GPs’ indemnity costs are an unfair burden - Medical Defence Union
Dr Michael Devlin, Medical Defence Union (MDU) head of professional standards and liaison explains why the staggering rises we are seeing in the cost of compensation place an unfair burden on GPs and the NHS.
When a patient receives a multi-million pound compensation claim, it often makes headlines. But few of us stop and think about the effect the rise in such claims is having on the cost of indemnity for GPs or on NHS finances.
While NHS hospital doctors are protected from the costs of litigation because claims are paid by the NHS litigation authority (NHSLA), GPs have to pay for their own indemnity.
With clinical negligence inflation, that is the number and value of claims, running at 10% for several years, GPs are already seeing unsustainable increases in the costs of their indemnity. This could threaten their ability to continue to practise. And NHS trusts are also facing a huge compensation bill, with NHSLA liabilities, reported in July 2016, standing at a staggering £56 billion (bear in mind this is just the figure for England).
2016 saw GPs voicing understandable concern at this intolerable burden and NHS England has committed to protect them from at least the inflationary element of their subscriptions for two years. Now, however, they face the additional threat inflicted on them by the Lord Chancellor’s announcement on 27 February of a 3.25% reduction in the discount rate.
The discount rate is the mechanism used by the courts to adjust large compensation payments to take account of future investment returns. Reducing the rate, as the Lord Chancellor has done, to minus 0.75% adds billions to the cost of claims against the NHS. In his budget statement, the Chancellor announced he had set aside £5.9 billion across the forecast period to protect the NHS from the effects of the changed personal injury discount rate.
This change increases the costs of compensation awards dramatically and immediately for known claims which have already been reported but not yet settled. It also has retrospective effect on incidents from past years where the claim is not yet reported.
None of this is fair. What was already a significant problem has, at a stroke, been made substantially worse for GPs bearing rising indemnity costs. The impact of this is enormous and we are working with the Department of Health and NHS England to find a solution to ensure MDU GP members can continue to provide high-quality clinical care to their patients without the fear that they will not be able to afford increasing indemnity costs.
Why are claims increasing?
It is easy for politicians to blame ‘unsafe care’ for the problem of claims inflation, but this is not the case. It is true that claims generally arise because something has gone wrong that could have been avoided, but the main reasons claims and their costs are increasing are legal, economic and social. The NHS Litigation Authority's Annual Report for 2014-2015, sets out the main reasons, including the increasing numbers of patients being treated in the NHS, more complex (and costly) healthcare, an increasingly litigious society, and changes to the legal marketplace with non-specialist lawyers moving to clinical negligence work. Patient safety is vital and we have for many years done all we can to help doctors to make care for patients as safe as possible.
The main reasons claims cost so much is that organisations which fund clinical negligence damages such as the NHSLA and the MDU are required by law to disregard the availability of NHS care when making compensation payments to patients who have sustained serious injury as a result of negligence. These patients need a high level of health and social care for the rest of their life, which is often 30 or 40 years or more.
Therefore, clinical negligence damages are calculated on the basis that the care will be sourced privately by the claimant, whether or not it actually is. Even before the announcement of the change in the discount rate, it was not uncommon for the MDU to be notified of medical claims where, for just one claim, the damages sought were over £10 million. Now in some cases this will increase to £15 or even £20 million.
We need a long term solution to the rises we are seeing in clinical negligence compensation payments, which are increasing much more rapidly than other common measures of inflation, including retail prices, wages and housing costs.
Claims costs will continue to spiral out of control and billions will be spent on litigation the NHS and society cannot afford. The reduction in the discount rate has made an already grave situation much worse and something must be done to effectively address claims inflation. We must have law reform and I urge you to join the MDU in our campaign for fair compensation. Details are on our website .
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