Can negotiation with judges solve malpractice crisis?

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Malpractice reform was a low-simmer issue that was once little more than convenient cover for Republicans offering alternatives to the Patient Protection and Affordable Care Act. However, hospitals are going to have to get into the malpractice fray sooner rather than later.

With the stratospheric ascent of accountable care organizations as the delivery model of the near future, more and more hospitals are going to be employing physicians rather than contracting with them. A new survey by Merritt Hawkins indicates that 56 percent of new physician openings are with hospitals, compared to less than a quarter of those jobs just five years ago.

Working directly for a hospital obviates doctors of the headaches of running a back office. However, hospitals are then tasked with such headaches as obtaining their malpractice insurance coverage. Being self-insured can make this a much cheaper proposition, but given that several medical errors likely occur in a hospital on any given day, the chances for a big claim--and millions of dollars in losses and higher premiums--are omnipresent.

Some hospitals have undertaken radical experiments, such as apologizing to patients and their families for a serious medical error. Preliminary studies suggest this cuts down on costs and sometimes eliminates lawsuits entirely. But we live in a litigious society, and medical care is becoming ever more intermarried with financial stress on the middle class. It is therefore unrealistic that a blanket "I'm sorry" could prove a systemic solution.

Several states that have initiated malpractice reforms have also given the upper hand to physicians. My state of California was the first in the nation to cap non-economic damages to $250,000. However, that occurred in 1975, and that award amount hasn't budged since. That sum of money could once buy you a handful of nice homes in Los Angeles. Now, it's a down payment on one. A couple of other states have placed inflation escalators in their malpractice caps, but they are in the vast minority.

That kind of legislative sleight-of-hand may work for a solo practitioner, who can claim a specific hardship in paying too large a judgment. But deep-pocketed hospitals are not going to receive the same kind of sympathy with jurors.

Then again, the notion of some sort of limits on jury in exchange for access to healthcare coverage might find some sympathetic ears as well.

Some boroughs in New York City employ an innovative approach known as judge-directed negotiation regarding cases involving public facilities. A single judge experienced in medical legal issues is brought into the process of litigation far earlier than in a typical suit, and advocates for settlements sooner rather than later.

Patients don't get the size of award they may get by going to trial, but then they do not have to wait years, perhaps even decades, before they're compensated.

Officials with the New York City Health and Hospital Corp., which operates 11 inpatient facilities, say the program is saving it $66 million a year in malpractice-related costs. The average payment in a malpractice case dropped nearly 25 percent between 2003 and 2010.

"The process forces parties to really evaluate their case and look at the strengths and weaknesses," Suzanne S. Blundi, the NYCHHC deputy counsel, recently told the New York Times.

Such numbers have piqued the interest of the Obama Administration, which is aware it needs to keep cost-cutting ahead of the rolling boulder of reform. The Agency for Healthcare Research and Quality claims it could save $1 billion a year if instituted nationwide. It recently issued a $3 million grant to expand judge-directed negotiation to cases in upstate New York, as well as in litigation involving private hospitals.

It's too early to tell if this is the malpractice fix that hospitals will soon need. However, it does hold promise for being the one fairest to all parties involved. - Ron