Hospital-acquired illness creates 12% of liability: Study

Zack Phillips
http://www.businessinsurance.com

One of out six liability claims against health care entities is associated with infections, injuries and other conditions acquired at the hospital, according to a new report.

The 2008 Hospital Professional Liability and Physician Liability Benchmark Analysis, released Monday, found that hospital-acquired infections, hospital-acquired injuries, objects left in the body after surgery and pressure ulcers represent more than 12% of hospitals’ liability costs.

After Oct. 1, the Baltimore-based Centers for Medicare and Medicaid Services no longer will reimburse providers for 10 categories of hospital-acquired conditions and medical errors, known as “never events” because they are considered preventable and should never happen.

Risk managers are concerned that this change—and the resulting increased publicity surrounding these hospital-acquired ailments—will trigger an increase in hospital professional liability claims, according to the study. Several insurers have announced they will cease reimbursing for such errors, including Hartford, Conn.-based Aetna Inc., Chicago-based Blue Cross and Blue Shield of Illinois, Bloomfield, Conn.-based CIGNA HealthCare and Indianapolis-based WellPoint Inc.

The study, a joint effort between Aon Corp. and the American Society for Healthcare Risk Management, both based in Chicago, was created to give health care risk managers a better understanding of their cost of risk compared to an industry benchmark. This year marked the first time the study included data on hospital-acquired illnesses, the goal being to establish a benchmark against which future liability costs for such ailments could be compared.

Health care organizations can better manage their liability concerns by looking at trends in frequency, severity and total loss costs, Aon said in a statement.

The study found that the frequency of liability claims was nearly the same in 2007 as in 2006—about .01% higher in 2007—which is consistent with a downward trend in claims frequency since 2002, according to the study’s figures. But the average claim was 3% larger in 2007 than 2006, an increase the study attributed to escalating defense and judgment costs.

The study also established a benchmark for the frequency of indemnity claim payments for the first time.

Most of the participants in the database use the alternative malpractice insurance market rather than traditional insurance to cover the liability exposure of the hospital and its physicians. The loss experience in this survey is distinct from the losses the insurance industry reports quarterly to the National Assn. of Insurance Commissioners.

The database includes more than 77,000 claims from 1998 to 2007. More than 100 health care organizations, representing more than 1,200 facilities of all sizes, provided loss and exposure data to the study.

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