- Email: [email protected]
Medical Malpractice: Reform for Today's Patients and Clinicians
Accepted Manuscript Medical Malpractice: Reform for Today’s Patients and Clinicians Jason A. Stamm, MD, Karen A. Korzick, MD, Kristen Beech, JD, Kenneth E. Wood, DO PII:
S0002-9343(15)00856-6
DOI:
10.1016/j.amjmed.2015.08.026
Reference:
AJM 13170
To appear in:
The American Journal of Medicine
Received Date: 27 June 2015 Revised Date:
4 August 2015
Accepted Date: 4 August 2015
Please cite this article as: Stamm JA, Korzick KA, Beech K, Wood KE, Medical Malpractice: Reform for Today’s Patients and Clinicians, The American Journal of Medicine (2015), doi: 10.1016/ j.amjmed.2015.08.026. This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
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Medical Malpractice: Reform for Today’s Patients and Clinicians
1 Department of Medicine Geisinger Medical Center, Danville PA
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Jason A. Stamm MD1, Karen A. Korzick MD1, Kristen Beech JD2, Kenneth E. Wood DO1,3
2 Chief Legal Officer, Harvard Medical Faculty Physicians, Beth Israel Deaconess Medical
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Center, Boston MA
Conflict of Interest, all authors: None
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3 Chief Medical Officer, Geisinger Medical Center, Danville PA
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All authors had access to the data and a role in writing the manuscript. Running head: Medical Malpractice Reform for Today
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Disclaimer: The views expressed herein are those of the authors and do not reflect the opinions
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of either Geisinger Health System or of the Harvard Medical Faculty Physician group.
Reprints and correspondence: Jason A. Stamm MD, 100 North Academy Drive, Box 20-37, Danville PA 17822; telephone: 570-271-6389; email: [email protected].
Word count (approximate): 3200
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Abstract The current system of medical malpractice does a poor job of serving the best interests of
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physicians or patients. Economic and societal forces are shifting the nature of healthcare from the individual physician to a system of healthcare professionals, characterized by Accountable Care Organizations. In particular, more physicians are employed, quality and outcomes are
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routinely measured, and reimbursement is moving to value based purchasing. Medical
malpractice likewise needs to transition to a new model that is consistent with the modern era of
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patient-centered care. Collective accountability, the concept that patient care is the responsibility of all the members of the healthcare organization, requires malpractice reform that reflects a systems-based practice of medicine. Enterprise liability, coupled with medical error communication and resolution programs, provides the legal framework necessary for the patient-
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centered practice of medicine in today’s environment.
Keywords: malpractice, accountable care organization, collective accountability, enterprise
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liability, communication and resolution program
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Introduction Medical malpractice reform efforts, which command much attention within the medical
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community, should be developed in accordance with a rapidly changing healthcare environment 1,2
. Economic and societal forces occurring before and after the passage of the Patient Protection
and Affordable Care Act (ACA) are shifting the nature of healthcare from physicians to a system of healthcare professionals, characterized by Accountable Care Organizations (ACOs). In the
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context of modern healthcare delivery, this essay will review medical malpractice and propose
Medical Malpractice Background
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malpractice reform that satisfies the needs of the involved stakeholders.
Medical malpractice is a form of tort law, civil wrongs that do not arise from contracts. Malpractice generally aligns under negligence, a form of tort law which provides civil remedies
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for alleged wrongful acts that result in injury to person or property. The plaintiff in a tort claim generally pursues monetary damages, compensatory and/or punitive, from the defendant 3. The traditional goals of medical malpractice are to ensure that the injured patient is made whole
duty 2.
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again, usually through monetary award, and to deter other physicians from similar breaches of
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However the current system of malpractice does a poor job of serving the interests of physicians or patients. The malpractice process is slow, frustrating patients and negating any impact on deterring poor physician behaviors or on improving patient outcomes. The administrative costs of the current system are significant, as large amounts of compensation are taken by attorney fees. Most importantly, there remains an atmosphere of “deny and defend” in
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which patients’ questions and concerns often go unanswered, medical errors often go unrecognized, and patient safety is not addressed.
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A Broken Malpractice System: Perspective of Physicians and Patients The annual risk of having an open malpractice claim was recently reported to be 7.4% of all physicians, with an annual rate of 1.6% of physicians having a claim leading to payment. By
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65 years of age, 75% of physicians in low risk specialties, and 99% of physicians in high risk specialties, will have faced a malpractice claim 4. With this near certainty of dealing with the
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stress of a malpractice claim during the course of a career, physicians have understandably responded. Physicians resort to medical society advocacy for malpractice reform, practice defensive medicine, curtail high risk procedures, and/or relocate to areas with lower malpractice risk 5.
