Published 9/1/2010
S. Jay Jayasankar, MD

Transforming the medical liability system

D&EO programs can lead to a culture of safety and transparency

Conventional tort reform, such as caps on noneconomic damages, can help hold down physician premiums for medical liability insurance as evidenced in California and Texas. Liability reform, however, must do more than just reduce physician premiums.

True medical liability reform must address the following issues:

  • early and fair compensation for negligent injury
  • enhanced patient-physician communication
  • apology, where appropriate, and assurance of future prevention efforts
  • promotion of adverse event data collection
  • open discussion to improve patient safety
  • a reduction in liability pressure and defensive medicine

The success of current disclosure and early offer (D&EO) programs, such as those discussed in this issue of AAOS Now, has generated much interest and momentum. Many have recommended this approach, and President Obama sponsored such legislation while he was a senator. The AAOS position statement on medical liability reform includes the principles of D&EO based on extensive research by the AAOS Medical Liability Committee.

Recently, the U.S. Department of Health and Human Services awarded 20 grants totaling more than $20 million for the Patient Safety and Medical Liability Initiative. Nine of these projects include prompt disclosure of adverse events to the patient; five also include early offer of settlement.

The Beth Israel proposal
One of the planning grants was awarded to the Beth Israel Deaconess Medical Center of Boston, working with the Massachusetts Medical Society for “Removing Barriers to Disclosure-and-Offer Models.” The goals of the plan are to determine the barriers to implementation through in-depth interviews with stakeholder group representatives, develop strategies for overcoming the barriers, design a roadmap to reform based on these strategies, and examine the applicability for other states.

The driving principles cited in this proposal are consistent with the AAOS Medical Liability Reform position statement:

  • To compensate quickly and fairly when inappropriate medical care causes injury
  • To defend medically appropriate care vigorously
  • To reduce patient injuries (and therefore claims) by learning from mistakes

The plan is modeled after the D&EO program at the University of Michigan Health Systems (UMHS) (see “Saying Sorry” on page 30). It would enable healthcare providers to “disclose unanticipated outcomes of care to patients and make prompt offers of compensation in appropriate cases. Patients do not waive their right to sue by accepting the offer, but reportedly, few go on to file lawsuits.”

The proposal cites the success of the UMHS program, which has reduced medical malpractice claims, resolution times, and transaction expenses, even as the number of incidents reported has increased tenfold, attributed to an increase in trust in the program for addressing adverse events. Medical liability premiums for physicians in the system have also stabilized.

The UMHS “conduct[s] a comprehensive internal investigation upon the occurrence of one (or more) of the following ‘triggers’: (i) anyone within the entity believes there may have been a medical error, (ii) a patient complains directly or through an attorney, alleging substandard care, or (iii) in the event of an adverse outcome.” In addition to increasing patient satisfaction, this investigation drives risk management through improvements in patient safety. The savings in transaction expenses (which fell from $48,000 per case to less than $20,000 per case), litigation, reinsurance costs, and insurance reserves are used to fund patient safety initiatives.

The Beth Israel proposal includes the following barriers, which were identified a priori:

  • Physicians, who are currently concerned about personal, professional, and financial ruin, may not be comfortable with full disclosure and apology.
  • Massachusetts physicians and hospitals may not be on equal footing culturally or financially.
  • The current lack of justice in the system for both physicians and patients may make them leery of a new system.
  • The adversarial nature of litigation generates an atmosphere of mistrust.
  • The perceived separation of liability issues from patient-safety issues must be confronted.

A barrier not mentioned in the proposal, but one that engendered much deliberation by the AAOS Medical Liability Committee, is the question of how to translate the UMHS model to physicians at large who may be in solo or small group practices and not part of a health delivery system.

UMHS is self insured, with captive hospitals and employed physicians. This enables seamless and financially integrated investigation of errors, system-wide safety improvement efforts, payments to negligently injured patients, and the ability to use savings for improvement. UMHS also determines which payments would trigger reporting to the National Practitioner Data Bank and other agencies.

These core and high stakes elements, which shape physician attitudes and behavior, would likely pose significant challenges to wider transformation of culture without necessary and dependable regulatory and legislative accommodations.

S. Jay Jayasankar, MD, is a member of the AAOS Medical Liability Committee and contributing editor of the Orthopaedic Risk Manager Series. He can be reached at jaymd@massmed.org

Disclosure and early offer plans
In the view of many experts, the U.S. medical liability system fails to promptly or fairly compensate negligently injured patients, fails to prevent injuries, and is intensely adversarial, disrupting both communication and the relationship between patients and physicians. In addition, it places a high emotional cost on all participants, hampers openness and learning for prevention, promotes practice of defensive medicine, and is expensive.

This month’s Orthopaedic Risk Manager articles examine programs that attempt to address these shortcomings through early disclosure to patients with offer of compensation for negligent injury and learning from the untoward incidents. Two examine existing programs—one sponsored by an insurance company with voluntary physician participation (“Litigation alternatives: COPIC’s 3Rs Program”) and one that operates in an integrated self-insured health system (“Saying sorry”). The third article (“Transforming the medical liability system,” this page) looks at a planning grant submitted to the Department of Health and Human Services.

Articles labeled Orthopaedic Risk Manager are presented by the Medical Liability Committee under the direction of contributing editor S. Jay Jayasankar, MD. Articles are provided for general information and are not intended as legal advice; for legal advice, consult a qualified professional. E-mail your comments to feedback-orm@aaos.org or contact this issue’s contributors directly.


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