Malpractice

Reducing Risk is Vital When Hospitals Use Temporary Nurses

By Leigh Page

Poorly designed contracts with staffing agencies can add to liability woes

Using a nurse-staffing agency may help a hospital fill vacancies, but poorly constructed arrangements also have the potential to increase malpractice risk.
Depending on its insurance coverage and its contract with the hospital, the staffing agency could turn out to be a dependable ally‚Äîor it could spread millions of dollars of liability to the hospital.

"Keep in mind, as you outsource your work, you are not totally outsourcing your risk," says Ruth Dyer, an account executive at the Lockton Companies, an insurance broker in Kansas City, Mo., that helps hospitals select staffing agencies. "The temporary nurse is still operating under your roof, often under the direction of your employees as supervisors."

Jeffrey Driver, the chief risk officer for Stanford University Medical Center in Palo Alto, Calif., says it is important to assess the agency's risk to the hospital before signing a contract. "We generally do not choose companies that have pending lawsuits because that indicates that they have a problem with hiring nursing that are prone to lawsuits," he says.

Dyer and Driver agree on assessing the following areas before choosing an agency:

• Agencies with a "claims made" policy that cover incidents when the claim is made—not when the incident occurs—require an additional policy for incidents if coverage expires.

• The agency's carrier should have a credit rating of "A" or better.

• The agency should have coverage of $2 million per occurrence and $4 million in aggregate, but in some cases $1 million and $3 million may be adequate. Dyer also would insist on an excess-coverage policy of $5 million or more.

• Try to steer clear of agencies with self-insured retention, where the agency pays a base amount in malpractice costs before regular coverage kicks in. Unlike a deductible malpractice insurance policy, a self-insured retention policy does not require the policyholder to put up collateral, meaning that there is no guarantee that the money will be there.

Driver, who is also a lawyer, adds that the hospital's attorneys should closely review the proposed contract. He prefers contract language that indemnifies the hospital for negligent acts of agency employees and he would resist attempts by the agency to indemnify itself against negligent acts of hospital employees.

Viewing all these risks, "we prefer not to use agency people," Driver says. "But obviously there are times when you need to fill in staffing gaps."

This article 1st appeared in the October 2009 issue of HHN Magazine.

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