As the health care delivery system continues to undergo a major overhaul, a host of unknown, yet significant consequences swirl around medical and professional liability. Hospital risk managers are "grappling with greater physician integration and changes in state legislation that influence professional liability costs," according to the 2012 Hospital and Physician Professional Liability Benchmark report, recently issued by the American Society for Healthcare Risk Management and Aon.

 

Among other things, the report points out that state lawmakers are pursuing new liability reforms:

  • Massachusetts enacted a law that adopts a mandatory 180-day cooling off period, where providers are given the opportunity to disclose the event, offer an apology and negotiate compensation.
  • New Hampshire lawmakers passed an act establishing an early-offer alternative in medical injury claims. The program provides patients the option to settle medical liability claims within 90 days of injury.

"These states are at the forefront in changing the environment for health care providers as the laws move away from traditional tort reforms, such as caps on non-economic damages, and move toward restructuring the patient/provider relationship," Erik Johnson, health care practice leader for Aon's Actuarial and Analytics Practice and author of the analysis, said in a press release. "This legislative trend shares a synergy with the health care reform legislation in that they are focused on innovations that would promote efficiencies and unlock savings that are currently ingrained within the system."

The report also found that as hospitals ramp up physician employment they are using self-insurance to provide med mal coverage. And while the hospitals surveyed for the report pointed to cost savings and streamlined claim defense as a reason for going this route, self-insurance isn’t without its own challenges, "such as consideration of physician tail and prior acts coverage," the report noted.

Here are some other key findings from the report:

  • The frequency of professional liability claims and claim severity continue to rise at a relatively stable rates — 1 percent and 2.5 percent respectively.
  • The report projects an annual loss rate of $3,030 per occupied bed in 2013 and that loss rates will increase at a 3.5 percent annual rate.
  • Nearly 30 percent of hospital professional liability costs are associated with five health care-acquired conditions: infections, injuries, medication errors, objects left in a body during surgery and pressure ulcers.

"We see that the integration of risk management issues with the broader strategic direction of the organization differentiates top-performing hospitals from others," said Theresa Bourdon, group managing director of Aon Global Risk Consulting. "This integration is especially important considering the magnitude of changes health care systems are dealing with in the current environment."

We’ll be exploring the issue of liability reform in an upcoming issue of H&HN. We’d welcome your thoughts on the subject. How are you handling the potential for increased risk under new care delivery models? What impact is this having on physician relations? What about on your overall costs? Is your state pursuing tort reform? Email your comments to me at mweinstock@healthforum.com.