The elephant in the strategic management room: Medical malpractice liability

The elephant in the strategic management room: Medical malpractice liability

October 16, 2019
Larry L. Smith
By Larry L. Smith

Discussions around hospital or healthcare strategic management often start by focusing on the future: What services must the organization offer to remain competitive, what technologies are needed to fulfill mandates, how best to satisfy a dynamic set of regulatory requirements. And, at some point or another—especially in today’s litigious climate—executive leadership must address the elephant in the room: the high cost of medical malpractice liability.

Although the total number of claims has shrunk by roughly 50% over the last 16 years, the total dollars paid to settle claims over $500,000 has steadily increased. Clearly plaintiffs’ lawyers continue to home in on the claims that are likely to yield the greatest payout.

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The result is medical malpractice liability has grown to be one of a typical healthcare organization’s greatest expense lines, after personnel and supplies. That is all money that is not available to invest in revenue-generating projects, capital equipment, better personnel, clinician education, facilities improvements or innovative programs such as care management. With the small margins most hospitals and health systems operate on, failure to account accurately for medical malpractice liability in strategic planning could end up being devastating for the organization.

Far-reaching implications
Beyond financials, medical malpractice settlements can have a catastrophic effect on hospital/health system personnel and the organization’s reputation in the community. Physicians, nurses and others who are at the center of a medical malpractice lawsuit experience frustration and anxiety that can ultimately lead to burnout and withdrawal from practice.

So, as healthcare leaders helping to plot the future of our respective organizations, it is a strategic imperative to work to reduce preventable iatrogenic adverse events. The first step is to realize that as much as science is at the heart of medicine, healthcare delivery is often dependent on the momentary judgment of individuals, and often in pressurized circumstances that are unique—and may never have been encountered by those clinicians before.

Yes, there are a lot of machines gathering a lot of data these days, but the analysis, prioritization and presentation of this data can be uneven at best or even misleading. Human beings must still determine what that data is indicating, as well as the proper course of action. It’s not realistic to expect multiple clinicians—with varied knowledge, experience, backgrounds and biases—to come to the same assessment of the available data at the same time and to then follow a standardized course of treatment or intervention.

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