problems, but eco-nomic and otherwise. So, I believe physicians have an obligation to help people.”

Philip Marler, M.D.The Longstreet ClinicGainesville, Georgia

I am the State Surgeon for the Louisiana National Guard. Part of my job is to oversee the evaluation of soldiers with medical conditions to determine their fitness for deployment to Afghanistan and Iraq. When the National Guard Bureau in Washington asked Louisiana for five medical providers to be deployed to Iraq, I felt morally obligated to go, so I put myself first on the list.

On February 24, 2004, I flew to Kuwait. It was another two or three weeks before we made the trip across the desert from Kuwait to Camp Caldwell in Iraq. The trip took four days and covered more than 500 miles. We traveled in a convoy. You only travel during the day, very little at night. We were fortunate in that we only had one soldier killed and several injured during the trip. This was the most stressful part of my time in Iraq.

We were stationed about 90 miles east of Baghdad, right on the Iranian border, near the village of Balad-Ruz. Our medical company set up a Level II clinic treating military personnel and local citizens with injuries, illness and disease. We saw a few serious injuries such as traumatic head injuries suffered by civilian workers falling off buildings and

severely injured soldiers from Improvised Explosive Devices. The civilians had primitive medical care or no care at all.

The Internet was my primary way of keeping in touch. I learned while I was there that MAG Mutual would continue my medical liability coverage but would not charge me the premium while I was away. It was more than a gesture – it made me feel that MAG Mutual considered me as something more than just a policyholder. It gave their organization a very human and caring face.

After returning home, on my first day back to the clinic, I was home reading around 9:30 a.m. when the doorbell rang. Three sheriff ’s deputies were at the door. They asked me to come with them, and they escorted me to my office. We went about 25 miles an hour the whole way.

When we got to the office, the employees of Longstreet Clinic were gathered on the balconies on all the three floors of our building. There was bunting, ribbons and confetti all over. There’s no other way to describe it other than to say it was emotionally overwhelming and reminded me of the real reason I went to Iraq.”

“ I learned in October of 2003 I was to be deployed to Iraq in January 2004.


Charlotte Elenberger, M.D.Florida Radiology Associates, P.A.Altamonte Springs, Florida

“ Even before the Florida hurricanes of 2004, I was well aware of the damage that big storms could cause. I was at the Medical University of South Carolina in Charleston when Hurricane Hugo hit there in 1989. Even 15 years later, I vividly remember the widespread devastation it left in its path.

So when talk started of hurricanes hitting the Orlando area, I began mentally preparing for the worst. With a hurricane, you don’t know how bad it’s going to be until the wind dies down and you go outside the day after. I knew we might see lots of injuries, and people all over town might be counting on us for emergency care. So we stationed a doctor at each of the seven hospitals we served.

Once we had a plan in place for providing patient care, I thought about how I could keep my family safe. Only later did I wonder, will my practice still be there after these storms?

Hurricane Charley affected our billing office. We lost phone service for 10 days, and during that time, we were unable to process bills or payments. That was a major setback for our business. Then,

Hurricane Jeanne damaged a new outpatient imag-ing center that we were just getting ready to open. We had to delay its opening for a month.

But overall, we were very fortunate. I was grate-ful. Like a lot of people and businesses, we had some property damage, but that can all be fixed. In the end, property is just property.

We were also fortunate to have MAG Mutual as the provider of our property coverage. They put an adjustor on the job and got the claim paid. And we appreciated the fact that throughout the process, MAG Mutual made it a point to touch base with us just to see how we were doing.”


“ I thought about how I could keep my family safe. Only later did I wonder, will my practice still be there after these storms?”

Peter Gordon, M.D.Eye Physicians & Surgeons, PCDecatur, Georgia


“ Our ophthalmology practice was losing money every year in unpaid insurance claims. Payment from our successful claims was even sluggish at times. On average, our receivables took about two months to be paid. Unacceptable amounts of our receivables were over 120 days old. Delays and inconsistency in our cash flow made it difficult for us to budget properly.

