Med-mal cost growing at slowest rate in 14 years
The cost of medical malpractice is growing at the slowest rate in the 14-year history of the Aon/ASHRM Hospital and Physician Professional Liability Benchmark report. The 2013 report was released recently by Aon Risk Solutions, the global risk management business of Aon, with the American Society of Healthcare Risk Management (ASHRM).
"We project zero growth in the number of malpractice claims," says Erik Johnson, healthcare practice leader for Aon's Actuarial and Analytics Practice and author of the analysis. "Healthcare professional liability claims are subject to a complicated set of geographic, societal, and technological influences. These forces are largely in-check, resulting in a low inflationary environment for medical malpractice."
New in this year's report is the use of hospital admissions and revenue as a basis for benchmarking medical malpractice cost levels. The report estimates that in 2014 medical malpractice claims will represent $0.60 per every $100 of hospital revenue or an average of $135 per hospital admission.
Healthcare organizations are achieving efficiencies and savings by employing physicians and using their self-insurance facilities to cover medical malpractice, Johnson says. The cost savings are achieved by promoting patient safety, creating uniformity of risk management, and jointly defending claims, when they happen. However, Johnson warns, "some costs that would have traditionally been covered by the physician are now shifted to the hospital."
Risk management involvement and investment in patient safety have translated into improved medical malpractice results, says Ron Calhoun, managing director of Aon Risk Solutions Healthcare practice. "Hospitals are focused on containment of traditional risks such as medical malpractice while they take on new opportunities introduced by the Affordable Care Act and the transition from fee-for-service models and into outcome-based models," he says.
These are additional findings in the report:
- Projected loss rate for hospital professional liability is $2,940 per occupied bed equivalent (OBE) for events occurring in 2014. The frequency of claims is projected to be 1.67% per OBE, and the severity of claims is expected to be $176,000 per claim.
- Projected loss rate for physician professional liability is $6,030 per physician for events occurring in 2014. The frequency of claims is projected to be 2.97% per physician and severity of claims is expected to be $203,000 per claim.
- Projected loss rate for hospital general liability is $119 per occupied bed equivalent. The average general liability claim is expected to be $36,000 for claims occurring in 2014.
- Projected loss rate for obstetrics claims occurring in 2014 is $171 per birth; for the emergency department, the projected loss rate is $6.16 per visit.
- The hospital professional liability benchmark database includes claims from all U.S. states and provides specific benchmarks for 28 states. Florida ($7,440) and Pennsylvania ($4,720) have the highest projected loss rates for 2014. Indiana ($800) and Minnesota ($810) have the lowest projected loss rates for 2014.
To purchase a copy of the 2013 Hospital Professional Liability and Physician Liability Benchmark Analysis, go to http://tinyurl.com/llvsxql. The cost is $269 for ASHRM members and $369 for others.