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Insuring patient safety?

How compensation payouts may shape the quality of hospital care

NHS Trust hospitals must pay compensation to patients who suffer at the hands of negligent medical staff. But is this requirement to pay compensation when things go wrong making hospitals work harder to improve standards of patient care and safety? In practice, NHS Trust hospitals take out insurance to cover themselves against the risk of successful claims for compensation. Does the ‘safety net’ which these insurance arrangements provide damage the incentive to improve the quality of patient care?In the past, a variety of insurance arrangements have been available to hospitals. These range from insurers and hospitals sharing the payment of compensation claims to an insurer having sole responsibility to pay successful claims. They also include the possibility of paying a lower ‘premium’ based on a hospital’s record in pursuing good risk management performance. Researchers will examine how differing insurance arrangements, particularly a NHS Trust’s ability to pass on some responsibility for paying compensation, influence the quality of care that patients receive. What the research means for policy makers and the wider community

Research methods This study will combine, for the first time, data on NHS Trust hospital insurance arrangements (supplied by the NHSLA) with data from the Department of Health on claims volumes and a variety of clinical outcomes (for example, 30-day post operative mortality rates and MRSA infection rates). After exploring how insurance arrangements may work in theory, researchers will investigate whether, over the past ten years, insurance arrangements have resulted in better patient safety and improved treatment care.

Project Posters

Updated Project Poster 2009

Below is a summary of this project’s provisional findings. It was originally presented as a dissemination poster, which is available here as a pdf document. All figures can be found at the bottom of this poster summary as thumbnails, which one should click to view full-size images. Alternatively, where figures are reffered to in the text, click the linked text for a full-size version.

 

INSURING PATIENT SAFETY

Background

Death and harm caused to patients by doctors and nurses is something that is always in the news, with some estimates putting deaths caused by doctors in the USA at as many as 250,000 per year. For the UK, the NAO reported in 2005 that more than 2,000 patient deaths and almost a million other patient safety accidents were attributable to negligence. To protect themselves against patient claims for compensation under the law of tort or delict, NHS Trusts have to take out insurance policies, but it has been argued such arrangements can act as a disincentive to take care – ‘moral hazard’ in economic jargon. Do insurance arrangements lead to a disregard for patient safety and, if so, what type of insurance arrangement should be used to minimise negligent behaviour?

Aims

We aimed to use a ‘natural experiment’ to examine the effects of different insurance arrangements on the quality of hospital care in England. Before 2002 hospital trusts had a risk-pooling arrangement for insuring against compensation claims and each trust could select its own level of excess payment (that is the amount of each claim the insured agrees to pay, like the excess you may have on your care insurance; Figure 2 shows the situation in 2001). After 2002 the insurance arrangements were disaggregated. From that natural experiment we could explore the effects, if any, of different insurance arrangements on the quality of hospital care.

What We Did

» We gathered data from the NHS Litigation Authority on the insurance arrangements used by different trusts, including their risk management standards (see Figure 3) and excess levels (Figure 2), and matched that data against hospital performance and activity measures between 1995 and 2005 from the Department of Health and Hospital Episode Statistics.

» We than used regression analysis to explore the relationships between insurance, risk management arrangements and hospital performance on patient safety (Figure 4).

Provisional Findings

» Figure 4 shows that in most cases the direction of effect was indeed negative, suggesting that compliance with standards of risk management leads to better performance and higher levels of patient safety. » But our analysis so far suggests the strength of this association is fairly weak, mostly below the level of statistical significance. » That raises intriguing questions for policy and research. Does it mean the effect of risk management policies and insurance arrangements are relatively slight? Or could stronger relationships be discovered with different methodology, particularly in testing the joint impact of different aspects of insurance arrangements? Watch this space…

Figures

Click on the figures to enlarge fennfig1.jpg fennfig2.jpg fennfig3.jpg fennfig4.jpg

Other Project Outputs and Related Webpages

Project page on the ESRC Society Today website January 2007: Liability, insurance and medical practice, Journal of Health Economics, Volume 26 Issue 5 December 2008: ESRC Press release Prescription for patient safety (pdf)
Article in JPART Special Issue on Incentives Paul Fenn, Alastair Gray, Neil Rickman, Dev Vencappa, Oliver Rivero and Emanuela Lotti ‘Enterprise liability, risk pooling and diagnostic care’, July 2010.

Research Team

Professor Paul Fenn

Professor Paul Fenn

Paul Fenn is the Norwich Union Professor of Insurance Studies and Research Director of the Centre for Risk and Insurance Studies at Nottingham University Business School. He has written extensively on personal injury litigation, liability insurance, health economics, and the economics of workplace risk. He has contributed to public policy debates relating to proposals for no-fault compensation for medical injuries and the funding of personal injury litigation, and co-ordinated research projects on these issues for the Department of Health and the Department of Constitutional Affairs.

Tel: 0115 951 5254 begin_of_the_skype_highlighting              0115 951 5254      end_of_the_skype_highlighting begin_of_the_skype_highlighting              0115 951 5254      end_of_the_skype_highlighting
Email: Paul.Fenn@nottingham.ac.uk

Neil Rickman

Neil Rickman

Neil Rickman is Professor (and Head of the Department) of Economics at the University of Surrey. His research interests include applied microeconomic theory, particularly in relation to legal and health service delivery and the regulation of public services. He has participated in a number of projects funded by the Department of Constitutional Affairs, the Department of Health and the ESRC.

Tel: 01483 686960
Email: N.Rickman@surrey.ac.uk

Alastair Gray

Alastair Gray

Alastair Gray is Professor of Health Economics and Director of the Health Economics Research Centre, Department of Public Health, University of Oxford. His research interests include the economics of medical negligence and adverse events. He has long-standing research experience in the economics of legal aid, legal procedure, the legal profession and clinical negligence litigation.

Tel: 01865 226885
Email: alastair.gray@dphpc.ox.ac.uk