Even though we had five full-time employees handling our insurance processing, the job was not consistently being done. Our billing software was old, which made it difficult to manage our accounts receivable properly. All too often, by the time we discovered problems with the claims we had filed, insurance companies would reject and deny pay-ment, due to timely filing requirements. So we had to appeal, which delayed our payments even longer.

When we thought of outsourcing our claims processing, we decided to check with MAG Mutual Healthcare Solutions. We’d had a positive, long-term relationship with MAG Mutual, which had

provided us with medical professional liability coverage since MAG Mutual was founded. So it made sense to look to MMHSI, one of MAG Mutual’s subsidiaries, for help.

Having MMHSI working on our claims has turned things around for us. We collect on most claims much faster. Our cash flow and “days in accounts receivable” have greatly improved. Our billing software is up to date. And their support team assists with all our computer issues.

Working with MMHSI has given us the staff support necessary in today’s market without increasing our staff. In fact, we have reduced our staff from five people to just one person, who can focus on problem claims and works directly with MMHSI’s staff to resolve problems.

Finally, my partners and I can focus on the practice of medicine, with the confidence that MMHSI is hard at work for us.”


Making time to manage risks

Inside every physician and practice manager, there lives a gnawing concern: Is my practice doing everything possible to prevent a serious mistake?

The rigors of running a medical practice feed this fear. “Practices run so hard and fast, day in and day out, that it’s tough to find time to think about risk management,” says Julie Radabaugh, physician services coordinator for Low Country Medical Associates, a Charleston, S.C., practice of 22 clinics, eight lab draw stations, a diagnostic imaging center and newly opened physical medicine and pain management center.

But just as prevention is key to good personal health, identifying areas of vulnerability is crucial to maintaining a healthy practice.

That’s why MAG Mutual has developed a thorough process to help practices assess and man-age risks. This process examines every aspect of operations – from hiring doctors and staff to calling patients for follow-up appointments – then offers suggestions on avoiding missteps.

“The recommendations we make are based on our analyses of past claims filed against medical practices,” says Dan Wright, MAG Mutual’s Director of Risk Management. “By understanding what’s led to litigation in the past, we’re able to identify ways to avoid litigation in the future, and at the same time, improve the quality of patient care.”

When Low Country president Dr. Strait Fairey saw a copy of Healthcare Risk Manager, MAG Mutual’s newsletter on risk management, he invited Bettye Scrutchin to Charleston to speak to all 60 physicians in the practice. In her presentation, Scrutchin, a senior risk management consultant for

While MAG Mutual uses an exhaustive checklist to assess risks to practices, these problems currently pose the greatest threats:

1 | Missed diagnostic tests: Results are not received or are filed before a doctor reviewed them.

2 | Patient: Sometimes noncompliant with treatment plan and need follow-up and referrals.

3 | Documentation: Fails to reflect the physician’s findings, thought process and actual care rendered.

3

Above: Dr. Charles Geer of Island Internal Medicine in Charleston is a model for “excellent documentation.” Opposite page: MAG Mutual’s Bettye Scrutchin (blue coat) helps Island Internal Medicine and Low County Medical Associates assess and manage risks.


MAG Mutual, opened the eyes of her audience to the many ways in which a practice could reduce its risk.

“It was fascinating,” Radabaugh remembers. “She advised us on how to respond to our risk management issues and how malpractice suits are handled. We would have loved for her to stay another three hours to answer questions.”

Low Country then invited Scrutchin back to talk to the practice managers. Again, the response was enthusiastic: Seven of Low Country’s offices asked for Scrutchin to conduct a site visit and review.

Island Internal Medicine in Charleston was one of the clinics that welcomed Scrutchin’s inspection. Scrutchin spent most of a day with Island, review-ing charts, studying processes and talking with phy-sicians and staff. Her findings were highly positive: Island had implemented a new system for tracking lab results, and she commended Dr. Charles Geer for his “excellent documentation.” Scrutchin’s sug-gestions for improvement included taking more frequent inventories of pharmaceutical samples, implementing a patient satisfaction program and taking additional steps to follow up with patients.

MAG Mutual’s collaborative, low-key approach drew praise from both Island Internal Medicine and its parent, Low Country Medical Associates.

