Premium credits encourage hospitals to act

When Hospital Corp. of America (HCA) in Nashville, TN, began its focus on obstetrical malpractice claims, the parent company required all of its member hospitals to start collecting extensive data on all births and report on a quarterly basis. While HCA could require that, system leaders knew that compliance and the quality of the data would depend on the motivation of risk managers and executives at individual hospitals.

So HCA offered cold, hard cash as an incentive. The system has its own captive insurance company that insures all its hospitals and charges each hospital a premium for malpractice insurance. To encourage robust participation in the data collection effort, HCA offered premium credits if the hospital met certain criteria, explains James D. Hinton, vice president of risk insurance at HCA.

"If they are very proactive, working on issues that we believe will prevent claims from recurring, they can earn up to 15% of their premium back," he says.

HCA makes the same offer with some other risk reduction initiatives, and Hinton explains that the premium credit takes away one of the main excuses that hospitals offer with these programs. With nurses are in short supply and many of the risk reduction programs requiring nurses to be off the floor for training, the premium credit counters the excuse that taking those nurses off duty is just too expensive.

With the perinatal program, HCA said every hospital could earn 4% of its premium back if it got 95% of their nurses trained in the fetal monitoring program within a certain time frame.

"This was a way to acknowledge that the training has a cost, but we are more than paying for that cost with the premium credit," Hinton says. "It was a success because the premium credit allowed people to do the right thing without having to sacrifice a lot of money from their individual hospital's budget."