SUMC decreases annual liability premiums

Nov. 9, 2011, 3:00 a.m.

A recent report by the Institute for Healthcare Improvement (IHI) showed that a new approach to handling preventable medical errors has reduced liability premiums at Stanford hospitals by $3.2 million per year.

Stanford’s program involves the identification and disclosure of adverse events, a movement intended to prevent litigation and improve patient relations, according to Jeffrey Driver, chief risk officer for Stanford University Medical Center (SUMC).

Stanford University Medical Indemnity and Trust Insurance (SUMIT) launched the Process for Early Assessment and Resolution of Loss, or PEARL program, in 2007. Under the new initiative, insurance providers worked with nurses and physicians at SUMC to identify any adverse events and investigate medical outcomes.

If an event is deemed to have been avoidable, Stanford approaches the affected patient and discloses the details of the event. An apology is offered, and compensation may be negotiated.

Driver said that the program avoids high expenses associated with settling medical liability claims in court.

“Our focus was on the patient,” Driver said. “To see if we can’t resolve this in a quicker way that doesn’t involve litigation.”

Without a disclosure program, Driver said it takes much longer for an adverse event to be identified by a patient. He said the time it takes for a patient to attain a lawyer and file a claim can take up to a year after the actual event.

He added that once the legal process is initiated, legal expenses soar and can become staggering if the claim is not resolved quickly.

“In the PEARL program, we rely on physicians and nurses to report an event,” Driver said. “That allows SUMIT to look into these as soon as they happen — when the event is still fresh in everyone’s mind.”

Under PEARL, events are investigated and interviews are conducted within 90 days of occurrence, unless legal action has already been taken. All negotiations occur amongst the parties involved, allowing hospitals to avoid expenses associated with court-settled cases.

SUMIT has evaluated the success of the program over the past four years, and recently released those results to the IHI, Driver said. In addition to the $3.2 million savings on premiums, the report showed that Stanford has seen a 36 percent decrease in liability claims.

Driver said the new process creates a win-win situation for both parties: hospitals and patients circumvent legal fees, and promptly achieved resolution can avoid the emotional suffering often brought on by long court battles.

Patients seem to be much happier with the program, according to Driver, and initial testimony has been positive.

“Patients really are able to heal after one of these events much quicker,” he said.

This seems to have been the case with Leilani Schweitzer and her son Gabriel, who was treated at Lucile Packard Children’s Hospital six years ago. Gabriel died of complications from hydrocephalus, or “water in the brain,” because of what Schweitzer described as a “perfect storm of things going wrong.”

“Stanford was very open about what happened,” Schweitzer said. “They explained everything to me. They understood how I felt.”

Schweitzer said she found out much more about hydrocephalus after her son died. She said that she might have been able to help her son more had she been equipped with this knowledge beforehand.

“[Stanford] saw that there was a need for better communication around hydrocephalus,” she said. “They helped me take steps to start a nonprofit.”

Stanford helped to fund a nonprofit Schweitzer founded, a website called Gabriel’s Life. The site provides informative resources and a social network for patients and families dealing with hydrocephalus.

Stanford works to ensure that patients are fairly compensated at amounts comparable to what might be awarded in court-based settlements, according to Driver. Cases may still go into litigation if a patient does not accept the privately negotiated compensation.

Driver noted that Stanford is not the first to implement such a program. Other private institutions, such as the University of Michigan and the University of Illinois, have also begun disclosing adverse events.

Despite initial successes, health care providers are nervous about the movement towards non-court resolution, Driver said. Many are reluctant to implement such policies, worrying that admittance of medical error makes providers vulnerable to prosecution in courts.

According to Driver, California’s benevolent gesture statutes, or “apology laws,” make it easier for Stanford physicians to offer apologies to patients without excessive fear of litigation.

Despite initial concern, Driver said he sees a push towards more disclosure programs. Federally funded demonstrations of successful implementations are currently underway in programs across the nation, he added.

Schweitzer said the disclosure program is not merely financially practical, but also emotionally healing for patients and families.

“It’s a very powerful way of taking something that is so immensely bad and making it good,” Schweitzer said.

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