When you send a package through the US Postal Service (USPS), you can buy insurance in case they lose your package, or you can save the cost and not purchase the insurance. If you do not buy the insurance it does not mean that the USPS will treat your package any differently. However, with insurance, if they do accidentally misplace or lose your package you can receive monetary compensation for your loss.
Now let’s consider the healthcare industry. Malpractice insurance is a $55 billion dollar per year industry, according to a study performed in 2010. To avoid being sued by patients, doctors practice what is known as “defensive medicine”. Essentially, doctors call for extensive and often unnecessary testing to avoid the possibility of a lawsuit, raising the cost of healthcare in the US.
The difference between the USPS example and the healthcare example is that you purchased the right to hold the USPS accountable for their potential mistakes, while in the healthcare example you have the right to sue the doctor without making a conscious pricing choice. Imagine how much cheaper a medical procedure might be if you could waive your right to sue the doctor. There would likely be less unnecessary tests ordered, and the savings in malpractice insurance could be passed along to the patient.
Wouldn’t the healthcare industry benefit from following the lead of the USPS and making the right to sue the doctor an “option” you paid for, rather than a compulsory right?
The USPS actually created an additional revenue driver by offering insurance. In particularly litigious businesses we often overlook that customers have the right to sue. Why not expressly exclude the right to sue in your contract, and then offer a separate insurance option? Let’s say you are a wedding photographer, and after a wedding, you had an accident that destroyed the pictures you took.
Simply returning the fee you charged the customer would not be enough; you would likely be sued by the bride and groom for damages since they could never recreate the event. Now imagine that you expressly removed the option of a lawsuit in your contract, but offered an insurance policy with a defined payout if a catastrophe occurred and you were not able to deliver the photos as agreed. You just created another revenue driver for your business and removed the compulsory right of the client to sue you.
How can you use the lesson from the USPS to make your offering more profitable and less prone to lawsuits by providing the “option” to sue for an additional cost?
