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The Changing Healthcare Liability Market: How Hospitals and Healthcare Providers Should Respond

2019 saw some changes within the professional liability industry, resulting from claims trends and the correlating response from insurance carriers. Heather Moore, CHC, AIAF, VP of Risk Management, Quality & Compliance for OB Hospitalist Group discusses these changes, what to look for in 2020, and how the consumer/patient experience is being impacted by the shifts.
The Changing Healthcare Liability Market: How Hospitals and Healthcare Providers Should Respond
Featured Speaker:
Heather Moore, CHC, AIAF | Vice President of Risk Management, Quality & Compliance
Heather Moore is Vice President of Risk Management, Quality & Compliance for OB Hospitalist Group, the nation’s largest and only dedicated OB hospitalist organization, directing national risk strategy as well as leading organization’s national perinatal initiatives and areas of focus.

[00:01] Prakash Chandran (Host): Recently there's been changes in the healthcare liability market caused by a convergence of different factors. How should hospitals and healthcare providers respond to these changes? We're going to learn about it today with Heather Moore, the Vice President of Risk Management, Quality, and Compliance for OB Hospitalist Group. This is the Obstetrics Podcast from OB Hospitalist Group. I'm so Heather 2019 saw some changes within the professional liability industry resulting from claim trends and the correlating response from insurance carriers. I'm curious as to what your thoughts are on these market shifts.

[00:33] Heather Moore: Yeah, so I think there's a lot of discussion and activity right now in the healthcare space of what are we seeing in terms of changing trends related to medical malpractice claims. That is then also of course, driving insurance carriers response to that or, or what is the potential signaling of, you know, a hardening of a market or tightening of pricing in the market. So we look at this particularly in our space from an OBGYN perspective, which a lot of times it is a loss leader for hospitals or healthcare systems. And so of course it's the top of our radar of what we're paying attention to in the market. You know, 2019 was a little bit unprecedented in that we saw the largest medical malpractice verdict ever. And what is emerging as unfortunately I think a trend in some mega verdicts. And while those still represent a very, very small percentage of cases or medical malpractice lawsuits in the country, and it is extremely small, they're big attention getters and of course they drive a lot of media interest in having the largest ever mega verdict in 2019 was pretty noteworthy.

[01:39] There certainly is discussion about 2020 continuing to be another noteworthy year in terms of high severity. So increasing costs on average for medical malpractice cases, increasing dollars associated with either settlements and or verdicts, and then also increasing frequency. And you know, I think there's a lot of areas where you can look at what's that coming from. I think some of it comes from patient perception of care. I think some of it comes from the reversals that we've seen in tort reform that were previously viewed as being successful. And maybe a mitigator of claim activity. And then there's a lot of talk about other factors such as millennial jurors and other contributors to what seems certainly to be a little bit of a heightened an escalating time in the market that I think clinicians, and whether it's an individual clinician or a physician group or a health care system, is going to really have to make sure that they're paying close attention to. And becoming, a couple of years, to determine what are they going to do to really control that risk and hopefully to ideally to be mitigating the drivers of that risk in the first place.

[02:50] Host: So do you think that things are going to remain the same for 2020 and what are the key things that we should be looking for?

[02:56] Heather Moore: I think depending on who you speak to in industry, there's a lot of different opinions out there on what we're going to see. There's definitely conversation around hardening of the market. So the insurance carrier space and the corresponding claims experience from health systems, seeing higher severity claims coming through, more costly claims coming through. In addition to, I've heard, recently, 2020 was thought to be potentially the highest frequency of claims we've seen in a long time, coming through with plaintiff's bar and plaintiff's feeling probably pretty bullish on how receptive the market's going to be to more claims coming in. Like I said, with the reversal of tort reform and in other key markets where they found juries to be very accepting of these mega verdicts and big events. Now, while that's actually very small percentage of cases that would go to a mega verdict or be the noteworthy things that you see in the press, there's no doubt that it creates a fear factor among providers and healthcare systems at a whole, and so I think what the more interesting things going to be for 2020 is not necessarily how the data plays out because I think that whether even if we see a spike in frequency, it's going to take many years for that to play out and see what actually happened with the trends or the claims. I think what's going to be more interesting to see is how the healthcare systems and providers respond on really the fear factor and the potential impact to defensive medicine. Or on the proactive side, what is happening around risk mitigation and quality control that is going to be proactive to improve patient experience and improve quality. That could be very impactful in driving down the likelihood of a medical malpractice claims being successful.

[04:39] Host: Yeah. I want to actually unpack that a little bit more and just hear your thoughts around how the consumer patient experience is going to be impacted by all of these shifts.

[04:48] Heather Moore: So I think that consumers have become, and when we talk about consumer, the patient become increasingly empowered and increasingly aware of what their role is in the broader healthcare system. And whether that, you know, you think of that as impacting hospital patient satisfaction scores and reimbursements or whether you think about that impacting actual medical malpractice claims, which is would be the unfortunate side. There's no doubt that patient advocacy and kind of consumer awareness of their role is growing. And so I think that there also is an expectation with that for patients to expect good care, high quality care, and look to an accountable party when it doesn't meet their expectation. Now you could kind of challenge at times whether experience is not necessarily, does not necessarily correlate with good care. You can have great care and have an unfortunate experience. And so I think that's going to be a challenge for the healthcare industry to continue to understand what meets good care and good patient experience for the consumer.

