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By DAN REYNOLDS, senior editor of Risk & Insurance®

The U.S. recession may have eclipsed the dreaded "never events" list as the principal driver of frequency for U.S. hospital professional liability insurance claims, according to the results of a new study released Oct. 23 in Denver.

Hospital professional liability policies typically cover employees only, and only in some cases cover independently contracted physicians.

Analyzing more than 1,500 healthcare facilities, the researchers found that 2008 saw a hospital professional liability claims frequency of 2.02 percent per bed, compared with 1.97 percent per bed in 2007.

"The increase is subtle compared to the drastic declines we had in 2001 through 2007," said Erik Johnson, a Raleigh-based consulting actuary with Aon Global Risk Services, who along with fellow Aon actuary Chris Coleianne presented the study's conclusions to an audience of about 200 risk managers at ASHRM'S annual conference.

From 2001 through 2007, according to Aon and ASHRM, frequency declined a total of 24 percent. HPL claims frequency was at 2.68 percent per bed in 2001 and bottomed out at 1.95 percent per bed in 2006.

EXPLANATIONS

So, what's at work here? Well, for one, the economy is a lot weaker. Unemployment has spiked to a national average just south of 10 percent, after wavering in the 5 percent range for much of 2004 through 2007.

Johnson and his colleagues theorize that households stung by the recession are placing much more emphasis on a possible dollar recovery from a hospital or some other healthcare provider for an alleged error or injury.

As a driver of frequency, they compared that with the buzz over "never events," such as wrong-site amputations or other erroneous surgeries, hospital-acquired infections and pressure sores. Back in October 2007, the Centers for Medicaid & Medicare Services (CMS) said it would limit claims reimbursement for specific never events in an effort to get hospitals to adopt firmer risk management standards.

Some experts posit that, by posting such a list, the CMS gave plaintiff's lawyers more to work with as they eyed healthcare providers for liability lawsuits.

A third factor that may be driving claims frequency, according to Johnson, is that the public and the media are less sympathetic to the healthcare industry now than they were three or four years ago. Then, the media was abuzz with the shortage of affordable medical-malpractice insurance coverage and its effects on doctors and hospitals.

Now, with the Obama administration bringing the plight of the average citizen's healthcare coverage front and center, public opinion has shifted.

"Public attitudes are less sympathetic, and it shows up in our politics as well," Johnson said.

OPENNESS TO BLAME TOO?

At least one risk manager in the audience thought yet another factor was at work.

James Hinton, vice president of risk and insurance for the Nashville-based Hospital Corporation of America Inc., said increased transparency on the part of hospitals and healthcare risk managers may also be a reason for the uptick in claims frequency.

"Hospitals are doing things they didn't do four or five years ago," said Hinton.

In the case of infections, for example, risk managers now might tend to work with public health officials and publicize the occurrence of a hospital-acquired infection to notify other patients that they might be at risk.

That sort of openness might not have happened in 2004. It's the right thing to do from an ethical standpoint, but it also may be driving the increase in claims frequency, Hinton said.

October 23, 2009

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