Partnership aims to reduce US hospital claims

Obstetric care is the single largest cause of malpractice claims for hospitals in the US, reflecting the risk of complications and expectations of parents at what is both a joyous and stressful time. But an innovative partnership between Lloyd's insurer Beazley and risk reduction company PeriGen aims to reduce obstetric medical malpractice claims and insurance costs for US hospitals.

Complicated birth

According to Don Deieso, Chairman and Chief Executive of PeriGen, it is not unusual for a US hospital to face as many as 40 obstetric medical malpractice claims at any one time, potentially costing as much as $20m. “Obstetric medical malpractice exposures are considerably higher than those of operating rooms, the next highest exposure for hospitals,” he said. "And this is a significant financial exposure for hospitals and independent practitioners."

A recent survey from the Washington DC-based American College of Obstetricians and Gynecologists found that over 90% of US obstetricians have been sued at least once, while 43% had been sued 2.7 times.

Around half of all large medical malpractice claims for US hospitals are for obstetrics, said Nat Cross, head of Beazley’s healthcare professional liability team.

Birth complications can lead to brain damage or serious disability that will require full-time nursing care for the rest of a child’s life, a much longer period than would usually be required by an adult, he said.

According to Deieso, the higher incidence of medical malpractice claims for obstetrics reflects the “social factor” associated with child birth. “A couple who enter a hospital for the joyous event of having a child have a predisposition toward a healthy outcome," he explained. "But some 4.3 million births per year – around 1% of births – will have complications that are profoundly dangerous to the infant or the mother." He added: “Any birth that starts out as normal can have complications that need to be resolved in minutes.”

Almost all births in the US take place in hospital, and this brings its own risks, said Deieso. “Hospital births have an increased risk of infection [compared with home births]. And there are staffing issues in hospitals that often work on 12 hour shifts, increasing the chances of fatigue and error.”

Reducing risk, improving care

PeriGen is dedicated to reducing the risks of obstetric care, said Deieso, with the company supplying hospitals with technology-based risk management solutions.

It has developed bedside technology that provides clinicians and patients with all the information they need, including patients’ records, vital signs, foetal monitoring and lab results.

The system can evaluate patients’ conditions and compare actions proposed by the obstetrician with recognised best practices. It also keeps risk to a minimum, preventing errors due to lack of attention to detail, fatigue, cognition and complications, while alerts and reminders make sure that care is kept close to best practice, said Deieso.

Further, the system can be used as part of a continuous improvement program and because it documents every step of the birthing process, deters litigation where plaintiffs exploit incomplete or poor clarity of patient records. 

According to Deieso, PeriGen’s system has helped reduce medical malpractice obstetrics claims for a group of four Washington DC hospitals by $12m and a group of five hospitals in Arizona by $6m in the first two years.
 
One of the biggest challenges for obstetricians is to continually monitor foetal and patient data and understand what is happening with the mother and child during labour, said Cross. PeriGen’s system of monitoring and alarms helps obstetricians know when intervention is needed, he added.

“PeriGen offers insureds the ability to reduce the risk of adverse events during the birthing process by providing sophisticated monitoring of the mother and infant," said Cross. "The system does not rule out obstetric risk, but it does reduce the probability of adverse outcomes."

“US hospitals that have invested in PeriGen have reported favourable outcomes. And Beazley is offering an up-front premium credit to hospitals investing in PeriGen in recognition that claims should reduce.”

Hospitals find long-term partners at Lloyd’s

There is some $100m of US medical malpractice insurance capacity available in London, said Cross, led by Beazley, Chaucer and Catlin at Lloyd’s. Beazley, which insures large urban hospitals, underwrites medical malpractice insurance for over a quarter of large hospitals in the US, said Cross.

He added that the emphasis on long-term, meaningful relationships with insureds from Lloyd’s insurers such as Beazley means that some US hospitals have bought their insurance from Lloyd’s for more than 40 years.