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Nationwide, health care systems continue to experience a moderate decrease in the frequency of professional liability claims according to the Aon/ASHRM Hospital and Physician Professional Liability Benchmark report. The 2016 report was released today by Aon Risk Solutions, the global risk management business of Aon plc (NYSE: AON), in conjunction with the American Society for Healthcare Risk Management.

While professional liability claim frequency showed a decrease of one percent annually, new to this year’s study is a focus on the correlation between professional liability and workers’ compensation claims. Aon analyzed data from 34 health care systems participating in both the Aon/ASHRM Hospital and Physician Professional Liability study and the Aon Healthcare Workers Compensation Barometer.

“Risk Managers and Insurance Underwriters seek to find data that describes the general safety environment for a given hospital facility” said Dominic Colaizzo, Chairman of Aon’s National Health Care Practice. “Through the findings compiled by the Aon/ASHRM Hospital and Physician Professional Liability Benchmark, we are now able to address this need.  We found that there is, in fact, a correlation between patient safety and worker safety. Health care systems should be encouraged to know that investments in their general safety environment benefit both workers and patients.”

Additionally, the study indicates that health care systems with better Total Performance Scores (TPS), as measured by the Centers for Medical & Medicaid Services (CMS), also tend to have a lower frequency of professional liability claims. TPS measures are facility specific calculations based on a combination of clinical process scores, patient experience scores, outcome scores and efficiency scores. This data supports the importance of measuring quality and safety scores such as TPS as they are not only influential in the CMS Value-Based Purchasing program, but also are indicative of the professional liability claim environment.

The 2016 report examines trends from useful vantage points, including:

Claim Frequency and Severity by Cause of Loss

The benchmark study details average claim severity and frequency by cause of loss, including:

  • Listing of the top 10 most frequent causes of professional liability claims
  • Listing of the top 10 most severe causes of loss

Claim Frequency and Severity by State

The benchmark study includes statistical information specific to 25 states, including state-specific benchmarks for:

  • The frequency and severity of claims within these states
  • The average indemnity payments and expenses for claims recently closed within the states

Department Specific Statistics

The benchmark study provides benchmark frequency and severity measures for two specific hospital departments, including obstetrics and emergency.

  • Obstetrics claims are characterized by large indemnity payments and a slow time to closure
  • Emergency department claims are characterized by higher average indemnity and lower average expense compared to overall claims

Interaction between Insurance and Self Insurance

Participants in the benchmark study completed a survey indicating how they coordinate commercial insurance with their self-insurance programs.  Survey results presented in this report include:

  • Attachment points and total insurance limits for health care systems
  • Use of self-insurance for coverage of employed providers

Other Noteworthy statistics from the 2016 Aon/ASHRM Hospital and Physician Professional Liability Benchmark report

  • Projected loss rate for hospital professional liability is $2,620 per occupied bed equivalent (OBE) for events occurring in 2017. The frequency of claims is projected to be 1.55 per 100 OBE and the severity of claims is expected to be $169,000 per claim.
  • Projected loss rate for obstetrics claims occurring in 2017 is $178 per birth and emergency department is $5.80 per visit.
  • Projected loss rate for physician professional liability is $5,450 per class 1 (internal medicine) physician for events occurring in 2017. The frequency of claims is projected to be 3.01 per 100 class 1 physicians and the severity of these claims is expected to be $181,000 per claim.
  • Projected loss rate for hospital general liability is $122 per OBE; the average general liability claim is expected to be $38,000 for claims occurring in 2017.

Click here to purchase a copy of the 2016 Aon/ASHRM Hospital and Physician Professional Liability Benchmark report.

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