Mr. Larcher, the report author, said: "In addition, the medical malpractice availability and affordability crisis of the last several years has resulted in a rapidly growing alternative market. Healthcare systems now have a greater financial incentive to reduce their cost of risk."

Greg Morris, chief operating officer of Aon Healthcare, attributed the decline to actions taken by healthcare systems to improve quality of care. He said that "a heightened awareness of how quality care and patient safety tie directly to the cost of risk" have also likely played a role in the decline.

The Aon study examines more than 200,000 hospital bed equivalents and represents approximately 10 percent of the hospital professional liability market, and 15 percent of the alternative segment of the market.

In total, the analysis database contains 53,000 non-zero claims, representing $4.5 billion of incurred losses, and includes historical claims information for 10 years (1995 to 2004).

The study also includes breakouts of claim costs and frequency trends by facility type, including university, specialty, religious, publicly traded and community.

The 2005 Hospital Professional Liability and Physician Liability Benchmark Analysis is co-sponsored by the American Society of Healthcare Risk Managers.