Malpractice claims dropping in reformed states
Malpractice claims dropping in reformed states
The frequency of malpractice claims has decreased by 1% from the 2004 figure, even as the severity of claims continues to rise, growing at an annual rate of 7.5%, according to the 2005 Hospital Professional Liability and Physician Liability Benchmark Analysis prepared by Aon. The analysts said it is the first time in the study's history that the frequency trend decreased in claims for both hospitals and physicians.
Study author Greg Larcher, assistant director and actuary of Aon Risk Consultants, said, "We believe that legislative reforms in several states over the last few years are contributing to the reduction in claims. In addition, the medical malpractice availability and affordability crisis of the last several years has resulted in a rapidly growing alternative market. Health care systems now have a greater financial incentive to reduce their cost of risk."
Aon Healthcare COO Greg Morris said, "Actions taken by healthcare systems to improve quality of care and a heightened awareness of how quality care and patient safety tie directly to the cost of risk have also played a role in the decline."
The study examined more than 200,000 hospital bed equivalents and represents some 10% of the hospital professional liability market, and 15% of the alternative segment of the market.
In total, the analysis database contains 53,000 non-zero claims representing $4.5 billion of incurred losses, and includes historical claims information for the 10 years from 1995 to 2004. It also includes breakouts of claims costs and frequency trends by facility type, including university, specialty, religious, publicly traded, and community.
Mr. Larcher tells State Health Watch there are three elements to be considered in the decreasing claims frequency: 1) the AON database shows that California, Florida, Pennsylvania, and Texas are the leading states experiencing a decline; 2) the rapidly growing self-insurance market creates an incentive to reduce the cost of risk by investing in quality initiatives; and 3) consumer attitudes are changing.
The four states, Mr. Larcher says, have undertaken various types of malpractice reform that are leading to a decline in claims. "Texas is leading the charge," he tells SHW, "with an 18% decrease over the last several years."
Because various states have undertaken different types of reforms — including use of experts, statutes of limitations, caps on damages, and limits on attorney fees — Mr. Larcher says it's not possible to know which provisions are the most effective at cutting claims.
Despite the uncertainty about the most effective approach, Mr. Larcher says it's safe to conclude that other states could see a decline in malpractice claims if they enacted comprehensive reforms.
"The number of claims is a leading indicator," he says. "It will take a number of years to see the effect of malpractice reform on settlement values."
[Contact Mr. Larcher at (312) 381-3920.]
The frequency of malpractice claims has decreased by 1% from the 2004 figure, even as the severity of claims continues to rise, ...Subscribe Now for Access
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