With more changes slated for 2012 as part of healthcare reform, professional liability insurers should approach medical injury prevention with a new focus on clinical risk management.
By MATTHEW F. POWER, executive vice president of Boston-based Lexington Insurance Co.
As medical malpractice liability and defensive medicine have further swelled U.S. healthcare system costs, medical professional liability insurers have focused their attention on several fronts, including the tort system and the new healthcare insurance reform law.
But patient safety initiatives and new learning cultures at the provider level truly get to the root of the problem and drive unnecessary costs out and efficiencies into the complex U.S. healthcare system.
A recent study by Harvard medical professionals indicates that the combined annual costs for medical liability and defensive medical practices exceed $55.6 billion. Of that total, $45.6 billion is attributable to defensive medicine, 85 percent of that by hospitals.
That estimate, which some experts suggest is extremely conservative, pales in comparison to overall healthcare expenditures of approximately $2.3 trillion annually. But while amounting to only 2.4 percent of total system costs, the costs stemming from medical errors still are a formidable amount. To put them into perspective, they exceed the annual budgets of many states, including Illinois, Ohio, Nevada and Washington.
The true cost of medical errors, however, is tough to accurately gauge, according to the authors of the study, "National Costs of the Medical Liability System."
Lead author professor Michelle Mello and her colleagues at the Harvard School of Public Health point out there are numerous additional expenses related to medical errors, including those associated with the psychological effect on patients, families, and their physicians, as well as additional administrative and healthcare costs.
Meanwhile, most researchers agree that defensive medicine--the practice of avoiding high-risk patients or ordering unnecessary tests and procedures just to reduce malpractice liability--is a common and unnecessarily costly practice that has increased in prevalence at the specter of malpractice litigation.
For example, according to the American College of Obstetricians and Gynecologists and the American Medical Association, fears of litigation and unaffordable medical malpractice insurance costs have compelled more than six in 10 of the nation's obstetricians-gynecologists to reduce the level of service they had previously provided. The medical groups report that 30 percent of ob-gyns have reduced the number of high-risk patients they see, 14 percent have cut back on the number of deliveries they perform, and more than 8 percent have stopped delivering babies.
Overall, the AMA estimates, defensive medicine alone adds from $84 billion to $151 billion of costs to the nation's healthcare system annually, which is significantly more than the estimates from the Harvard School of Public Health study.
While the cost of medical errors affects healthcare providers nationwide, it does not affect providers in every state or region of the country equally. As a result, the availability of medical professional liability coverage and annual premium costs can fluctuate significantly based upon the state of operation and the tort environment within a given jurisdiction.
For example, a 2003 seven-state study by the U.S. Government Accountability Office--the nonpartisan investigative arm of Congress--found that liability insurance rates for general surgeons in Miami-Dade County, Fla., were more than 17 times higher than for their counterparts in Minnesota.
At the peak of escalating medical malpractice litigation in the early 1980s, massive jury awards forced some malpractice insurers out of the market. As medical malpractice liability insurance premium costs escalated for healthcare professionals and underwriting profits dwindled for the remaining insurers writing the coverage, insurers called for substantial reforms to the U.S. tort system.
In response to the crisis, as many as 23 individual states enacted legislation that capped non-economic damages for plaintiffs' medical injuries. But those reforms were short-lived in many states, as courts overturned laws imposing the caps. Indeed, many advances by tort reform advocates have deteriorated under the weight of judicial challenges.
Where reforms have survived, evidence suggests they have been effective. A prime example is Texas, where the state's 2003 tort reform law triggered a wave of medical license applications. During the first year after the law took effect, license applications soared an astounding 58 percent, according to the Texas Medical Board.
During the first five years after the reforms were enacted, the number of obstetrician-gynecologists practicing in the state increased 7.2 percent, and the number of other specialists increased at a similar pace.
The medical malpractice insurance market also has responded positively to the reforms. Medical professional liability insurers have slashed their rates 25 percent between 2003 and 2008, according to the Texas Insurance Department.
Most recently, Congress has attempted to curb healthcare costs through some provisions of the new national healthcare insurance reform law, the Patient Protection and Affordable Care Act.
For example, this year the law calls for the establishment of the Center for Medicare & Medicaid Innovation, which would test new ways of delivering care to improve the quality of treatment patients receive. In 2012, the law would establish the Medicare Value-Based Purchasing Program. The concept of the new program is to compensate Medicare medical care providers based on the quality, rather than quantity, of care they deliver.
Focusing on the underlying cause of excessive healthcare system costs--poor patient care--through a redoubled emphasis on best practices, will be the approach that ultimately drives the costs associated with errors and defensive medicine out of the system.
The National Patient Safety Foundation already is working on reducing the number of medical errors through improved patient safety risk management efforts.
"The key to reducing malpractice expense lies in going upstream to improve processes and reduce the opportunity for errors to occur in the first place," said Diane Pinakiewicz, president of the patient safety foundation.
"It is also critically important that, when something does go wrong or an unanticipated outcome occurs, the culture of the provider organization is such that the response to the event is appropriate," she said. "This includes effective disclosure processes and a learning environment that not only seeks to understand the root cause of the event, but also follows through to correct the systems issues that allowed it to occur."
Among the programs the patient safety foundation offers is an online professional learning series that provides healthcare professionals continuing education and peer-to-peer collaboration on best practices and emerging patient-safety issues, as well as cutting-edge perspectives from the nation's leading medical professionals.
Planned webcasts this year will address the implications of the new health reform law on readmissions and the quality and safety imperative for shared decision making. Past webcasts have covered topics such as how information technology can improve patient safety, lessons from literary research on improving medication safety and patient self-management, and the kind of communication patients and their families want following an adverse event.
The link between healthcare provider performance and patient safety initiatives will be increasingly examined in the years to come. Ultimately, it will serve as the basis for the new Medicare Value-Based Purchasing Program.
Medical professional liability insurers with foresight would partner with the patient safety foundation and offer a medical malpractice insurance premium credit to any eligible provider who joins the organization's patient safety programs.
Using treatment and outcome quality indices developed by The Joint Commission, an independent nonprofit organization that accredits healthcare organizations, those organizations already have demonstrated consistent improvement in several key metrics in recent years.
For example, The Joint Commission reports that medical outcomes associated with cardiac arrest treatments improved to a composite index of 97.7 percent in 2009 from 88.6 percent in 2002.
A 97.7 percent score means that hospitals provided evidence-based heart attack treatment 977 times for every 1,000 opportunities to do so. During the same period, pneumonia care accountability composites improved 20 percent and surgical care accountability composites improved 18 percent.
Effectively driving unnecessary expenses out of the system begins with clinical risk management.
Improved patient safety, resulting from a sharpened focus on process improvement and the development of best practices, bode well for everyone involved in the healthcare system.
It's good news for patients, who will receive the best appropriate care; healthcare providers, who can choose a practice without consulting litigation trends; and medical professional liability insurers, which will be able to underwrite medical providers based on their skill levels rather than a community's perceived litigiousness.
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