Hospital claims fall, thanks to OB, ED efforts

Risk managers are doing something right in the emergency department and obstetrical units, according to new data showing the frequency and severity of hospital claims are at new lows.

The Aon Corp. 2007 Hospital Professional Liability and Physician Liability Benchmark Analysis is a comprehensive look at liability claims in the U.S. health care industry, published annually by Aon Corp. with the American Society for Healthcare Risk Management (ASHRM), both in Chicago. This year's report is full of kudos for patient safety efforts.

The study measures 65,689 nonzero claims representing more than $7.7 billion of incurred losses. More than 80 health care organizations representing 1,000 facilities and 90,000 licensed beds contributed to the study. The report says hospital claims are at their lowest levels in eight years. Claim severity is increasing at just 3% annually, which is the lowest severity trend in eight years.

Also, for the third straight year, there has been no increase in the frequency of claims. Patient safety initiatives aimed at obstetrics and emergency departments are linked to reductions in the number of claims in those areas, says Greg Larcher, director and Actuary Healthcare Practice leader with Aon Global Risk Consulting and author of the analysis.

Facilities that are recognized for their patient safety initiatives exhibit lower liability loss costs, he says. For the third straight year, the industry has seen no increase in the frequency of claims, the data show. Since the last edition of the study, the trend in the severity of claims has been cut in half. Liability losses are projected to be just 3% higher in 2008, down from 6% in the 2007 projection. The resulting loss cost trend is the lowest in the eight-year history of Aon's published advisory benchmarks, Larcher says.

"We continue to recognize improvements in the underlying claims environment and have enhanced our ability to measure the impact of the improvement on claims costs," Larcher says. "I expect many hospitals to realize lower liability expense in 2008 as hospitals adjust to the new cost environment."

The 2007 study introduces benchmark statistics for the obstetrics and emergency departments. More than 800 facilities that experienced about 700,000 births and 16 million emergency department visits provided historical loss information for these measures, says Frank Dodero, senior vice president of Aon Healthcare.

"Since many of the patient safety initiatives being implemented focus on obstetrics and emergency departments, it is important to have industry benchmarks available to measure their effectiveness," he says.

The study found that the number of claims per 10,000 births decreased from 9.4 in 2001 to 6.2 in 2006, while the number of claims per 100,000 emergency department visits dropped from 5.8 to 3.4 in that same period. The report includes a case study of a multistate hospital operator where similar improvements were linked to patient safety initiatives. In obstetrics, fetal heart monitoring and a focus on high-risk deliveries were found to be contributing factors in claim reduction. The assessment of high-risk presentations, such as chest pain in patients over 50 and abdominal pain in all patients, contributed to the reduction of claims in the emergency department.

In addition, the study found that the nation's best hospitals, those recognized for their patient safety environments, exhibit significantly lower liability loss costs compared to the national averages. This is important, Larcher says, because hospitals that emulate the nation's best in terms of their patient safety environment may realize reduced liability costs in the future.

Sources/resource

For more information on the Aon Corp. study, contact:

  • Frank Dodero, Senior Vice President, Aon Healthcare, 1411 Opus Place, Suite 250, Downers Grove, IL 60515. Telephone: (630) 434-4500. E-mail: frank_dodero@aon.com.
  • Greg Larcher, Director and Actuary Healthcare Practice Leader, Aon Global Risk Consulting, Aon Corp., 200 E. Randolph St., Chicago, IL 60601. Telephone: (410) 381-2254. E-mail: gregory_larcher@aon.com.

To purchase a copy of the 2007 Hospital Professional Liability and Physician Liability Benchmark Analysis, call (800) 242-2626 and request item No. 178703. Or you can go to www.aon.com/hpl_study for more information. The cost is $250 for members of the American Society for Healthcare Risk Management (ASHRM) members and $350 for nonmembers.