A combination of the rapid growth in medical malpractice claims dealt with by the NHS Litigation Authority (NHSLA), and a growing awareness by NHS bodies of the need to deliver improved patient safety in a cash limited NHS, are perhaps the two most important reasons for the increased interest within the NHS Trust and NHS Foundation Trust communities in the potential benefits of placing their indemnity arrangements with the commercial insurance market. One can perhaps add to these reasons the impact of the Francis reports and the duty of candour, and of course the increasing contributions Trusts are making to the NHSLA for their indemnity cover.
Fundamental to this shift in thinking is less concern about the actual cost of the indemnity but rather greater interest in improved patient safety. That development heralds a greater acceptance of the proposition that changing outcomes (improving patient safety) means taking more ownership of risks and thereby reducing costs.
Using historic claims data to assist in the improvement of patient safety, which is how the NHSLA sees its role, is quite different to moving or changing from a culture that reacts to claims, to one of risk ownership and proactive and effective risk management. It is the cultural shift required that has led some NHS bodies to appreciate how commercial insurance practices can play a part in the process of change management, with a view to the delivery of improved patient outcomes and patient safety.
Triennial Review of the NHSLA
The Triennial Review (the Review) of the NHSLA, finally published on the 20 July 2015, includes a number of notable findings and recommendations, which in large part aim to improve the NHSLA’s efficiency and service, and recover from the disengagement with its membership that appears to be a theme which the Review highlights. The increased role of the Department of Health (DH) in setting the agenda for a refocused NHSLA that is more engaged with the membership it was designed to serve, is a telling development in the potential future strategy of an organisation set up to manage claims reported to it by its members.
The recommendations do not address the fundamental issue of risk ownership and risk management, which remains a gap in the NHSLA offering. Little wonder that scheme members are thinking differently about what indemnity arrangements are best suited to their strategic plans to own and manage risk, and to take forward the national drive to improve patient safety.
The issue of costs
One of the recommendations to emerge from the Review is that the role, purpose and objective of the NHSLA should be better defined. The DH plans to assist the NHSLA in that regard. This perhaps highlights the fact that the NHSLA derives its authority from a number of sources, which are owned and maintained by different bodies (such as the DH and the Ministry of Justice). This diversity of purpose may constrain its efficiency and also increases its costs. This uncertainty of identity is not a problem encountered by a commercial insurer, which operates to a uniform aim, in a competitive market, controlling costs, driving efficiency (with a view to making a profit) and therefore providing competitive pricing.
In the light of the significant liabilities the NHSLA is now reporting (£28.6 billion as reported in the recently published annual report) there is an expectation that contributions from NHSLA scheme members are only going one way - up. Rather than tackle the underlying issue of managing the risks and events that give rise to claims, a solution suggested in the Review is to work with stakeholders to cap or limit how much can be claimed in either costs or compensation, for injury loss and damage arising from clinical negligence (or medical malpractice, as insurers would refer to it).
This approach (to cap costs) is certainly one that has a precedent in other types of cases where fixed costs apply. Indeed in other jurisdictions the value of compensation that can be claimed is also limited. This approach, if taken up, would rather tend to steer thinking away from the current NHSLA objective of providing patients with fair access to justice and redress. One already sees the claimant lobby manoeuvring to limit the impact of these recommendations. Yet the cost of providing for redress, and the cost of seeking redress is ever increasing and, as commentators on the NHSLA annual report have said, these costs are more and more unaffordable. The Medical Defence Union in its press release of the 29 June 2015 called for the Government to do something to contain the “spiralling cost of compensation awards” and for “legal reform to make damages payments affordable, sustainable, and fair for all parties.”
No one would disagree with that approach though the fix suggested is not the fix that is required. What is being suggested is a sticking plaster fix, to deal with the consequences of the legacy of less than effective risk ownership and risk management in the NHS - a legacy the NHSLA may well have contributed to in disengaging from its members, and in only tackling claims rather than the cause of claims.