[05:47] But patients now have just the amount of information you can get on clinicians, on hospitals, whether you're looking at quality measures and how hospitals or just feedback on a physician is unparalleled. And there's also real time feedback patients can have regarding their experience. So where you used to have a potential patient experience or medical events that didn't go as planned, that would result in a PR risk where a hospital system had, you know, days to respond. You now have patients who have the ability to do Facebook Live or some sort of other real time sharing of their experience, which can be of course very detrimental to a clinician's reputation and or hospital from a PR risk. So the hospitals and healthcare systems and the healthcare industry as a whole, is going to have to become recently proactive to understand what's driving patient experience, what's driving patient's perception of care. Because I think the perception of care is so critical, also critical and what's going to drive a likelihood at times for a lawsuit. And really being able to understand what are those key components around perception of care and experience to improve quality for the patients, but also to mitigate potential risk for providers. And of course the health system.

[07:05] Host: So you touched upon this a little bit, but I'm curious to hear about your best advice to a healthcare provider or hospitals going into 2020 and beyond, in order to respond to a lot of these changes.

[07:16] Heather Moore: Right. So we've talked about the patient experience and the perception of care issue and what do we do about that? And I think there's a lot of opportunities in that space. But I think as we've, we just want to go back to the point, the initial point around, you know, what are we seeing in the professional liability market? I think there's a lot of best practice that's out there that has been slowly implemented over time. So for example, groups or systems, practices that are really engaged in proactive early resolution that are being extremely transparent with their patients if something does go wrong. Saying we want to make that right, what does this look like? How do we avoid getting into an unnecessary lawsuit? And how do we have transparent conversations with our patients early on and consider early resolution, you know, if financial consideration is needed at that time. And I think there's a lot of best practice that is out there. One of the things that I think we've seen though, is that the healthcare industry has been somewhat slow to adopt a lot of those best practice platforms.

[08:24] And I think that a lot of systems haven't had to do that yet. Again, the market has been in a place of relative stability for the past decade or so. And so the healthcare system and providers have not been maybe pushed to say, okay, it's really time for us to implement certain best practices like early resolution because it's in the best nature or it's for the best intention of the patients, but also it's going to improve our quality and minimize our risk over time. Whether it's a financial risk control or just quality improvement, things that we can learn from and learn to do differently in the future. And I think that that's going to be particularly critical. And I think we're going to see that the hospitals and healthcare systems and clinicians who really step forward and embrace those proactive changes and early resolution, high transparency with the patients and patient experience. I think that those are the groups that will really benefit in this changing landscape, and potentially challenging landscape and will, I think come ahead in the long run.

[09:34] Host: So in this changing landscape, are there any best practice trends that are emerging that will help support healthcare providers in hospitals?

[09:40] Heather Moore: Sure. So we hit on a couple of different points, which are really just broad themes, but patient experience. We've talked about things like the early resolution and patient transparency after an unexpected event or a negative experience. And I think that some of the other things that are going to emerge are going to be how do the actual hospitals and healthcare systems structure their organization to respond the most proactively. So one of the really interesting things that's recently come out from the New England Journal of Medicine was a look at how quality has or has not improved post, a lot of merger and acquisition activity in the healthcare space. And I think of what the findings of that publication have been for the most part is that it's been pretty flat. It doesn't show quality improving, it doesn't say show quality deteriorating. So now I think what the challenge is going to be is how do these organizations maximize their internal processes and organizational effectiveness to manage potentially more volume of patient complaints, and or claims coming through with a more proactive twist.

[10:52] So for example, one of the things that we feel strongly in is having alignment between departments and potentially either having them operate under one organizational structure, for example, a risk management quality or clinical excellence and even compliance, and what we see is a lot of those issues are interrelated. So what could be a patient experience issue could also be a quality process opportunity that become a perinatal initiative on the OB side, that could also pose as a risk. And what we see in the traditional healthcare system or hospital space is that those functions tend to continue to be really siloed. There certainly are, I think systems that are leading the charge with looking at that differently, whether it's clinical excellence and risk really being dyad partners that report up into the same organization. But I think it's going to be really important, particularly in light of the merger and acquisition activity in the healthcare market to say, now let's look at what the organizational structures are and how do we make sure that we're proactively identifying hospital risks, potential errors, patient experience, fallouts.

[12:04] And how do we look at those in a holistic manner from all those different aspects so we really can put in quality improvement activities that are going to address the underlying tensions in the market. That I think are a lot of what's driving these, whether it's increased claims activities on the professional liability side or whether it's just negative press from patients via social media or other avenues. I think that that best practice in implementing organizational best practice for operational kind of excellence there, is going to be really critical.

[12:37] Host: All right, Heather, thanks for your insight today. Very informative. That's Heather Moore, the Vice President of Risk Management, Quality and Compliance for OB Hospitalist Group. Thanks for checking out this episode of the Obstetrics Podcast. Check out the hospital leaders section at to learn more about the risk management and quality program at OBHG. If you found this podcast helpful, please share it on your social channels and be sure to check out the entire podcast library for topics of interest to you. Thanks, and we'll talk next time.