Hospital malpractice costs continue to rise

The average hospital liability claim is approaching $500,000, according to new data from the American Society for Healthcare Risk Management.

ASHRM presented the data trend at its annual meeting earlier this week in Southern California and noted that the average claim, at $492,000 in 2013, was up 2 percent from the prior year. That was slower than the 2012 trend, when the average claim rose by 6 percent.

However, larger claims  of $2 million or more continue to grow at a faster rate--they're up by 14 percent over the past five years. Moreover, such claims comprise about 28 percent of total claims that are on record. Such data is collected on behalf of ASHRM by the Beazley Group, which providers liability insurance for hospitals. The company has claims data representing about 40 percent of the nation's hospital beds.

According to Beazley, the biggest concern for hospital liability coverage is if states roll back caps on non-economic damages patients can collected on malpractice claims. A Missouri court struck down a $350,000 cap in 2012. Such a proposal is on the November ballot for voters to decide in California. It would increase the cap from its current $250,000 to more than $1 million.

"In recent years, we have seen some convergence between the severity of claims in states that have enacted tort reform and those that haven't," Steve Chang, a healthcare claims executive at Beazley said in a statement. Chang said the average claim in states that have capped damages is $71,000 lower than compared to claims in states without such caps.

However, other alternatives have been proposed to hard caps on medical malpractice awards. They include a safe harbor provision for physicians who would be absolved of liability if they followed certain practice guidelines, with plaintiffs required to show that they did not follow standards of care. Policy experts say such a change would discourage the practice of defensive medicine, which tends to escalate the cost of delivering care.

To learn more:
- read the Beazley/ASHRM statement