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Physicians are not alone in believing the current malpractice process is broken. Patients are not well served by the current malpractice system. Only 2% to 3% of patients who suffer medical error are believed to file a malpractice claim 6. In addition, nearly 60% of all malpractice
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claims that are filed are subsequently abandoned by patients. The most common reasons for dropping a claim is the discovery of information that weakens the negligence claim and
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frustration with the slow pace of claim resolution 7. These frustrations are supported by work performed by Studdert and colleagues, who independently reviewed the medical records of a large number of closed malpractice claims. The mean time from claim initiation to closure was over 5 years, a duration of time in which injured patients were not receiving financial support and which detracts from deterrence basis of malpractice, given the temporal separation between error and payment. In addition, the administrative costs of the malpractice system are significant,
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particularly for the plaintiffs. The authors report that nearly 50% of all compensation awarded to patients is consumed by attorney fees and administrative charges 8.
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Thus, most physicians will face a malpractice claim during their career, a reality which likely leads to the practice of defensive medicine. The malpractice process is tedious, expensive, and frustrating for patients and negates any impact on adverse physician behaviors or on
improving patient outcomes. Most importantly, the current malpractice system promotes barriers
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to effective patient and physician communication and patient safety is not readily addressed.
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Based on these realities, some have attempted to redefine the goals of medical malpractice. Then Senators Clinton and Obama wrote in 2006 that the malpractice system should aim to “reduce the rate of preventable patient injuries, promote open communication between patients and physicians, ensure patient access to fair compensation for legitimate medical injuries, and reduce
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liability insurance premiums” 9
Malpractice: Prior Reforms and Impact
Malpractice reforms have traditionally been broken into first and second generation
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efforts. First generation reform measures were focused at reducing the number of malpractice claims and limiting payment amounts. Examples of these early reform efforts include monetary
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caps on malpractice claim awards, shortened statutes of limitation, pre-trial screening, and elimination of joint and several liability rules. These reform efforts have been implemented in various combinations in a number of states, and a large body of literature examining the impact of these measures exist. However, in general, evaluation of these early malpractice reforms has focused on changes relevant to defendants, namely claim volume, payment amounts, and insurance premiums. In particular, caps appear to be effective in limiting payments in adjudicated and settled claims. Nearly half of all jury awards in Texas were reduced after Stamm 4
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implementation of a non-economic cap. Furthermore, during the same period, payment amounts made in claims settled pre-trial also decreased by 18% 10. There is also good evidence that noneconomic caps reduce malpractice claim volume and payment amounts by 20-30% 11. Much less
outcomes, such as access to care and patient safety 12,13
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literature is available describing the impact of these early measures on patient-centered
A second generation of malpractice reforms are in the process of being tested by
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individual healthcare systems or in pilot projects and include concepts such as schedules of non-
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economic damages, health courts, and communication and resolution programs, among others 13. Overall, these newer reform efforts are more balanced in terms of plaintiff/defendant benefit. Communication and resolution programs have been the most widely implemented of these newer reform efforts14. The goal of communication and resolution programs is to quickly identify medical errors, communicate those errors to the patient, provide appropriate compensation, and
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improve patient safety in the future. The University of Michigan and the Veteran Affairs (VA) Hospital in Lexington, KY have implemented inclusion of apology as part of their transparent risk management strategies for medical error. The University of Michigan subsequently reported
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that their litigation costs decreased by 50% and new claims decreased by 40% 15. The Lexington
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VA has reported similar findings 16.
While patient focused, there are several potential hurdles with communication and
resolution programs. States provide varying degrees of legal immunity to nonprofit and government based medical centers. These laws limit the liability of the institution in hospitalbased malpractice cases and result in conflicting interests among malpractice defendants. In particular, hospitals may be less likely to support novel reform efforts, given their limited liability, while unprotected physicians may be less likely to be transparent 14. Furthermore, while Stamm 5
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most states have “apology protection” in place, fewer states afford physicians “disclosure protection.” This creates a conversational and legal disconnect. Physicians can express sympathy for a medical error without fear of having that apology being admissible in court;
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however any communication beyond that apology could constitute an admission of fault which would be potentially admissible in malpractice litigation. The lack of disclosure protection
errors with patients, families and administrators 14,17.
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certainly limits the willingness of physicians to self-identify medical errors and to discuss these
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The Modern Era in Health Care: Accountable Healthcare Systems
The practice of medicine has changed significantly in the recent past. Previously, the provision of medical care was provided mainly by independent physicians, hospitals and healthcare systems generally had limited liability, and negligence was assessed on an individual
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physician level. In contrast, contemporary medical care occurs in a complex environment composed of multiple physicians within larger healthcare organizations 12. In particular, fewer physicians are independent. In 2004, 20% of new physicians went into private solo practice and
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11% of physicians became hospital employed physicians. By 2014, these numbers had changed dramatically, with 64% of new physicians starting in employed positions while less than 1%
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went into private solo practice 18.
