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Broadening the Business Case for Patient Safety

Broadening the Business Case for Patient Safety In the November 25 issue of the ARCHIVES, Rothschild et al1 provide additional evidence that substantial downstream costs—specifically those of defending and settling malpractice claims—are associated with patient safety violations. While the argument is commendable, and one we have made before,2,3 it may fall on deaf administrative ears within health care settings for 3 reasons. First, although the settlement costs associated with malpractice claims sound high—$19 million for agencies covered by the Controlled Risk Insurance Company over a 10-year period, $27 million for adverse drug event claims, and $556 million for all malpractice claims in the Department of Veterans Affairs (VA) during approximately the same time2—those costs are trivial in the context of the overall budget. In the 1990s, direct payments approximated 0.22% of the VA health care delivery budget for all claims and 0.01% for adverse drug event claims. Second, there are substantial time delays between incident and claim and between claim and settlement.2 A plaintiff must suffer harm, discover that the harm was related to an error, navigate the legal system, and present a winnable case. Aside from egregious, overt criminal activities, it is likely to be difficult to anticipate which errors that result in harm will have legal ramifications. In the financial world, future dollars are discounted to a lower value because of the possibility that they will not materialize. With so few occurrences resulting in claims, the probability of payments is low and the discount rate is high. An argument to invest resources to minimize medical errors, with the promise of avoiding future malpractice costs, is not likely to be fruitful. Most importantly, the organization responsible for providing a safe environment of care will not necessarily incur the costs associated with patient safety violations. Patients will bear the burden of increased out-of-pocket costs and uncompensated disability and sick leave. Employers will bear the burden of disability payments and human resources costs associated with extended leaves. Malpractice insurers will bear much of the cost of legal defense and settlement payments. Insurers (or employers, if self-insured) will bear the costs of higher charges associated with care delivery,4 charges that may ironically result in higher revenues for the health care delivery system. Rothschild et al,1 and we, will continue to include malpractice costs as a financial incentive to pursue patient safety initiatives. However, enumerating the indirect costs associated with preventable medical errors are likely to be much more motivating to health care delivery decision makers in a competitive environment.3 Bad press and inability to retain contracts because of poor performance are likely to decrease revenues and spurn investment. Inability to compete for the retention of physicians and nurses because health care environments with systems vulnerabilities expose these providers to undue risk will raise labor costs. Deviation of labor resources to paperwork, review committees, and the witness stand will raise administrative costs and cause inefficiency. Health care administrators have a moral imperative to provide safe patient care. Far beyond malpractice avoidance, they have a financial one as well. The views expressed in this letter do not necessarily represent the views of the Department of Veterans Affairs or of the US government. References 1. Rothschild JFederico FGandhi TKaushal RWilliams DBates D Analysis of medication-related malpractice claims: causes, preventability, and costs. Arch Intern Med. 2002;1622414- 2420Google ScholarCrossref 2. Weeks WBFoster TWallace AEStalhandske E Tort claims analysis in the Veterans Health Administration for quality improvement. J Law Med Ethics. 2001;29335- 345Google ScholarCrossref 3. Weeks WBWaldron JFoster TMills PDStalhandske E The organizational costs of preventable medical errors. Jt Comm J Qual Improv. 2001;27533- 539Google Scholar 4. Bates DSpell NCullen D et al. The cost of adverse drug events in hospitalized patients. JAMA. 1997;277307- 311Google ScholarCrossref http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Archives of Internal Medicine American Medical Association

Broadening the Business Case for Patient Safety

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Broadening the Business Case for Patient Safety

Abstract

In the November 25 issue of the ARCHIVES, Rothschild et al1 provide additional evidence that substantial downstream costs—specifically those of defending and settling malpractice claims—are associated with patient safety violations. While the argument is commendable, and one we have made before,2,3 it may fall on deaf administrative ears within health care settings for 3 reasons. First, although the settlement costs associated with malpractice claims sound high—$19 million...
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Publisher
American Medical Association
Copyright
Copyright © 2003 American Medical Association. All Rights Reserved.
ISSN
0003-9926
eISSN
1538-3679
DOI
10.1001/archinte.163.9.1112-a
Publisher site
See Article on Publisher Site

