Hospital Professional Liability Claim Frequency Rising

The study shows that the frequency of hospital professional liability (HPL) claims has been steadily increasing since 2007.  Prior to 2007, HPL claims had been decreasing in regularity for 7 straight years. In 2010 AON estimates that the frequency of HPL claims will be approximately 2.06% per bed, about 5.3% higher than in 2006 when HPL frequency trends began to rise.

AON suggests several different theories to explain the claim increases, including the downturn in the U.S. economy, changes to CMS reimbursement rules regarding never events, and changes in public sympathy toward healthcare providers.  Never events, in particular, have received extra attention from attorneys representing clients because they have been designated by CMS as entirely preventable.  As a result, hospitals are perceived as having a significantly weaker defense against never event claims.

Liability Claim Severity Rising

Although claim frequency trends have changed significantly from negative to positive in the past ten years, claim severity has remained consistently positive.  Research by AON shows growth in claim severity has increased significantly 2004 through 2008, starting at an average of $116,000 per claim and gaining 3.5%-6.5% per year. Estimates suggest that claim severity will continue to rise 4% per year in 2009 and 2010.

Total Cost of Liability Risk Rapidly Rising

As a result of the increases in hospital professional liability claim frequency and severity rising, the total cost of hospital liability risk has grown significantly in recent years.

Although decreases in claim frequency translated into generally lower total costs starting in 2000 at $2,790 per bed and ending in 2005 at $2,420 per bed, increases in claim severity have reversed the cost trend since then.  In 2007, when claim frequency began to increase, the total cost of liability began to rise considerably.  As a result, total costs of risk are expected to rise 5% to $3,020 in 2009 and $3,170 in 2010.

The High Cost of Patient Falls and Bed Sores

According to AON, patient falls and injuries and Bed Sores are never events that comprise a large portion of all HPL costs.  Patient falls and injuries encompass 12.5% of total costs, and bed sores encompass 2.1% of total costs. Consequently, the HPL claims from these two never events will cost an estimated $463 per hospital bed in 2010.  The large HPL costs of these select never events run in addition to the costs already incurred by the hospital due to CMS never event non-reimbursement.

These four patient safety errors make up a portion of the larger list of “never events,” which are events flagged by the Centers for Medicare & Medicaid (CMS) as “serious adverse events during inpatient stays that should never occur,” and “are reasonably preventable through adherence to evidence-based guidelines.”

Hospital expenses incurred due to never events are not reimbursed by CMS.  In addition, hospitals are prohibited from passing the costs onto patients.  Consequently, never events prove quite costly for hospitals even before the threat of litigation.  In 2007, the last year CMS reimbursed hospitals for never events, pressure ulcers cost CMS $43,180 per incident.  Falls with injury weighed in at $33,894 per occurrence.

“The increased awareness surrounding these non-reimbursable conditions may cause a rise in the frequency of related hospital professional liability claims,” said Greg Larcher, director and actuary of Aon Global Risk Consulting.

Preventing Never Events with New Technology

As the cost of never events continues to rise, new technologies such as Dalcon Alert! have been developed to help hospitals prevent never event incidents.  Dalcon Alert! is a new solution from Dalcon Communication Systems, designed to help caregivers prevent patient falls and pressure ulcers.

A recent study by the Healthcare Management Council, Inc. (HMC) found that US hospitals stand to save millions of dollars per year by eliminating preventable patient safety errors.

According to the study, a 200 bed hospital is likely throwing away $2 million dollars yearly because of bed sores, patient falls, and other never events and hospital acquired conditions (HACs).

The reason hospitals stand to lose so much from these patient safety errors is because Medicare has refused to reimburse hospitals for any costs associated with a never event or HAC (click here to learn more about never events and HACs).  It is expected that soon private insurers will also deny hospitals reimbursement for these events.  Because hospitals are forbidden from passing the costs associated with these events on to the patient, they end up eating the price of care.

Patient safety incidents not cheap, and just a few events drive up the hospital bill significantly.  The most prevalent events hospitals are being denied reimbursement for, are bed sores.  HMC found that bed sore events were costing hospitals an average of $536,900 annually—at an average of $9,200 per event.

The most expensive events are Postoperative pulmonary embolisms and deep-vein thrombosis (DVT).  Although these occurred less than bed sores, the $15,500 average cost per event bumped the total annual cost of these events to $564,000 per hospital on average.