In addition to employment status, the financing of medicine is changing. While fee for
service has been the historically dominant model of reimbursement in the US, there is movement away from this economic model towards one of payment for value. The Centers for Medicare and Medicaid Services (CMS) defines value-based healthcare purchasing as care that is financially linked to quality outcomes. Value based purchasing exists on a spectrum, ranging Stamm 6
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from fee for service with quality incentives to population based payments that are entirely disconnected from the quantity of provided services. By 2018 the CMS has set a goal to have 90% of Medicare fee for service in value based categories; furthermore, by this date the CMS
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anticipates locating 50% of all Medicare value-based financing within ACOs 19,20. In addition to healthcare purchasing moving away from fee for service, emphasis is concurrently being placed on quality, safety, and patient experience. The passage of the ACA in 2010 accelerated this
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movement through a variety of measures, including programs focused on value (Hospital
Acquired Condition Reduction Program and Readmission Reduction Program), new payment
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models (ACOs and bundled payments), and quality initiatives (Comprehensive Primary Care Initiative) 21,22.
ACOs exemplify the changing landscape of modern healthcare and are defined as a group of physicians, hospitals, and other healthcare providers that accept a shared responsibility to
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deliver medical services across the spectrum of care and are held accountable for the quality and cost of that care 23,24 . Cost containment pressures are tempered by incentivized metrics in both
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quality improvement and patient satisfaction 25. The earliest ACO groups have reported several years of experience and have consistently demonstrated improvements in quality and patient
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satisfaction while concurrently lowering spending 26-30. Overall, while the evidence base is still accumulating, ACOs likely represent the future of healthcare delivery and financing. In this evolving healthcare delivery and financing environment, physicians will face
fundamental changes in the practice of medicine. Importantly, physicians within an ACO will need to understand the importance of clinical data to assess their own practice patterns, particularly as they will likely see their income tied to quality metrics. Beyond their individual practice, clinicians will need to understand the importance of ACO viability and embrace system Stamm 7
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accountability, recognizing and acting upon opportunities for process and safety improvement. Finally, physicians will need to acclimate to team-based care, incorporating the skills of a multidisciplinary healthcare team that is responsible for patient outcomes across the spectrum of
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healthcare 23.
Malpractice Reform: An Approach for a Changing Healthcare Environment
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Thus, medicine is changing as physicians are employed, quality and outcomes are
routinely measured, and healthcare finance is moving to value based purchasing. The medical
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malpractice system likewise needs to adapt to these forces that are reshaping healthcare 31. Adopting and implementing the concepts of “collective accountability” and “enterprise liability” integrates medical malpractice with the changing nature of healthcare. “Collective accountability,” a concept recently reviewed by Bell et al., states that since
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“we take care of patients in teams, we err as teams, and [therefore] we need to accept responsibility as teams” 32. Collective accountability is a recognition that many patient errors in healthcare occur due to system issues, rather than individual physician negligence, and that
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providers, institutions, and patients should work collaboratively to share responsibility for error
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transparency and error prevention 32-34. The idea of collective accountability leads to enterprise liability, a construct that codifies collective accountability in medical malpractice law. “Enterprise liability” is a legal doctrine assigning liability to a healthcare organization for
medical errors that occur in its facilities or by its physicians. Specifically, under enterprise liability the health care organization would assume liability while the individual physician is immunized from liability. While the negligence standard is maintained, medical negligence is assessed in terms of the healthcare organization as a whole, rather than on an individual Stamm 8
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physician level 13. Patients are at the center of collective accountability and enterprise liability. An ACO with a robust collective accountability culture and enterprise liability, coupled with an institutional communication and resolution program, would be more likely than our current
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malpractice system to promote voluntary clinician reporting of error and to achieve transparency, to improve patient-physician communication, and to prevent future errors.
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Enterprise liability is the necessary evolution of medical malpractice in the US. As ACOs assume responsibility for patient outcomes and costs, they are likely to also assume
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liability. ACO policies that guide care decisions, particularly in a system where individual physicians are employed and incentivized to quality metrics, may be identified by plaintiff attorneys as contributing to harm, especially if such policies are construed as cost containment in nature 24,35. Furthermore, the success of ACOs is dependent on system awareness of individual physicians, an attitude that is more likely to flourish under an enterprise liability and which
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aligns incentives between physicians and the ACO. Specifically, physicians are more likely to make patient care decisions tempered by quality and costs factors, and less influenced by
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personal liability concerns, if protected by the shield of enterprise liability 35 . While some may argue that it is important to hold physicians accountable for their actions via postings to the
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National Practitioner Databank, the emerging federal and state models with emphasis on published outcomes of provider and organizational data will, in the long term, satisfy this need. Furthermore, the growing number of patient safety and reporting initiatives should result in enhanced public transparency under enterprise liability. In particular, communication and resolution programs should enhance voluntary reporting of patient safety events given the transfer of liability from the clinician to the healthcare system. Instead of a perceived punitive
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environment, healthcare systems and physicians will have a vested interest in promoting clinical improvement because of the access the public will have to such information.
