Establishing a program that mandates full disclosure and compensation to patients with regard to medical errors may potentially reduce malpractice claims, according to a retrospective analysis published in the Aug. 17 edition of the Annals of Internal Medicine.

Since 2001, the University of Michigan Health System (UMHS) has fully disclosed and offered compensation to patients for medical errors. Under this model, UMHS has claimed to proactively look for medical errors, fully disclose found errors to patients and offer compensation when at fault.

As a result, Allen B. Kachalia, MD, JD, medical director of quality and safety at Brigham and Women’s Hospital in Boston, who also works with Ann Arbor Veterans Affairs Medical Center, University of Michigan Health System in Ann Arbor, Mich., and colleagues sought to compare liability claims and costs before and after implementation of the UMHS disclosure-with-offer program.

"The need for full disclosure of harmful medical errors is driven by both ethics and patient safety concerns," said Kachalia. "However, because of fears that disclosing every medical error may lead to more malpractice claims and costs, disclosure may not happen as often and consistently as we would hope."

The researchers studied inpatients and outpatients involved in claims made to UMHS from 1995 to 2007. They assessed the number of new claims for compensation, number of claims compensated, time- to-claim resolution and claims-related costs.

After full implementation of a disclosure-with-offer program, Kachalia and his colleagues found that the average monthly rate of new claims decreased from 7.03 to 4.52 per 100,000 patient encounters. Likewise, the average monthly rate of lawsuits decreased from 2.13 to 0.75 per 100,000 patient encounters.

Median time from claim reporting to resolution decreased from 1.36 to 0.95 years, wrote the authors, who also reported that the average monthly cost rates decreased for total liability (rate ratio, 0.41), patient compensation (rate ratio, 0.41) and non-compensation-related legal costs (rate ratio, 0.39).

Although the researchers acknowledged that the study “design cannot establish causality,” they found that malpractice claims generally declined in Michigan during the latter part of the study period.

“The findings might not apply to other health systems, given that UMHS has a closed staff model covered by a captive insurance company and often assumes legal responsibility,” the authors wrote.

"The decrease in claims and costs may be attributed to a number or combination of factors," said Kachalia. "We found a 61 percent decrease in spending at the UMHS on legal defense costs, and this supports the possibility that patients may be less likely to file lawsuits when given prompt transparency and an offer of compensation."

Based on their findings, Kachalia and colleagues concluded that UMHS implemented a program of full disclosure of medical errors with offers of compensation without increasing its total claims and liability costs.

Blue Cross Blue Shield of Michigan Foundation provided the primary source of funding for the study.