NCPA - National Center for Policy Analysis

What Happens To Liability Costs When A Hospital Admits Errors?

August 18, 2010

A major university health system starts encouraging workers to report medical mistakes and telling patients and family members the details of these mistakes.  And if the hospital determines that one of its physicians was at fault for an error-related injury, it offers financial compensation to the patient or his family. What happens to the health system's liability costs, asks the Wall Street Journal's Health Blog? 

As reported this week in the Annals of Internal Medicine: 

  • During the period in which such a program was implemented at the University of Michigan Health System (UMHS), legal costs went down, as did the number of new claims for compensation, the number of claims compensated and the time it took to resolve a claim.
  • But whether costs and the number of claims declined as a result of the new policy isn't clear, since there was no control group -- and claims in the state were generally on the decline (the university system did have fewer claims than were predicted by historical trends and its own models, the study says).
  • It's also unclear whether the same results would apply to physicians in private practice or who purchase their own liability insurance; UMHS docs were covered by their institution. 

The authors say the results suggest that such a disclose-with-offer program can be implemented without exacerbating legal costs and that it can address some of the problems of the medical liability system, including long waits for compensation. 

An Annals of Internal Medicine editorial calls the study "promising" but notes a couple of other limitations, including the fact that "the authors could not distinguish disclosures initiated by the health system from those offered in response to a patient complaint."  In other words, it's hard to know how many of the voluntary disclosures were voluntary. 

And the editorial notes that no disclosure problem will totally eliminate litigation "for the simple reason that causes of an adverse outcome and standards of care are often difficult to define."  One person may see a medical error; another sees an unavoidable event.  This was a point made by many of the commenters on a recent post that pegged the cost of medical errors at $19.5 billion. 

Source: Katherine Hobson, "What Happens to Liability Costs When A Hospital Admits Errors?" Wall Street Journal Health Blog, August 16, 2010. 

For text:  

For Annals of Internal Medicine abstract:  

For Annals of Internal Medicine editorial: 


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