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Collective Accountability and Enterprise Liability: Positive Change Patient safety should improve in a collective accountability culture that implements enterprise liability and error disclosure. Individual clinicians have not previously had the
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resources or financial motivation to implement changes in healthcare delivery. However,
healthcare organizations do have access to data on medical errors and patient outcomes, and
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ACOs and similar organizations have the resources to re-engineer processes and promote improvements in patient care. When working together in collective efforts under the umbrella of the ACO, groups of clinicians can leverage the data collection of the ACO, as well as the mechanisms for developing and implementing best practice standards, to address identified
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medical safety issues. In addition, as a majority of physicians are now employed, healthcare organizations have the ability to align physician behavior, via incentives, with redesigned care delivery models.
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In addition to a reduction in medical errors and improved patient communication, there
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are other potential positive outcomes of enterprise liability. As large healthcare organizations acquire more experience with the application of communication and resolution programs, the malpractice process should become both more just and more efficient. While many injured patients currently do not receive compensation, robust communication and resolution systems would proactively recognize an injured patient and, in an equitable and transparent manner, make the patient medically and financially whole. Likewise, in contrast to the protracted and expensive legal process typical of the current malpractice system, communication programs
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should lead to quicker resolution and patient compensation 15. Financial savings may be realized from a culture of collective accountability. In conjunction with the pay for performance initiatives of ACA, patient care may become more cost effective, with reduced unnecessary
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variation in care, through quality improvement efforts and ongoing clinician education. In
physicians are less concerned about individual liability 36,37. Potential Obstacles to Enterprise Liability
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addition, the present but difficult to quantify costs of defensive medicine costs may be reduced if
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While the positives are significant, there are potential obstacles to the implementation of enterprise liability. Plaintiff attorneys may embrace some aspects of enterprise liability, including the maintenance of the negligence standard for malpractice claims that are filed. However, the legal profession may not support the widespread adoption of communication and
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resolution programs, as there are less legal fees associated with payments made absent attorney facilitated, patient-initiated claims. Moreover, as litigation practice and the law of tort claims are governed at the state level, effectuating change will also have to take place at the state level,
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guaranteeing that implementation of such new approaches will be inconsistent. Enterprise liability may require that medical malpractice move from the state level to the federal level.
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Federal medical liability jurisdiction, while debated in principle, may be found to be constitutional under the commerce clause of the US Constitution 38. Likewise, enterprise liability coupled with communication and resolution programs will require changes in disclosure laws, as discussed previously.
Enterprise liability would be most effective in organizations that both own hospitals and employ physicians. Alternative models may be more viable in healthcare systems in which Stamm 11
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physicians are not directly employed. Enterprise insurance, a concept related to enterprise liability in which non-employed physicians purchase malpractice insurance from collaborating healthcare organizations, is one specific alternative. In an ACO environment, both the healthcare
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system and physicians would have shared incentives to improve patient outcomes and reduce medical error. Enterprise insurance would require that healthcare organizations subsidize liability
standardization, and quality improvement initiatives 12,39.
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insurance for non-employed physicians, who in turn participate in error disclosure, practice
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Some physicians will object to the increased loss of autonomy associated with enterprise liability. Indeed, enterprise liability was introduced as a possible reform during the Clinton era healthcare debates, only to be blocked in part by medical society advocacy 36. However, the climate of medicine has changed since then and ACOs continue to develop, fostered by the passage of ACA. Independent physicians may need to join a healthcare organization, enter into
malpractice insurance.
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Conclusion
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enterprise insurance agreements with ACOs, or form their own collectives for the purpose of
The current system of medical malpractice does a poor job of promoting the interests of
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physicians or patients. Malpractice reform needs to address system inefficiencies, neutralize the “deny and defend” stance that impairs patient-physician communication and discourages the reporting of medical errors, and adapt to the changing landscape of medicine that is now centered on patient outcomes and which requires collective accountability. Enterprise liability, coupled with medical error communication and resolution programs, provides the legal framework necessary for medical malpractice in today’s healthcare environment.
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Acknowledgements: Dr. Stamm would like to thank Professor Linda Enghagen, J.D. of the
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University of Massachusetts Isenberg School of Management for fostering the development of
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this project.
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Medical Malpractice: Reform for Today’s Patients and Clinicians
1 Department of Medicine Geisinger Medical Center, Danville PA
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Jason A. Stamm MD1, Karen A. Korzick MD1, Kristen Beech JD2, Kenneth E. Wood DO1,3
2 Chief Legal Officer, Harvard Medical Faculty Physicians, Beth Israel Deaconess Medical
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Center, Boston MA
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3 Chief Medical Officer, Geisinger Medical Center, Danville PA
Bullet Points •
Medical malpractice does a poor job of promoting the interests of physicians or patients
•
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and does not improve patient outcomes.
Malpractice reform should align with collective accountability, the concept that patient outcomes and safety are the responsibility of all the members of the healthcare
Enterprise liability, coupled with medical error communication and resolution programs, provides the legal framework necessary for the malpractice reform in today’s healthcare
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•
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organization.
environment.
