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.

Never events are select hospital acquired conditions defined by CMS as treatment errors that are 100% preventable.  As a consequence, CMS has mandated that they will refuse to reimburse hospitals for any never event expenses.  Additionally, hospitals are prohibited from passing the costs on to the patient.

In 2007, the last year CMS reimbursed hospitals for never events, pressure ulcers cost CMS $43,180 per occurrence and falls with injury cost $33,894 per occurrence. Thus, in 2007 pressure ulcers cost over $11.1 billion and falls cost over $6.5 billion.

Breaking Down the Return On Investment

According to the American Hospital Association (AHA) there were 951,045 registered beds in the United States in 2008. Thus US hospitals recorded approximately 0.27 dangerous pressure ulcers per bed per year on average, and approximately 0.20 falls with injury per bed per year on average. Do the math, and the total cost sum of pressure ulcers and falls with injury was about $19,032 per bed each year.

Due to the high cost of never events, investment in never event prevention provides a great return.  Investment in technologies and policies that particularly target patient falls and pressure ulcers return especially high value.

Investments that limit patient falls and pressure ulcers even slightly pay off handsomely.  For example, a 25% reduction in falls/pressure ulcers at $19,032 annually per bed results in savings of $4,748 per bed annually. For a medium sized 200 bed hospital, that’s $951,600 per year.

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.

Many techniques, tools, and technologies have been utilized to reduce fall rates in hospitals, but fall rates are still remain high.  The primary reason patient monitors fail to stop falls is because caregivers are unable to receive patient monitor alarms remotely.  As a result, caregivers are only able to act upon those alarms they can see and hear in their close vicinity.

Solutions Offered by New Technology

Dalcon Alert helps hospitals prevent patient falls by managing and remotely communicating patient monitor alarms.

Dalcon Alert sends patient monitor alarms directly to wireless phones carried by caregivers.  Remotely communicating alarms directly to caregivers allows caregivers to react to all changes in patient status, and provide their best possible patient care.
Dalcon Alert also sends alarms to the nursing station console where they can be viewed in real-time.  This up-to-date tracking of all patient monitoring alarms assures that no alarm will be overlooked.

Specifically, Dalcon Alert connects with up to five common monitoring devices including, but not limited to:

• IV pumps
• bed fall pads
• bed exit pads
• patient monitors

By working with existing patient care devices, Dalcon Alert can dramatically reduce patient fall rates, thus saving hospitals tens of thousands of dollars annually.

For more information about the severity of patient fall liability, and methods used to prevent falls, see the white paper “An Assessment of Falls in Patients’ Rooms and Methods of Prevention.”