Abstract

In the November 25 issue of the ARCHIVES, Rothschild et al1 provide additional evidence that substantial downstream costs—specifically those of defending and settling malpractice claims—are associated with patient safety violations. While the argument is commendable, and one we have made before,2,3 it may fall on deaf administrative ears within health care settings for 3 reasons. First, although the settlement costs associated with malpractice claims sound high—$19 million for agencies covered by the Controlled Risk Insurance Company over a 10-year period, $27 million for adverse drug event claims, and $556 million for all malpractice claims in the Department of Veterans Affairs (VA) during approximately the same time2—those costs are trivial in the context of the overall budget. In the 1990s, direct payments approximated 0.22% of the VA health care delivery budget for all claims and 0.01% for adverse drug event claims. Second, there are substantial time delays between incident and claim and between claim and settlement.2 A plaintiff must suffer harm, discover that the harm was related to an error, navigate the legal system, and present a winnable case. Aside from egregious, overt criminal activities, it is likely to be difficult to anticipate which errors that result in harm will have legal ramifications. In the financial world, future dollars are discounted to a lower value because of the possibility that they will not materialize. With so few occurrences resulting in claims, the probability of payments is low and the discount rate is high. An argument to invest resources to minimize medical errors, with the promise of avoiding future malpractice costs, is not likely to be fruitful. Most importantly, the organization responsible for providing a safe environment of care will not necessarily incur the costs associated with patient safety violations. Patients will bear the burden of increased out-of-pocket costs and uncompensated disability and sick leave. Employers will bear the burden of disability payments and human resources costs associated with extended leaves. Malpractice insurers will bear much of the cost of legal defense and settlement payments. Insurers (or employers, if self-insured) will bear the costs of higher charges associated with care delivery,4 charges that may ironically result in higher revenues for the health care delivery system. Rothschild et al,1 and we, will continue to include malpractice costs as a financial incentive to pursue patient safety initiatives. However, enumerating the indirect costs associated with preventable medical errors are likely to be much more motivating to health care delivery decision makers in a competitive environment.3 Bad press and inability to retain contracts because of poor performance are likely to decrease revenues and spurn investment. Inability to compete for the retention of physicians and nurses because health care environments with systems vulnerabilities expose these providers to undue risk will raise labor costs. Deviation of labor resources to paperwork, review committees, and the witness stand will raise administrative costs and cause inefficiency. Health care administrators have a moral imperative to provide safe patient care. Far beyond malpractice avoidance, they have a financial one as well. The views expressed in this letter do not necessarily represent the views of the Department of Veterans Affairs or of the US government. References 1. Rothschild JFederico FGandhi TKaushal RWilliams DBates D Analysis of medication-related malpractice claims: causes, preventability, and costs. Arch Intern Med. 2002;1622414- 2420Google ScholarCrossref 2. Weeks WBFoster TWallace AEStalhandske E Tort claims analysis in the Veterans Health Administration for quality improvement. J Law Med Ethics. 2001;29335- 345Google ScholarCrossref 3. Weeks WBWaldron JFoster TMills PDStalhandske E The organizational costs of preventable medical errors. Jt Comm J Qual Improv. 2001;27533- 539Google Scholar 4. Bates DSpell NCullen D et al. The cost of adverse drug events in hospitalized patients. JAMA. 1997;277307- 311Google ScholarCrossref

Journal

Archives of Internal Medicine – American Medical Association

Published: May 12, 2003

Keywords: patient safety

References

  • Analysis of medication-related malpractice claims: causes, preventability, and costs.
    Bates D; Arch Intern Med.
  • Tort claims analysis in the Veterans Health Administration for quality improvement.
    Stalhandske E; J Law Med Ethics.
  • The organizational costs of preventable medical errors.
    Stalhandske E; Jt Comm J Qual Improv.
  • The cost of adverse drug events in hospitalized patients.
    Cullen D; JAMA.

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