Perhaps it is the focus on claims, rather than the cause of claims, which has left the NHS with a culture of waiting for claims to emerge, rather than managing events when they arise in order to mitigate the cost of a claim, or better still managing risk to avoid events that give rise to claims in the first place. In many ways the NHSLA focus on post-event and post-claim management might be seen as closing the stable door after the horse has bolted. Controlling the cost of managing the aftermath does nothing to better manage the underlying risks that give rise to the costs that the DH and others recognise are increasingly unaffordable.
Contrast this reactive position with that of a commercial insurer operating in a global healthcare market, where a proactive view of risk management, focussed on prevention to avoid incidents and an active policy on managing incidents when they arise, reduces the cost of claims more effectively. Such proactive practice, acting to support the insured and work cooperatively with them, is a common approach among insurers who ultimately wish to limit claims exposure to maximize profit. Looked at very simply, it is a mutually beneficial relationship of insurer and insured working to the same ends.
The Review also recommended that the NHSLA should evaluate the mediation scheme it piloted and consider rolling it out to other regions. The benefits of having a mediation scheme are clear, as it reduces costs and helps to achieve a mutually beneficial result for the parties. This is already something supported by most commercial insurers both in and outside the healthcare sector. Again, this recommendation has a focus on claims rather than risk.
A reactive nature
The NHSLA approach to its objectives is largely reactive. Dealing with claims is after all what it was designed to do. As such, it largely deals with the claims as they come in, rather than identifying and addressing events which, with more proactive management, may never become claims. That it has so cut its cloth is a lesson that has cascaded down to the NHS members of the NHSLA schemes, where one might detect an expectation that there is nothing to be done in the aftermath of an incident, until the claim emerges – coupled with a reluctance to do anything for fear of transgressing the objectives the NHSLA work towards. At worst there is a perception that NHS Trusts have little or no authority to mitigate the escalation of an adverse incident to a claim.
The Review suggested that this lack of proactivity could be addressed by the NHSLA establishing a data project to improve the quality, analysis and access to claims data. It is always interesting to look back, but such an approach would be of limited benefit in looking forward to prevent claims. This is because, firstly, the data the NHSLA gathers is historical so therefore cannot predict future claims and, secondly, the NHSLA only gathers data on incidents that make it to the stage of being a claim, so the data cannot offer any assistance in predicting (and therefore preventing) recurring incidents that do not make it to this stage. That seems to be a gap in the role it is expected to have in supporting the drive for improved patient safety.
In contrast, insurers and insurance brokers who specialise in the healthcare market, can assist healthcare bodies (including Foundation Trusts if they go down this route – and insurance will not assist every Foundation Trust) in taking a proactive approach by working with them in surveying their risks when the insurance proposal is developed and thereafter when incidents arise, in assisting with the analysis of what went wrong and (whilst assisting in the management of the aftermath to mitigate the loss) what can be done to prevent it from becoming a claim and/or happening again.
The issue of control
The Review notes that a number of NHS Trusts feel disconnected from the NHSLA with little control over - and access to - information on the progress of their claims. The Review recommends that the NHSLA and relevant government bodies, most notably the DH should evaluate whether an extended programme of local delegated authority, or arrangements for local voluntary excesses could be effective. This approach offers hope since delegating back to the very organisations from which these responsibilities were taken could incentivise the NHS bodies to better identify and own their risks, to take steps to prevent claims, and to give them an element of control. Not surprisingly this approach exists where commercial underwriters insure healthcare bodies both here and elsewhere in the world.
Conclusion
The Review accepts there is a disconnect between the NHSLA and the membership it is designed to serve, a less than effectively stated objective, and a reliance on historic claims information to support what is essentially “learning from mistakes”. Whilst the plans to cap the costs of claims arising in the NHS will no doubt be welcomed by many, a number of NHS bodies have already embarked on a change management programme to identify and own their risks, and to work more effectively in managing those risks to prevent events that cause harm. In doing so they are leading the drive to improve patient safety.