S0002-9343(15)00856-6
DOI:
10.1016/j.amjmed.2015.08.026
Reference:
AJM 13170
To appear in:
The American Journal of Medicine
Received Date: 27 June 2015 Revised Date:
4 August 2015
Accepted Date: 4 August 2015
Please cite this article as: Stamm JA, Korzick KA, Beech K, Wood KE, Medical Malpractice: Reform for Today’s Patients and Clinicians, The American Journal of Medicine (2015), doi: 10.1016/ j.amjmed.2015.08.026. This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
ACCEPTED MANUSCRIPT
Medical Malpractice: Reform for Today’s Patients and Clinicians
1 Department of Medicine Geisinger Medical Center, Danville PA
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Jason A. Stamm MD1, Karen A. Korzick MD1, Kristen Beech JD2, Kenneth E. Wood DO1,3
2 Chief Legal Officer, Harvard Medical Faculty Physicians, Beth Israel Deaconess Medical
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Center, Boston MA
Conflict of Interest, all authors: None
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3 Chief Medical Officer, Geisinger Medical Center, Danville PA
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All authors had access to the data and a role in writing the manuscript. Running head: Medical Malpractice Reform for Today
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Disclaimer: The views expressed herein are those of the authors and do not reflect the opinions
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of either Geisinger Health System or of the Harvard Medical Faculty Physician group.
Reprints and correspondence: Jason A. Stamm MD, 100 North Academy Drive, Box 20-37, Danville PA 17822; telephone: 570-271-6389; email: [email protected].
Word count (approximate): 3200
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Abstract The current system of medical malpractice does a poor job of serving the best interests of
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physicians or patients. Economic and societal forces are shifting the nature of healthcare from the individual physician to a system of healthcare professionals, characterized by Accountable Care Organizations. In particular, more physicians are employed, quality and outcomes are
SC
routinely measured, and reimbursement is moving to value based purchasing. Medical
malpractice likewise needs to transition to a new model that is consistent with the modern era of
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patient-centered care. Collective accountability, the concept that patient care is the responsibility of all the members of the healthcare organization, requires malpractice reform that reflects a systems-based practice of medicine. Enterprise liability, coupled with medical error communication and resolution programs, provides the legal framework necessary for the patient-
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centered practice of medicine in today’s environment.
Keywords: malpractice, accountable care organization, collective accountability, enterprise
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liability, communication and resolution program
Stamm 1
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Introduction Medical malpractice reform efforts, which command much attention within the medical
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community, should be developed in accordance with a rapidly changing healthcare environment 1,2
. Economic and societal forces occurring before and after the passage of the Patient Protection
and Affordable Care Act (ACA) are shifting the nature of healthcare from physicians to a system of healthcare professionals, characterized by Accountable Care Organizations (ACOs). In the
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context of modern healthcare delivery, this essay will review medical malpractice and propose
Medical Malpractice Background
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malpractice reform that satisfies the needs of the involved stakeholders.
Medical malpractice is a form of tort law, civil wrongs that do not arise from contracts. Malpractice generally aligns under negligence, a form of tort law which provides civil remedies
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for alleged wrongful acts that result in injury to person or property. The plaintiff in a tort claim generally pursues monetary damages, compensatory and/or punitive, from the defendant 3. The traditional goals of medical malpractice are to ensure that the injured patient is made whole
duty 2.
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again, usually through monetary award, and to deter other physicians from similar breaches of
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However the current system of malpractice does a poor job of serving the interests of physicians or patients. The malpractice process is slow, frustrating patients and negating any impact on deterring poor physician behaviors or on improving patient outcomes. The administrative costs of the current system are significant, as large amounts of compensation are taken by attorney fees. Most importantly, there remains an atmosphere of “deny and defend” in
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which patients’ questions and concerns often go unanswered, medical errors often go unrecognized, and patient safety is not addressed.
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A Broken Malpractice System: Perspective of Physicians and Patients The annual risk of having an open malpractice claim was recently reported to be 7.4% of all physicians, with an annual rate of 1.6% of physicians having a claim leading to payment. By
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65 years of age, 75% of physicians in low risk specialties, and 99% of physicians in high risk specialties, will have faced a malpractice claim 4. With this near certainty of dealing with the
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stress of a malpractice claim during the course of a career, physicians have understandably responded. Physicians resort to medical society advocacy for malpractice reform, practice defensive medicine, curtail high risk procedures, and/or relocate to areas with lower malpractice risk 5.
