Hospital Liability Claims Increasing After Years of Decline

November 15, 2009

After a decade marked by decreases in Hospital Professional Liability claims, the frequency of claims is on the rise and is expected to continue increasing at a one percent annual rate, according to a study released by Aon Corp. in conjunction with the American Society for Healthcare Risk Management.

The study attributes the rise in claims to the downturn in the U.S. economy, changes to the Medicare and Medicaid reimbursement rules regarding events that should never happen in a hospital and changes in public sympathy toward healthcare providers.

“Worsening economic conditions in 2008 may have influenced individuals to assert claims against hospital systems,” said Erik Johnson, healthcare practice leader for Aon’s Actuarial and Analytics Practice and author of the analysis. “In 2003 through 2007 public attention was directed on tort reform activity and prohibitive medical malpractice costs for physicians. This coincided with significant reductions in professional liability claims. As public attention shifted to other subjects, the momentum of the reductions dissipated. Recently, the public focus has evolved to discussions regarding waste, inefficiency, and defensive medicine. It remains to be seen how this will influence the frequency of professional liability claims.”

According to Aon, the healthcare industry professional liability market should remain stable for the rest of the year.

However, expectations are that market pricing will increase in 2010, in part due to the increase in frequency noted in the tenth annual Hospital Professional Liability and Physician Liability Benchmark Analysis. The analysis looked at trends in frequency, severity and overall loss costs related to hospital and physician professional liability. More than 100 health care organizations provided loss and exposure data for the study.

The study also found:

  • In 2010, hospital loss costs per occupied bed equivalent, a major part of the total cost of risk, are expected to increase five percent annually to $3,170.
  • Claim severity, including both indemnity and defense costs, continues to increase at a consistent rate and is projected to increase by four percent annually.
  • One out of every four claims and 24 percent of hospital professional liability costs are associated with hospital-acquired conditions such as infections and injuries, medication errors, objects left in surgery and pressure ulcers.
  • In 2010, hospitals can expect to incur liability costs of $181.00 per birth in the Obstetrics Unit and $7.20 per visit in the Emergency Department.

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