6 Risks That Can Leave Medical Practices More Exposed Than They Realize
A recent New Jersey Supreme Court case highlights an important lesson for medical practices: having insurance does not always mean you’re fully protected.
In the recent article published by Medical Economics, Randy Sadler explores how medical practices can face significant financial exposure despite carrying commercial insurance. Drawing on the New Jersey Supreme Court case Jarrell v. Kaul, he explains why simply having an insurance policy is not enough. In this case, a physician was found liable after complications from spinal surgery. Although he carried medical malpractice insurance, his policy specifically excluded spinal procedures, leaving him without coverage for the claim. The court also ruled that the surgical center where the procedure took place could face liability for failing to verify that physicians practicing there maintained appropriate malpractice coverage.
This case is a reminder that insurance programs should be evaluated by how well they align with a practice’s actual operations, not simply by whether policies are in place. As medical practices face increasingly complex operational and liability risks, leaders are being challenged to look beyond the existence of coverage and evaluate whether their insurance programs truly reflect the realities of their business.
Insurance Gaps Extend Beyond Malpractice
Even well-insured practices can find themselves exposed if their coverage does not keep pace with how the organization operates. Coverage exclusions, policy limitations, reporting requirements, and changes in services or staffing can all create unexpected gaps.
Medical practices also face a growing range of operational risks that may not be fully addressed through traditional commercial insurance, including:
- Malpractice coverage gaps resulting from policy exclusions, coverage limitations, or changes in procedures, providers, or locations.
- Cyber incidents that disrupt patient care and revenue.
- Employment-related claims involving staff or workplace issues.
- Business interruptions caused by technology failures or third-party vendors.
- Reputation damage following lawsuits, data breaches, or public complaints.
- Financial strain from the temporary loss of a key physician, which can reduce patient volume and revenue while fixed expenses
- continue.
Each of these events has the potential to affect operations and cash flow, even when insurance is in place.
Looking Beyond the Policy
The Jarrell decision underscores the importance of regularly reviewing insurance coverage alongside the realities of day-to-day operations. Practice leaders should understand where exclusions, deductibles, waiting periods, and coverage limitations could leave the organization retaining more risk than expected.
For some organizations, alternative risk financing strategies, including captive insurance, may complement commercial coverage by helping finance retained risks and build long-term financial resilience.
Insurance remains an important part of protecting a medical practice, but no policy covers every exposure. Understanding where coverage ends and retained risk begins can help practices make more informed decisions before a claim reveals an unexpected gap.
Read the full article here to see why evaluating insurance beyond the policy itself can help medical practices identify retained risks, strengthen their risk management strategy, and better prepare for unexpected claims.