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Physicians are not alone in believing the current malpractice process is broken. Patients are not well served by the current malpractice system. Only 2% to 3% of patients who suffer medical error are believed to file a malpractice claim 6. In addition, nearly 60% of all malpractice
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claims that are filed are subsequently abandoned by patients. The most common reasons for dropping a claim is the discovery of information that weakens the negligence claim and
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frustration with the slow pace of claim resolution 7. These frustrations are supported by work performed by Studdert and colleagues, who independently reviewed the medical records of a large number of closed malpractice claims. The mean time from claim initiation to closure was over 5 years, a duration of time in which injured patients were not receiving financial support and which detracts from deterrence basis of malpractice, given the temporal separation between error and payment. In addition, the administrative costs of the malpractice system are significant,
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particularly for the plaintiffs. The authors report that nearly 50% of all compensation awarded to patients is consumed by attorney fees and administrative charges 8.
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Thus, most physicians will face a malpractice claim during their career, a reality which likely leads to the practice of defensive medicine. The malpractice process is tedious, expensive, and frustrating for patients and negates any impact on adverse physician behaviors or on
improving patient outcomes. Most importantly, the current malpractice system promotes barriers
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to effective patient and physician communication and patient safety is not readily addressed.
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Based on these realities, some have attempted to redefine the goals of medical malpractice. Then Senators Clinton and Obama wrote in 2006 that the malpractice system should aim to “reduce the rate of preventable patient injuries, promote open communication between patients and physicians, ensure patient access to fair compensation for legitimate medical injuries, and reduce
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liability insurance premiums” 9
Malpractice: Prior Reforms and Impact
Malpractice reforms have traditionally been broken into first and second generation
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efforts. First generation reform measures were focused at reducing the number of malpractice claims and limiting payment amounts. Examples of these early reform efforts include monetary
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caps on malpractice claim awards, shortened statutes of limitation, pre-trial screening, and elimination of joint and several liability rules. These reform efforts have been implemented in various combinations in a number of states, and a large body of literature examining the impact of these measures exist. However, in general, evaluation of these early malpractice reforms has focused on changes relevant to defendants, namely claim volume, payment amounts, and insurance premiums. In particular, caps appear to be effective in limiting payments in adjudicated and settled claims. Nearly half of all jury awards in Texas were reduced after Stamm 4
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implementation of a non-economic cap. Furthermore, during the same period, payment amounts made in claims settled pre-trial also decreased by 18% 10. There is also good evidence that noneconomic caps reduce malpractice claim volume and payment amounts by 20-30% 11. Much less
outcomes, such as access to care and patient safety 12,13
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literature is available describing the impact of these early measures on patient-centered
A second generation of malpractice reforms are in the process of being tested by
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individual healthcare systems or in pilot projects and include concepts such as schedules of non-
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economic damages, health courts, and communication and resolution programs, among others 13. Overall, these newer reform efforts are more balanced in terms of plaintiff/defendant benefit. Communication and resolution programs have been the most widely implemented of these newer reform efforts14. The goal of communication and resolution programs is to quickly identify medical errors, communicate those errors to the patient, provide appropriate compensation, and
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improve patient safety in the future. The University of Michigan and the Veteran Affairs (VA) Hospital in Lexington, KY have implemented inclusion of apology as part of their transparent risk management strategies for medical error. The University of Michigan subsequently reported
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that their litigation costs decreased by 50% and new claims decreased by 40% 15. The Lexington
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VA has reported similar findings 16.
While patient focused, there are several potential hurdles with communication and
resolution programs. States provide varying degrees of legal immunity to nonprofit and government based medical centers. These laws limit the liability of the institution in hospitalbased malpractice cases and result in conflicting interests among malpractice defendants. In particular, hospitals may be less likely to support novel reform efforts, given their limited liability, while unprotected physicians may be less likely to be transparent 14. Furthermore, while Stamm 5
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most states have “apology protection” in place, fewer states afford physicians “disclosure protection.” This creates a conversational and legal disconnect. Physicians can express sympathy for a medical error without fear of having that apology being admissible in court;
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however any communication beyond that apology could constitute an admission of fault which would be potentially admissible in malpractice litigation. The lack of disclosure protection
errors with patients, families and administrators 14,17.
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certainly limits the willingness of physicians to self-identify medical errors and to discuss these
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The Modern Era in Health Care: Accountable Healthcare Systems
The practice of medicine has changed significantly in the recent past. Previously, the provision of medical care was provided mainly by independent physicians, hospitals and healthcare systems generally had limited liability, and negligence was assessed on an individual
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physician level. In contrast, contemporary medical care occurs in a complex environment composed of multiple physicians within larger healthcare organizations 12. In particular, fewer physicians are independent. In 2004, 20% of new physicians went into private solo practice and
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11% of physicians became hospital employed physicians. By 2014, these numbers had changed dramatically, with 64% of new physicians starting in employed positions while less than 1%
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went into private solo practice 18.
