Study Reveals Leading Indicators for Hospital Professional Liability Claims

October 31, 2006

Advisen Ltd., a provider of analytics, benchmarking and market information to the global commercial insurance industry, released the results of its recent hospital professional liability claims study done in cooperation with the health care team at Zurich, an insurance-based financial services provider. The research was conducted using one of the largest databases of hospital professional liability claims and is the first report focused on the findings of a long term project to identify and quantify leading indicators of these claims.

This first phase of the study focused on two areas. First, Advisen researchers aimed to validate or refute some of the traditional factors used by underwriters to evaluate hospital risks such as size, location, type of patient served, and whether the facility is operated for profit or is owned by the government or a non-profit entity. Second, Advisen assessed whether hospital quality measures promulgated by the Centers for Medicare & Medicaid Services (CMS) are correlated with the number or dollar amount of claims experienced by hospitals. CMS quality measures quantify how rigorously hospitals adhere to specified best practices for heart attack, heart failure, pneumonia and surgical infection prevention.

“Hospital risk managers and underwriters have long made important decisions based on personal experience, anecdotal information, or information derived from comparatively small data samples,” said David Bradford, editor-in-chief at Advisen. “This is one of the first publicly available studies on hospital professional liability risk factors based on a statistically credible database. This report, and subsequent reports based on further analysis of the database, will provide underwriters and risk managers with a solid foundation for decision making.”

Initial key findings
Many of the factors that hospital professional liability underwriters use to evaluate a hospital, including size, location, type of patient served, and whether the facility is operated for profit or is owned by the government or a non-profit entity, are valid, although there were some unexpected findings in relation to the magnitude of the differences in claims size and frequency among the variables.

There was less difference than anticipated in malpractice claim size and frequency between hospitals that were the most rigorous in adhering to the CMS quality measures and those that were the least rigorous. However, trends within the data suggest that the largest hospitals, which typically incur the largest claims, may materially benefit from rigorous adherence to the quality measures, and that all hospitals may benefit from a well-administered risk management program.

“These are important findings for hospital risk managers and professional liability underwriters,” said Tom Ruggieri, CEO of Advisen. “America’s health care system will benefit from using the most accurate and current information when making critical medical malpractice business decisions.”

Advisen will be conducting further analysis to quantify the benefits as part of the next phase of the study. The next report is planned for the first quarter of 2007. For more information or to request a copy of the study, contact Jeff Cohen at 212-897-4820 or

Sources: Zurich Financial Services Group and Advisen Ltd.

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