The monetary cost isn’t the bottom line.  Thousands of deaths occur in hospitals each year due to never events and HACs—events that have been deemed preventable by the Centers for Medicare & Medicaid Services (CMS).

In the past, when medical information was stored on paper, centralized nursing stations were necessary to keep all medical data stored in an easy to access place. However, with the advent of new digital information storage and communication technology, centralized nursing stations have become an increasing burden on the quality of patient care.

The Value of Decentralization

The primary benefit of a well-managed system of decentralized nursing stations is the positive impact the system has on patient care. Having multiple nursing stations located throughout a floor instead of one centrally located station puts nurses in closer proximity to the patients. A result of close nurse-patient proximity is improved nurse response time and room observations.

Also, the close nurse to patient proximity helps hospitals with decentralized nurse stations better prevent never events due to patient falls.

Decentralized nursing stations also save nurses thousands of steps each day traveling back and forth from patient rooms to the central station. Less travel fatigue leads to enhanced quality of care. Also, hospitals with successfully implemented decentralized systems experience lower staff turnover due to improved work satisfaction.

When planning the decentralization process, it is important that nurses retain an area where they can gather and collaborate. Nurses, like many workers, enjoy camaraderie and need to have particular areas allocated for their gathering. Effective nursing requires teamwork, and the social aspect of the job must be respected. Thus, a central nursing workroom is an important part of any decentralized system.

Hospitals looking to incorporate decentralized nursing stations should be prepared to expand their supply inventories since there will be more stations. However, the added cost of expansion will be offset by decreased nursing staff turnover and more efficient workspace.

Importance of Nurse Communication

Communication is a key issue when developing a successful decentralization plan. Because the stations are spread out, effective nurse communications become a more important factor in determining quality of patient care. Communications technology to solve this problem is currently available. Dalcon has multiple communication solutions, including Dalcon Alert!, that can effectively bridge this nurse communication gap by placing wireless phones in the hands of caregiving staff.

Dalcon Alert! is a Remote Patient Monitoring system that places fully functional wireless phones in the hands of caregiving staff. When a patient monitoring device triggers an alert connected to Dalcon Alert!, the system sends a text message to caregivers’ wireless phones so they can respond to the patient immediately. Alerts are simultaneously sent to the PC displays of all nursing stations. The alert is tracked in real time so that caregivers at each station can observe which alerts have been canceled and which have not.

What are Never Events?

Never events are a series of medical errors that are defined by CMS as, “clearly identifiable, preventable, and serious in their consequences for patients, and that indicate a real problem in the safety and credibility of a health care facility.” Included in the CMS financial year 2009 list of never events that will be denied federal reimbursement are the following medical errors:

How Dalcon Alert! Helps Prevent Pressure Ulcers (Bed Sores)

Obviously, never events can be quite costly for hospitals.  Yet some occur much more frequently than others.  Preventing bed sores can be difficult, but new technology is available to help hospitals prevent bed sores. Dalcon Alert! is a system that contains 3 distinct sections that help nurses treat and prevent pressure ulcers.

1. Remote Patient Monitoring
2. Alert Management Software
3. Pressure Ulcer Management System

Dalcon Alert! Remote Patient Monitoring

Remote Patient Monitoring is achieved by integrating with existing patient monitoring devices in the hospital.  Dalcon Alert! automatically forwards all device alerts—via a text message—to wireless phones carried by the nursing staff.

Although Dalcon Alert! contains the technology for nurses to remotely monitor patients via wireless phones, the pressure ulcer management system does not require their use or purchase.  If desired, hospitals can implement Dalcon Alert!‘s Alert Management software & Pressure Ulcer Management System as a stand alone system, and use it as a tool to create and manage bed turn alerts using current hospital policy.

Dalcon Alert! Alert Management Software

Dalcon Alert!’s Alert Management application helps caregivers actively manage the many patient monitoring alerts that are created in the hospital. The Alert Management software is similar to a web application, but it can only be accessed from the browsers of computers on the hospital network.

The function of the Alert Management software is to display, in real time, all active alerts that are being managed by the Dalcon Alert! system. Combined with Dalcon Alert!’s pressure ulcer management system, Dalcon Alert!‘s Alert Management software makes sure no pressure ulcer treatment is overlooked by staff.

