Healthcare risk management professionals have the difficult task of making litigation strategy decisions and setting case reserves in medical malpractice cases. Although choosing the wrong course of action in these cases can potentially cost hospitals and health systems millions of dollars, these decisions are regularly made based solely on the persuasive power of the case manager and the often incorrect gut instinct of the decision-maker.
Most physicians will be sued for malpractice at some point in their career. A 2016 Medscape survey revealed about 80 percent of physicians age 60 and above had experienced at least one malpractice suit over the course of their careers. A similar analysis by the American Medical Association showed 60 percent of physicians over age 55 across all practice areas had been sued for malpractice at least once.
The reasons physicians and other medical professionals are sued for malpractice vary, but many lawsuits generally fall under three broad categories: failure to diagnose, patient suffered an abnormal injury and failure to treat. Although there may be similarities between two or more medical malpractice lawsuits, each case has its own unique set of facts, which makes it difficult to choose a litigation strategy and set case reserves.
Given the many variables, differing perspectives and competing objectives these lawsuits involve, it is unmanageable for a single person or even a panel of experts to effectively analyze medical malpractice cases. However, decision science and analysis can make this process more feasible.
Addressing challenges of setting case reserves
Since 2009, The Risk Authority Stanford, a risk consulting firm created from the hospital risk management department serving the Stanford University School of Medicine, Stanford Health Care and Stanford Children's Health in California, has been exploring ways to improve the reserve-setting process. "There are hundreds of thousands of uncertainties with every claim and we wanted to be able to quantify these," said John Littig, chief finance and underwriting officer of The Risk Authority Stanford and vice president of risk finance of Stanford Health and Stanford Children's Health.
The firm developed Decision Analysis Reserve and Trial Strategy, a structured reserve-setting process that uses decision science and risk management tools to help provider organizations make better choices about litigation strategy and case value. The tool, which Stanford University Medical Network has been using for the past year, provides more accurate medical malpractice reserves by accounting for all of the variables in cases as well as how they interact.
The Risk Authority Stanford not only wanted to help provider organizations develop more accurate reserves, but also wanted to simplify the complex reserve-setting process. The DARTS software tool breaks the process down into manageable steps that make setting reserves easier for the claim manager. "They don't even know they're using decision analysis," says Randall Smith, product manager for The Risk Authority Stanford.
A simpler reserve-setting process
When using the tool, the user first fills in the facts of the case, including the allegations against a physician or other medical professional and the injury the patient sustained. This is an important step since the facts of the medical malpractice case likely haven't been presented in the same way in a past lawsuit.
The standard of care section comes next. To establish a case for medical malpractice, the plaintiff must show the physician failed to meet the standard of care owed under the circumstances that led to the allegations of malpractice. The DARTS software tool allows the user to enter any information available regarding whether the physician did or did not deviate from the established medical standard of care.
The patient is also required to show the physician's mistake actually caused the patient's injury to establish a malpractice case. The DARTS software tool analyzes the probability of causation in a given case.
The last step in the process is determining damages. Based on the information provided by the user, the tool calculates the amount of all possible damages, including noneconomic, economic and loss of consortium.
Changing the way the industry approaches medical malpractice
Although first developed and applied at Stanford University Medical Network, the DARTS software tool is now available to other provider organizations. Mr. Littig says he hopes the tool will have a significant effect on the healthcare sector.
"Our mission is to change the way the healthcare industry approaches medical malpractice," he says.