The medical insurance crisis, like the ongoing public liability insurance crisis, raises big questions about where risk should fall, equity, and cost.

Personally, I favour the New Zealand accident compensation scheme, where employers, workers and car owners pay a small levy to the government’s Accident Compensation Corporation (the government puts in for kids and those who don’t work). You cannot sue for personal injury and it’s a no fault scheme – if you have an accident the ACC pays you periodic lump sums or weekly amounts to cover your lost pay and directs you to rehabilitation and treatment.

It’s your “luck” whether your injury is caused by accident or negligence, but the result is the same for you. NZ takes the big lump sums, the enormous administration costs, the legal bills and the insurance company tricks – and the profits lawyers and insurers cream off – out of the equation, and focuses on looking after the needs of the injured. It costs less than our system, and the poor and ignorant aren’t left out.

How about the same idea for medicos? When something goes wrong – by act of God or negligence – set lump sums, periodic payments and rehabilitation facilities get to work to help the victim. No more excessive administration costs, lawyers, insurance companies, court time. Like the NZ scheme, a provision that where there’s gross negligence or the like, a patient can still sue. Doctors, private hospitals and nursing homes would pay premiums to the government fund.

The taxpayer is already having to throw money at the wreckage of insurance companies – with more certain to come – so isn’t it time we at least debated a radical long-term solution?

Dell Horey has read Webdiary almost from inception, but is a busy woman who doesn’t write much. After attending a workshop on the medical insurance crisis last week, just before the big summit, she wrote: “There are lots of great opportunities but I afraid I don’t have any faith in Howard’s vision in this area – he is still a small time commercial lawyer at heart. It seems that they have decided to just blame the victim – mmmm, sounds familiar.” Then today, a piece from Dell, with the warning that she’s “not a natural writer” .

Thanks, Dell. It’s a strong opener to what I hope might be an ongoing policy and principle debate on Webdiary.

Culture of blame or culture of denial: Why does medical indemnity insurance have anything to do with health care?

By Dell Horey

In the taxi on the way to the airport from a workshop on medical litigation, the driver told me the answer to the medical indemnity problem was simple – they should just stop people from being able to sue doctors.

It seems that a lot of people, including Assistant Treasurer Senator Helen Coonan, may agree given the number of times that I have heard the culture of blame trotted out as the diagnosis of the cause of the current crisis in medical indemnity insurance. But like a lot of simple reasons, and even simpler solutions, it doesn’t add up when you look more closely at the issue.

The crisis in medical indemnity insurance isn’t a problem that has crept up on us. The issue was the subject of a review by the Federal Government in the early 1990s. The final report of the professional indemnity review (PIR) was published in November 1995, just months before the Howard government got into office. The review made 169 recommendations covering areas such as reducing the incidence of medical error, better data collection, and improved risk management.

What is the current crisis in medical insurance? Professor Marcia Neave from the Law Reform Commission identified the following issues at the workshop:

a) increase in premiums for doctors

b) increase in unfunded liabilities of Medical Defence Organisations

c) problems experienced by people after an adverse medical outcome (the term used when something goes wrong that shouldn’t have), including the cost of health services and ongoing care and costs related to legal representation.

The complexity of this issue is enormous. To get some idea, consider the range of stakeholders in Australia: Nine governments (and their departments of health, attorneys general, justice, disability and treasury), the Medical Defence Organisations (MDOs), doctors who practice, lawyers and health consumers (or users of health services). (Also affected are other health professionals who need indemnity insurance to practice, such as midwives who work outside hospital services. These midwives have been unable to find an insurer: The Federal Government says that nursing is a States responsibility.)

There are further difficulties. Data is so poor that it is not known how many cases are before the MDOs. We do know however that the current situation is inequitable, with some people who are damaged receiving huge payouts (and lots of media attention) while the majority get little or nothing.

Capping payouts may prevent some people getting huge sums, but it does nothing for those who choose, for whatever reason, not to proceed with litigation. Long term care for the disabled is very poor throughout Australia (though there were good reports of the motor vehicle victim scheme in Tasmania) and if you need significant care, a huge payout is one way of providing for it. But it is very clumsy way to provide for continuing health services, as it is difficult to assess just how long a life-time will be. Many of the large payouts have been awarded by juries who have a large degree of sympathy to the on-going needs of the damaged party and who have found their case compelling.