Dalcon Alert! Pressure Ulcer Management System

Dalcon Alert!’s pressure ulcer management system is a unique solution. When this feature is turned on, the system automatically creates a “bed turn” alert that reoccurs after a set period of time (dictated by the hospital).  This “bed turn” alert is treated the same as any other alert that Dalcon Alert! manages; relevant caregivers receive the alert on their wireless phone, and the alert is reported on the system’s alert management software.  Thus, caregivers are continually reminded to attend to and turn at risk patients. Because Dalcon Alert! helps nurses pro-actively prevent pressure ulcer negligence, the occurrence of dangerous pressure ulcers in at risk patients is significantly reduced.

Although Never Events are considered preventable, some are far more prevalent than others. Patient Injury or Death resulting from a fall inside the hospital is a particularly high risk Never Event. As a result, additional concern should be applied to preventing patient falls.

The Cost of Patient Falls

Aside from lowering the safety reputation of a hospital, patient falls are a large financial burden as well. Since patient injury or death due to falls are included on the list of “Never Events” published by the Centers for Medicare & Medicaid Services (CMS) for 2009, hospitals are denied full reimbursement should any such event occur. Patient falls can cost even a small hospital tens of thousands of dollars annually, not including the cost of any resulting litigation.

See also the White Paper, “An Assessment of Falls in Patients’ Rooms and Methods of Prevention” which analyzes the severity of patient fall liability for hospitals; and methods of fall prevention.

Fall Prevention Methods

The great burden to reduce patient falls has led hospitals to incorporate many different methods and techniques over the years aimed at lowering patient fall rates. Risk-assessment tools have been popular in hospitals. Such tools include:

• The Morse Fall Scale
• The STRATIFY tool
• The Hendrich II Fall Risk Model
• Schmid Fall Risk Assessment Tool

Falls prevention programs have also been utilized. These programs can be used to educate both nurses and patients regarding fall risk factors and injuries that can result from falls. Some hospitals have even used extensive physical therapy to reduce the risk of falls for individual patients.

Fall Prevention Technology

From a technological standpoint, many devices have been implemented to help nurses respond rapidly to fall-risk patients. Bed fall alert systems and monitoring systems utilize a variety of alerts, both visual and auditory, to help nurses respond more quickly.

Recently, new technologies have become available, such as Dalcon Alert!, which integrates with patient monitoring systems and sends alarms directly to nurses regardless of their location.  Because nurses receive patient monitoring alarms immediately with Dalcon Alert!, they can quickly react to alerts, and proactively reduce patient falls.

Never Events Explained

The term “Never Event” was introduced in 2001 by the National Quality Forum (NQF). A never event is generally defined as an incident that should “never happen” in a hospital. Never Events are preventable, and may have serious consequences for both the patient and the health care facility in which the incident occurs.

There are six categories of incidents that may qualify as Never Events:

1. surgical events
2. product or device events
3. patient protection events
4. care management events
5. environmental events
6. criminal events.

Examples of these events include:
• Surgery performed on the wrong patient
• Misuse of patient care devices that result in patient injury or death
• Infants discharged to the wrong person
• Patient death or injury resulting from a medication error
• Patient death or injury resulting from a fall while being care for in the facility
• Abduction of patient from facility

The High Cost of Never Events

Aside from the great emotional and physical pain caused by Never Events, there is also a very real financial cost. As of October 1, 2008, CMS has required Hospitals to disclose all Never Events. Also, CMS has stated that they will no longer reimburse hospitals for Never Events. Nor will hospitals be allowed to push such costs onto the patient.

Hospitals bear full accountability for the occurrence of Never Events, and, as such, are liable to the great financial burden created by these events. Because hospitals are no longer reimbursed for expenses incurred by Never Events, these events will cost hospitals billions of dollars annually if they continue to occur at historical rates. Clearly, hospitals must find new ways to prevent Never Events, to limit the huge liability of these events.

Limiting Patient Fall Never Events

New solutions have been developed to limit the occurrence of Never Events.  Dalcon Alert! is a system that decreases the prevalence of Never Event injury due to patient falls. Dalcon Alert! alerts caregivers immediately to events surrounding a patient by connecting with patient monitoring devices such as IV pumps and bed fall pads.

See also the White Paper, “An Assessment of Falls in Patients’ Rooms and Methods of Prevention” which analyzes the severity of patient fall liability for hospitals; and methods of fall prevention.