What does buying into an OB/GYN practice with a malpractice history cost?

It costs the buy in price plus your share of whatever the history still owes, and in this specialty the second number can rival the first. Every practice has a history; the question is whether it is closed or open. A closed history sits under occurrence policies or funded tails and costs you nothing beyond the practice's ordinary premiums. An open history, claims made years with departed partner tails unfunded, carrier switches without prior acts protection, or open claims carrying reserves, is a contingent liability the partners share, and it should be priced into the buy in, written into the agreement as a group obligation, or walked away from. In a market where the premium runs $243,988, the common tail band of 150 to 200 percent makes one uncovered block of years a six figure exposure before any claim is filed.

Part of the OB/GYN hub.

What the history consists of

A practice's malpractice past has four layers, and diligence reads all four. The first is the claims record: claims filed, closed outcomes, and open matters with carrier reserves, available through the group carrier's loss runs. The second is the coverage architecture by era: which years ran occurrence coverage, which years claims made, the current retroactive date, and whether every carrier switch preserved prior acts or bought the old tail. The third is the departures: every physician who left, and for each one, whether the tail was bought, waived, covered by a successor employer's nose coverage, or left open. The fourth layer is the paper: the partnership agreement's indemnity language, which decides whether a claim arising from care delivered before your arrival is the group's cost, the departed physician's cost, or, in the badly drafted version, a cost the current partners absorb by default. In obstetrics these questions are the diligence itself, because the exposure window behind each answer runs until the youngest patient of those years turns 18 in many states, and then through the limitations period after that birthday.

How an open history gets priced

Price what you find rather than discounting on instinct. An unfunded tail on identified years prices at the standard band against the mature premium for those years. Take a Philadelphia practice where the premium is $135,974. A tail at 150 percent comes to $135,974 times 1.5, which equals $203,961. A tail at 200 percent comes to $135,974 times 2, which equals $271,948. Your share of either figure, by the partnership allocation, belongs in the negotiation as a reduction of the buy in, an escrow, or a written group obligation to fund the tails before your capital is at risk. Open claims price by their reserves, with the group counsel walking you through posture, because a reserved claim is the carrier's own estimate of the exposure. Premium consequences are part of the price too: a group with a difficult recent history pays for it in its current premium for years, and your share of a $243,988 class premium in Miami Dade is a different ownership proposition than the same share at $49,804 in Los Angeles and Orange County. None of this requires suspicion of the group. Mature groups expect these questions and keep the answers in a file. A group that cannot produce its loss runs or state its retroactive date has answered the diligence by failing it, and the correct price for a history nobody can price is a smaller buy in with written protections, or no buy in at all.

The comparison that keeps you honest

Hold the diligence against the alternative so the questions stay proportional. Hospital employment sells you none of this history: the system's coverage architecture is its own, and your exposure begins with your own patients. That cleanliness is worth real money, and it is the large group's strongest argument in high premium states. The small practice's counter is the whole ownership stack: distributions above the employed ceiling in strong years, the vote, and the buy sell value at your exit. Buy the history only when the stack still wins after the open items carry prices, and write the prices into the documents: which obligations belong to the group, which tails get funded at closing, and what happens to a claim from before your arrival if it lands in your third year. The documents, not the goodwill in the room, are what you will own.

Follow up questions

What documents should I ask for before I sign?

Ask for the carrier loss runs, the current policy declarations page showing your group's retroactive date, a list of every departed physician with the tail disposition for each one, and the partnership agreement's indemnity section. A mature group produces all four without drama. Hesitation on any one of them is information. The loss runs and the departures list matter most in obstetrics, where the exposure window behind a departed partner can stay open until a child patient turns 18.

Can the group just insure over an open history?

Sometimes, and the price of doing so belongs in the same negotiation. A new carrier may accept prior acts by honoring the original retroactive date, which is nose coverage, priced into the premium the group then pays. Where the new carrier declines some years or some physicians, the old tail has to be bought for the uncovered span at 150 to 200 percent of the mature premium. Either route closes the history. Neither route is free, and the buy in should reflect who pays for the closing.

Does a patient compensation fund change the buy in math?

It changes the shape of the exposure in the states that run one. Indiana caps total recovery at $1,800,000 for an act of malpractice occurring after June 30, 2019, holds an individual provider liable for no more than $500,000, and pays the amount above the provider layer from the fund up to the cap. Louisiana, Kansas, Nebraska, Wisconsin, and Pennsylvania run funds or excess programs of their own. A fund does not erase open years or unfunded tails. It caps the severity behind them, which lowers the worst case you are pricing.

Related questions

• Large group for malpractice coverage or small practice for ownership?
• How does tail coverage work when my group switches malpractice carriers?
• How do I budget for OB/GYN malpractice premiums in private practice?

Sources

• Physician Side Gigs, malpractice tail insurance coverage (tail coverage at 150 to 200 percent of the mature annual premium, prior acts coverage as the alternative, and the child limitations clock that keeps obstetric history open for years, accessed October 2026)
• American Medical Association, Policy Research Perspectives, medical liability premiums (reported $1M/$3M OB/GYN premiums of $243,988 in Miami Dade, $135,974 in Philadelphia, and $49,804 in Los Angeles and Orange County, the base for pricing open tail exposure, accessed October 2026)
• NORCAL Group, state patient compensation funds (patient compensation funds and excess programs in Indiana, Louisiana, Kansas, Nebraska, Wisconsin, and Pennsylvania, accessed October 2026)

Takeaways

• The real cost is the buy in price plus your share of whatever the malpractice history still owes, and open years can carry six figure tail exposure.
• Read four layers in diligence: the claims record, the coverage architecture by era, the departures and their tails, and the indemnity language.
• Price an unfunded tail with shown arithmetic: $135,974 in Philadelphia becomes $203,961 at 150 percent and $271,948 at 200 percent.
• If the group cannot produce its loss runs or state its retroactive date, the history is unpriceable, and the answer is written protections or a walk away.