More tort reform needed to combat $8.5B in medical incidence claims

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U.S. hospitals will be faced with more than 44,000 incident claims this year, and according to a study conducted by Aon Risk Solutions, hospitals and physicians should plan for lofty liability costs associated with these claims that could exceed $8.6 billion.

According to the report, loss rates, which measure the total cost of medical malpractice claims per hospital bed, are expected to increase 5 percent annually.

Additionally, Aon noted that hospitals could experience a loss rate of $3,290, a $150 increase from the expected rate in 2010, which was $3,130. The rate is an almost $300 rise from $2,980 in 2009.

The report also found that the frequency of hospital professional liability claims is continuing to grow at a rate of 1 percent annually. Claim severity is increasing at a steady rate of 4 percent per year.

The researchers said that tort reforms and patient safety initiatives had facilitated the reduction of medical malpractice costs between 2000 and 2006. “Today, there is less momentum associated with establishing new tort reforms and existing tort reforms face serious legal challenges in several states,” the report stated.

Additionally, Aon Risk Solutions found that the obstetrics unit and emergency department of hospitals made up more than a quarter of the $8.6 billion in expected claims costs for hospitals and physicians this year. According to the report, hospitals could incur $204 per birth for liability associated with obstetrics claims and $6.30 per visit for ED claims.

"The uncertainties of healthcare reform and difficult economic times represent significant sources of risk for many hospital systems," said the report's lead author Erik Johnson, healthcare practice leader for Aon Risk Solutions' Actuarial and Analytics Practice. "While many hospitals have grown accustomed to declining professional liability costs, the underlying claim frequency and severity cost drivers have entered a period of growth. Whether commercially insured or self-insured, hospitals and physicians should prepare for increases to their professional liability costs in the coming years."

The 2010 Hospital Professional Liability and Physician Liability Benchmark Analysis report, conducted by the global risk management company in conjunction with the American Society for Healthcare Risk Management, examines the trends in frequency, severity and loss of rates for hospital and physician liability.