Healthcare providers continue to experience relatively flat malpractice costs, according to a new report released today by Aon Risk Solutions in conjunction with the American Society of Healthcare Risk Management.

“Although overall cost levels appear to be calm, these seemingly still waters hide a system of swirling undercurrents,” said Erik Johnson, leader of the health care practice group with Aon’s Actuarial & Analytics Practice.

“Proactive organizations are using data, analytics and business intelligence to reduce costs and strengthen risk management in this stable environment. Our report helps these organizations to identify underlying problem areas, even when the overall picture looks good.”

The 2014 Aon/ASHRM Hospital and Physician Professional Liability Benchmark report examines medical malpractice trends from several vantage points, exploring the link between quality of care and medical malpractice claim frequency. This analysis is new to this year’s study, and facilities scoring highly in the survey tended to have lower frequencies of medical malpractice claims, indicating that risk managers can use survey scores as a “marker” for detecting and remediating areas in need of improvement.

The report also includes a survey of claim frequency and severity by cause of loss. Using text-mining techniques to measure the frequency and severity, or average cost, of claims by the cause of loss, the report examines a new level of specificity to risk managers’ ability to identify potentially costly risks.

At the same time, the benchmark provides an assessment of claim frequency and severity benchmarks by state, including statistical information specific to 27 states and the District of Columbia. When it comes to individual states, the survey reveals that Florida has the highest projected loss rates for 2015, at nearly $8,000. Conversely Indiana and Minnesota have the lowest projected loss rates for 2015, at $800 and $770, respectively.

For California, the report includes a special section reporting highlights of the analysis, as well as the impact of Proposition 6, a proposed change to the Medical Injury Compensation Reform Act’s non-economic damage caps. According to the report, the passage of Proposition 46 would result in an increase in medical malpractice costs of 15 to 35%.

The report draws several noteworthy, evidence-based conclusions concerning the current state of hospital professional liability, as well as projecting the future outlook. Projected loss rate for hospital professional liability, for example, is $2,870 per occupied bed equivalent (OBE) for events occurring in 2015, and the frequency of claims is projected to be around 1.69% per OBE moving into next year. The severity of claims is projected to be around $170,000 per claim.

“Health care providers are adapting to transformations in the way services are paid for and delivered. The benchmark information in this report can serve as a diagnostic tool to identify areas where clinical integration and risk management can be used to narrow practice pattern variations and improve results,” said Ron Calhoun, health care practice leader for Aon Risk Solutions.

To purchase a copy of the 2014 Aon/ASHRM Hospital Professional Liability and Physician Liability Benchmark report, visit ASHRM online store.

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Aon report indicates healthcare providers can expect flat maplractice costs

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