In addition to employment status, the financing of medicine is changing. While fee for
service has been the historically dominant model of reimbursement in the US, there is movement away from this economic model towards one of payment for value. The Centers for Medicare and Medicaid Services (CMS) defines value-based healthcare purchasing as care that is financially linked to quality outcomes. Value based purchasing exists on a spectrum, ranging Stamm 6
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from fee for service with quality incentives to population based payments that are entirely disconnected from the quantity of provided services. By 2018 the CMS has set a goal to have 90% of Medicare fee for service in value based categories; furthermore, by this date the CMS
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anticipates locating 50% of all Medicare value-based financing within ACOs 19,20. In addition to healthcare purchasing moving away from fee for service, emphasis is concurrently being placed on quality, safety, and patient experience. The passage of the ACA in 2010 accelerated this
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movement through a variety of measures, including programs focused on value (Hospital
Acquired Condition Reduction Program and Readmission Reduction Program), new payment
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models (ACOs and bundled payments), and quality initiatives (Comprehensive Primary Care Initiative) 21,22.
ACOs exemplify the changing landscape of modern healthcare and are defined as a group of physicians, hospitals, and other healthcare providers that accept a shared responsibility to
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deliver medical services across the spectrum of care and are held accountable for the quality and cost of that care 23,24 . Cost containment pressures are tempered by incentivized metrics in both
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quality improvement and patient satisfaction 25. The earliest ACO groups have reported several years of experience and have consistently demonstrated improvements in quality and patient
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satisfaction while concurrently lowering spending 26-30. Overall, while the evidence base is still accumulating, ACOs likely represent the future of healthcare delivery and financing. In this evolving healthcare delivery and financing environment, physicians will face
fundamental changes in the practice of medicine. Importantly, physicians within an ACO will need to understand the importance of clinical data to assess their own practice patterns, particularly as they will likely see their income tied to quality metrics. Beyond their individual practice, clinicians will need to understand the importance of ACO viability and embrace system Stamm 7
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accountability, recognizing and acting upon opportunities for process and safety improvement. Finally, physicians will need to acclimate to team-based care, incorporating the skills of a multidisciplinary healthcare team that is responsible for patient outcomes across the spectrum of
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healthcare 23.
Malpractice Reform: An Approach for a Changing Healthcare Environment
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Thus, medicine is changing as physicians are employed, quality and outcomes are
routinely measured, and healthcare finance is moving to value based purchasing. The medical
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malpractice system likewise needs to adapt to these forces that are reshaping healthcare 31. Adopting and implementing the concepts of “collective accountability” and “enterprise liability” integrates medical malpractice with the changing nature of healthcare. “Collective accountability,” a concept recently reviewed by Bell et al., states that since
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“we take care of patients in teams, we err as teams, and [therefore] we need to accept responsibility as teams” 32. Collective accountability is a recognition that many patient errors in healthcare occur due to system issues, rather than individual physician negligence, and that
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providers, institutions, and patients should work collaboratively to share responsibility for error
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transparency and error prevention 32-34. The idea of collective accountability leads to enterprise liability, a construct that codifies collective accountability in medical malpractice law. “Enterprise liability” is a legal doctrine assigning liability to a healthcare organization for
medical errors that occur in its facilities or by its physicians. Specifically, under enterprise liability the health care organization would assume liability while the individual physician is immunized from liability. While the negligence standard is maintained, medical negligence is assessed in terms of the healthcare organization as a whole, rather than on an individual Stamm 8
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physician level 13. Patients are at the center of collective accountability and enterprise liability. An ACO with a robust collective accountability culture and enterprise liability, coupled with an institutional communication and resolution program, would be more likely than our current
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malpractice system to promote voluntary clinician reporting of error and to achieve transparency, to improve patient-physician communication, and to prevent future errors.
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Enterprise liability is the necessary evolution of medical malpractice in the US. As ACOs assume responsibility for patient outcomes and costs, they are likely to also assume
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liability. ACO policies that guide care decisions, particularly in a system where individual physicians are employed and incentivized to quality metrics, may be identified by plaintiff attorneys as contributing to harm, especially if such policies are construed as cost containment in nature 24,35. Furthermore, the success of ACOs is dependent on system awareness of individual physicians, an attitude that is more likely to flourish under an enterprise liability and which
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aligns incentives between physicians and the ACO. Specifically, physicians are more likely to make patient care decisions tempered by quality and costs factors, and less influenced by
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personal liability concerns, if protected by the shield of enterprise liability 35 . While some may argue that it is important to hold physicians accountable for their actions via postings to the
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National Practitioner Databank, the emerging federal and state models with emphasis on published outcomes of provider and organizational data will, in the long term, satisfy this need. Furthermore, the growing number of patient safety and reporting initiatives should result in enhanced public transparency under enterprise liability. In particular, communication and resolution programs should enhance voluntary reporting of patient safety events given the transfer of liability from the clinician to the healthcare system. Instead of a perceived punitive
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environment, healthcare systems and physicians will have a vested interest in promoting clinical improvement because of the access the public will have to such information.