There are problems with big lump sum payouts in other ways too – few people have skills in managing large amounts of money to provide life long income, and sometimes the health services that are needed are just not there. Scheduled payments, where the money is provided at regular intervals has been one strategy employed to get big money to last.

The big payouts are also difficult for the MDOs, who have a history of poor management although some appear to have improved recently. This has been a particular problem in recent time with new regulatory requirements for MDOs to have sufficient funds to cover potential litigation claims. Coupled with the general increase in re-insurance costs worldwide this hasn’t been an easy time for them.

But if we accept the taxi-drivers solution and just stop people from being able to undertake litigation would that solve anything? Well it certainly wouldn’t stop mistakes, including avoidable mistakes, occurring in hospital. The Quality in Australian Health Care Study in 1995 (a product of the PIR) found that one in six (16.6%) hospital admissions were due to an adverse event (defined as an unintended injury or complication) and that for over 8% of admissions the adverse event was highly preventable. Australian medical care had a culture of denial for a long time, and what was being denied (and still is by some parties) is that all mistakes are unavoidable, and you just have to accept that things sometimes go wrong and get on with things.

Many of the things that go wrong in hospitals are system problems, but until there is an incentive to address them they are likely to continue. People are given the wrong drugs, have the wrong limb amputated, the wrong hip replaced, the wrong diagnosis, the wrong treatment prescribed. Some doctors repeatedly make the same mistakes unless something or someone stops them.

We just need to look at the Bristol Hospital case where cardiologists failed to meet acceptable surgical standards in paediatric cases. It took a whistleblower, a cover-up and a number of inquiries to sort all that out, and along the way babies died who may have survived if they had been operated on elsewhere.

Litigation is only initiated to get compensation. Until the recent privacy legislation which gives people the right to access their medical records, many people initiated proceedings just to get access to them, so they could find out what went wrong and why. This was particularly an issue for private patients, the group mostly likely to sue.

Solutions

One proposed solution at the workshop was to remove long-term care costs from any payout and instead guarantee that people who are injured receive appropriate services. Long term care makes up about one quarter of all damages, and 25% of medical indemnity is used for long term care costs.

Workshop participants were told that the Tasmanian scheme for motor vehicle injuries may provide a good model. A small proportion of car insurance is used to fund the scheme and anyone who is injured is entitled to use them. Apparently services are flexible, designed to meet individual need, well received and adequately funded.

The proposal was to amalgamate medical injury with motor accidents so that there would be a critical mass. People who have suffered serious injury makes up about 70% of people with high care needs, whereas medical injury contributes one to two percent. A system which looks at meeting the needs of all would provide greater social benefit and be more cost effective in terms of medical injury.

In the end, what we want is a health system in which people have confidence that their needs will be met, especially when something goes wrong, and where health professionals feel confident to practice, to reflect on mistakes and work to improve care.

The solution to the crisis in medical insurance lies in improving systems to minimise error, addressing problems in an appropriate and timely way, managing risk well and addressing the short-comings in disability services.

Doctors should not be afraid to admit to error because of threats to their livelihood, but neither should they be sheltered from accountability for their mistakes. If people’s legal rights to seek recompense for harm done to them are to be curtailed, there has to be some guarantee that the burden of their care does not fall on them alone.

If the federal Treasurer can get $100,000 compensation for an incorrect allegation against him, what should people be entitled to when their daily lives are affected by long-term health problems that need never have occurred?

***

Notes:

Wilson RMcL, Runciman WB, Gibberd RW, et al. The Quality in Australian Health Care Study. Med J Aust 1995; 163: 458-471.

Follow-up to Quality in Australian Health Care Study (QAHCS), Wilson RMcL et al An analysis to the causes of adverse events from the QAHCS Med J Aust 1999; 170, 411-415 can be found at: medicaljournal

See also Barraclough B, Safety and quality in Australian healthcare: making progress. Med J Aust 2001; 174: 616-617, medicaljournal

See also Blomberd C The Professional Indemnity Review: what did it accomplish? Med J Aust 1996; 164: 502. medicaljournal