Big Med-Mal Claims Decline At Hospitals

Medical malpractice obstetrics claims have been declining steadily, but in 2005 they still comprised 14 percent of overall hospital malpractice claims and 32 percent of claim costs, according to a new report.

The study was conducted by Marsh, Oliver Wyman and CS STARS–all operating units of Marsh & McLennan Companies.

Included in the research was an examination of trends involving more than 25,000 malpractice claims at 357 hospitals and health care facilities throughout the U.S. from 1991 through 2005. According to the study, malpractice claims take 33 months on average to resolve, with little variance by type of procedure, service or facility.

John Geisbush, a managing director in the HealthCare Practice of Marsh brokerage, said factors contributing to a decline in frequency and severity of hospital professional liability include heightened emphasis on patient safety, an expansion of pay for performance initiatives to drive quality, a widened use of technology and tort reform efforts in certain states.

Mr. Geisbush said, “While each of these activities continues to gain momentum, the use of comprehensive benchmarking data can help health care institutions assess their performance and make informed decisions about their quality and patient safety initiatives.”

While the number of claims involving nearly all types of hospital services have been trending downward, those involving psychiatric care and services have been increasing, according to the report.

The study found average cost of all hospital professional liability claims was $124,574. Claims involving deliveries were the costliest at $365,477–more than double those of the next highest department, acute care, which involved costs of $181,191.

Although frequency of psychiatric claims is declining, the average cost of these claims is $112,069–lowest of any department, the report said. Claims involving clinic visits were third most costly at $147,196, followed by the emergency department ($135,003) and surgery ($115,445).

“For-profit systems showed the lowest average claim severity and the highest ratio of loss expense to indemnity,” said Leon Gottlieb, a principal of Oliver Wyman Actuarial Consulting. “This may mean that the for-profit health systems are more inclined to spend more to defend claims and that yields a positive return.”

Elsewhere, major findings in the report include:

o Claims frequency was similar across most of the types of ownership. However, university hospitals had a higher frequency of claims, which researchers guessed may be due to more physician professional liability exposure as well as a possibly greater complexity of cases managed.

o Since 2000, indemnity payments remained fairly consistent, especially when limited to $1 million per occurrence. Legal expenses increased dramatically on claims closed in 2005, although the report said it is too soon to tell whether the increase is an aberration or the beginning of a trend.

o There are significant differences in severity by state, especially in Illinois, Florida and Texas. Efforts at tort reform, especially in Texas, may improve average severity, the report suggested.

o Fewer than half (42 percent) of malpractice claims were reported within six months of occurrence; the median report lag was about 10 months. Almost all (94 percent) such claims were reported within 36 months. Psychiatric claims were reported faster than claims from other units. There were no significant differences in the lag between occurrence and report in the various high-risk services.

Information about the Hospital Professional Liability Benchmarking Report and related benchmarking services is available through Patti Lisle of Marsh at 615-340-2541 or by e-mailing HPLBenchmark@marsh.com.