Disclosing medical errors can lower liability lawsuit expenses

Disclosing medical errors to patients mitigates medical liability lawsuits, increases safety and ensures long-term financial benefits for medical practices, according to a new report.

The report, released online May 12 by the privately owned international insurance broker Lockton, reviewed previous studies on error disclosures between 1987 and 2010 and analyzed the financial impact of such disclosure on health care professionals.

The Lockton report cited an analysis of the University of Michigan Health System's 2001 medical disclosure approach. The study, in the Aug. 17, 2010, issue of Annals of Internal Medicine, showed:

• About 20 fewer lawsuits each year were filed after the program's implementation.
• Lawsuit resolution time went from 1.36 years before the program started to 0.95 afterward.
• The average cost per lawsuit decreased from $405,921 to $228,308.

The Annals study is online (link).

Research shows that disclosure programs make the best financial sense for health care organizations, along with being "the right thing to do," said report author Nancy Lamo, RN, an attorney and Lockton clinical risk consultant.

"I think health care practitioners, hospitals and clinicians, they're on the disclosure bus; it's left the station," she said. "But they're still wondering if it's going to save money or cost money. You can't argue with [the study data]. The data says these disclosures have saved us money."

A disclosure program by the Veterans Affairs Medical Center in Lexington, Ky., also demonstrated financial benefits, including a significantly lower claim payout than that of other VA medical centers. The Lockton report cited a seven-year study that showed the Lexington hospital paid an average $15,622 per medical liability claim. The average payout among the VA system is $100,000 per claim. The Lockton report is online (link).

Although not every study supports disclosure, Lamo said the majority show more medical professionals accept and embrace the practice. Most risk management officials also are on board with the idea and appreciate its benefits, she added.

"I'm in favor of disclosure, but this is the age of disclosure and transparency. You can't really go back," she said. "It's like saying, 'I don't like electronic medical records.' We've already gone there."

The American Medical Association's Code of Medical Ethics says physicians are ethically obligated to disclose what happened "when a patient suffers significant medical complications that may have resulted from a physician's error."