Medical malpractice claims decline, severity rises: New study released

by Patricia Iyer

A study released in October 2005 by Aon and American Society of Healthcare Risk Management reported on the frequency and severity of medical malpractice claims. Based on 52,959 non-zero claims representing $4.5 billion of incurred loss for ten accident years, the data represented 10 percent of the hospital market ($1 billion of $10 billion) and 15 percent of the alternative (self insured) market ($1 billion of $6.7 billion.) Both open and closed claims were studied. Key findings of the study included:

• Overall the frequency of claims against healthcare facilities is decreasing. In 2004, there were 3 claims for each 100 acute care bed equivalents, down from 3.3 percent in 1999. The analysts hypothesize that self-insured healthcare systems have a greater financial incentive to reduce the cost of risk, make investments to improve the quality of care, and reduce medical errors. Consumer attitudes may also be changing as result of the enormous media attention given to the physician insurance crisis and how it relates to availability of healthcare at the local level.

• The frequency of claims against physicians was also declining, based on data from the National Practitioner Data Bank. The frequency of claims against physicians had dropped from 9.3 percent in 1999 to 8.1 percent in 2004.

• Four states – Texas, Florida, California, and Pennsylvania – all of which had some form of tort reform, led the frequency decline.

• The severity of institutional claims continues to grow from a low of 102,000 to $172,000 in 2004. (This data excludes settlements or awards yielding more than $2 million.)

• Claims against physicians were projected to have a severity of $146,000 in 2006. The severity per claim has remained fairly constant over the last ten years.

• The 2006 loss cost for each physician was projected to be $12,000, up from $10,200 in 2004. Loss costs for physicians have remained fairly constant since 1997, when the cost was $11,200.

• Based on trends, the loss cost per hospital bed for 2006 was $5,800, up from $2,900 in 1997.

• Based on solid data, the loss costs were increasing in Tennessee, North Carolina, Ohio, and Maryland.

• Allocated loss adjustment expenses (defense legal fees) were projected to represent 20 percent of the claim costs in 2006.

• Using ten years of data, public hospitals were found to have the highest percentage of claims of more than $1 million, with 39 percent of the exposure and 43.4 percent of the total number of large loss counts. Specialty hospitals had the least number of large loss claims.

References
AON/ASHRM Hospital Professional Liability and Physician Liability 2005 Benchmark Analysis, released October 24, 2005. The full study is available for purchase from American Society of Healthcare Risk Management.

Med League provides board certified physicians to screen medical malpractice cases for merit, as well as locates expert witnesses for attorneys. Contact us about how we can assist you with your claim.

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