“Bettye was very helpful,” Dr. Geer says. “Her presence was unobtrusive, but she was clearly doing her job and doing it well.”

“Frankly, I was surprised Bettye was able to conduct this assessment with our clinics without putting them on the defensive,” says Greg Robinson, Low Country’s chief executive officer. “It can be a bit intimidating to have someone on the outside come in and ask probing questions.”

The fear factor may be a major reason why more practices forgo risk assessment. What helps practices like Low Country overcome that apprehension is an abiding commitment to provide the best patient care, as well as the recognition that MAG Mutual is a partner, not a policeman.

“What’s impressed us so much about MAG Mutual are the tools they have in place that can really benefit a practice,” says Julie Radabaugh. “Our office managers want to see this continue, and we would like to see Bettye visit all of our locations.”


Roy W. Vandiver, M.D.Chairman of the Board

Thomas M. Gose, J.D.President, MAG Mutual Insurance Company

Willie Adams, Jr., M.D. Catherine S. Andrews, M.D. John S. Antalis, M.D. William H. Biggers, M.D.

Benjamin H. Cheek, M.D. William C. Collins, M.D. J. Price Corr, Jr., M.D.

Board of Directors


E. Daniel DeLoach, M.D. Michael E. Greene, M.D. Joseph W. Griffin, Jr., M.D.

J. Daniel Hanks, Jr., M.D. Ralph L. Haynes, M.D. Philip Z. Israel, M.D. John B. Neeld, Jr., M.D.

Andrew B. Oliver, M.D. Rajnikant A. Patel, M.D. Joseph S. Wilson, Jr., M.D.

MAG Mutual Insurance Company is the largest physician-owned medical professional liability insurer in the Southeast. The following subsidiaries of MAG Mutual Insurance Company provide other products and services referenced in this report.

MAG Mutual Insurance Agency, LLC (MMIA) is an independent insurance agency created to meet the property and casualty insurance needs of MAG Mutual policyholders beyond medical professional liability insurance.

MAG Mutual Financial Services, Inc. (MMFSI) provides the medical community with a trusted and innovative resource for financial planning, investment management, employee benefit solutions and other financial services.

MAG Mutual Healthcare Solutions, Inc. (MMHSI) helps physicians manage the business side of practicing medicine, including consulting, billing and tran-scription, so that physicians can focus on patient care.

Select Professional Underwriters, LLC (SPU) is a Georgia insurance agency created to market MAG Mutual Insurance Company’s insurance products.

Professional Security Insurance Company (PSIC) is a casualty insurer that was created to provide an insurance option for good physicians who need insurance but may not meet standard underwriting guidelines.

For more information about MAG Mutual or any of its companies, visit www.magmutual.com.

MAG Mutual Corporate Code of Responsibility and Ethics

MAG Mutual has always been committed to the highest standards of business integrity and to the avoidance of wrongdoing. We understand that the wrongful acts by a few individuals at a few companies and the significant losses suffered by investors, employees and customers has caused the public to question the honesty and integrity of businesses. Therefore, the Board of Directors formally codified the Company’s long-standing policies into the following Code of Responsibility and Ethics for MAG Mutual Board members and Company officers:

1 | Conduct all business activities in a legal, honest and ethical manner.

2 | Ensure that all actions are in compliance with all applicable laws, rules and regulations.

3 | Avoid all conflicts of interest and promptly disclose to the Company’s Chief Legal Officer, and its independent auditors, any transaction or relationship that could potentially lead to or give the appearance of such a conflict.

4 | Establish and maintain proper internal controls for accurate financial report-ing and assess and report annually to the Company’s independent auditors the effec-tiveness of such controls and procedures and any failures therein.

5 | Prepare all reports, documents and disclosures in a complete, timely, fair and accurate manner.

6 | Promptly report all violations of this Code to the Company’s Chief Legal Officer and to its independent auditors.

MAG Mutual Insurance CompanyEight Piedmont Center, Suite 6003525 Piedmont Road N.E.Atlanta, Georgia 30305-15531-800-282-4882www.magmutual.com

by your side - magmutual | the policyowner difference · · 2015-01-23each of these stories...

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