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Collective Accountability and Enterprise Liability: Positive Change Patient safety should improve in a collective accountability culture that implements enterprise liability and error disclosure. Individual clinicians have not previously had the
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resources or financial motivation to implement changes in healthcare delivery. However,
healthcare organizations do have access to data on medical errors and patient outcomes, and
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ACOs and similar organizations have the resources to re-engineer processes and promote improvements in patient care. When working together in collective efforts under the umbrella of the ACO, groups of clinicians can leverage the data collection of the ACO, as well as the mechanisms for developing and implementing best practice standards, to address identified
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medical safety issues. In addition, as a majority of physicians are now employed, healthcare organizations have the ability to align physician behavior, via incentives, with redesigned care delivery models.
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In addition to a reduction in medical errors and improved patient communication, there
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are other potential positive outcomes of enterprise liability. As large healthcare organizations acquire more experience with the application of communication and resolution programs, the malpractice process should become both more just and more efficient. While many injured patients currently do not receive compensation, robust communication and resolution systems would proactively recognize an injured patient and, in an equitable and transparent manner, make the patient medically and financially whole. Likewise, in contrast to the protracted and expensive legal process typical of the current malpractice system, communication programs
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should lead to quicker resolution and patient compensation 15. Financial savings may be realized from a culture of collective accountability. In conjunction with the pay for performance initiatives of ACA, patient care may become more cost effective, with reduced unnecessary
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variation in care, through quality improvement efforts and ongoing clinician education. In
physicians are less concerned about individual liability 36,37. Potential Obstacles to Enterprise Liability
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addition, the present but difficult to quantify costs of defensive medicine costs may be reduced if
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While the positives are significant, there are potential obstacles to the implementation of enterprise liability. Plaintiff attorneys may embrace some aspects of enterprise liability, including the maintenance of the negligence standard for malpractice claims that are filed. However, the legal profession may not support the widespread adoption of communication and
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resolution programs, as there are less legal fees associated with payments made absent attorney facilitated, patient-initiated claims. Moreover, as litigation practice and the law of tort claims are governed at the state level, effectuating change will also have to take place at the state level,
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guaranteeing that implementation of such new approaches will be inconsistent. Enterprise liability may require that medical malpractice move from the state level to the federal level.
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Federal medical liability jurisdiction, while debated in principle, may be found to be constitutional under the commerce clause of the US Constitution 38. Likewise, enterprise liability coupled with communication and resolution programs will require changes in disclosure laws, as discussed previously.
Enterprise liability would be most effective in organizations that both own hospitals and employ physicians. Alternative models may be more viable in healthcare systems in which Stamm 11
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physicians are not directly employed. Enterprise insurance, a concept related to enterprise liability in which non-employed physicians purchase malpractice insurance from collaborating healthcare organizations, is one specific alternative. In an ACO environment, both the healthcare
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system and physicians would have shared incentives to improve patient outcomes and reduce medical error. Enterprise insurance would require that healthcare organizations subsidize liability
standardization, and quality improvement initiatives 12,39.
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insurance for non-employed physicians, who in turn participate in error disclosure, practice
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Some physicians will object to the increased loss of autonomy associated with enterprise liability. Indeed, enterprise liability was introduced as a possible reform during the Clinton era healthcare debates, only to be blocked in part by medical society advocacy 36. However, the climate of medicine has changed since then and ACOs continue to develop, fostered by the passage of ACA. Independent physicians may need to join a healthcare organization, enter into
malpractice insurance.
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Conclusion
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enterprise insurance agreements with ACOs, or form their own collectives for the purpose of
The current system of medical malpractice does a poor job of promoting the interests of
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physicians or patients. Malpractice reform needs to address system inefficiencies, neutralize the “deny and defend” stance that impairs patient-physician communication and discourages the reporting of medical errors, and adapt to the changing landscape of medicine that is now centered on patient outcomes and which requires collective accountability. Enterprise liability, coupled with medical error communication and resolution programs, provides the legal framework necessary for medical malpractice in today’s healthcare environment.
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Acknowledgements: Dr. Stamm would like to thank Professor Linda Enghagen, J.D. of the
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University of Massachusetts Isenberg School of Management for fostering the development of
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this project.
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Medical Malpractice: Reform for Today’s Patients and Clinicians
1 Department of Medicine Geisinger Medical Center, Danville PA
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Jason A. Stamm MD1, Karen A. Korzick MD1, Kristen Beech JD2, Kenneth E. Wood DO1,3
2 Chief Legal Officer, Harvard Medical Faculty Physicians, Beth Israel Deaconess Medical
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Center, Boston MA
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3 Chief Medical Officer, Geisinger Medical Center, Danville PA
Bullet Points •
Medical malpractice does a poor job of promoting the interests of physicians or patients
•
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and does not improve patient outcomes.
Malpractice reform should align with collective accountability, the concept that patient outcomes and safety are the responsibility of all the members of the healthcare
Enterprise liability, coupled with medical error communication and resolution programs, provides the legal framework necessary for the malpractice reform in today’s healthcare
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•
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organization.
environment.