Government needs coherent policy to tackle rising clinical negligence costs, says financial watchdog

Authors: Ingrid Torjesen 

Publication date:  11 Sep 2017


A coherent, cross government strategy is needed to tackle the rising cost of clinical negligence claims, and the Department of Health should work with the Ministry of Justice to develop this by September 2018, the National Audit Office (NAO) has said.[1]

Many of the factors contributing to rising clinical negligence costs have been identified by the Department of Health and NHS Resolution (formerly the NHS Litigation Authority), said the NAO’s report—but the factors likely to be most effective fall within the remit of more than one government department or are largely outside the health system’s control. They include developments in the legal market, the increasing level of damages awarded for high value claims, and changes in the discount rate used by courts to calculate lump sum payments for future damages.

The report said that NHS Resolution should work with other bodies—such as NHS Improvement, NHS Protect (part of the NHS Business Services Authority), and the Solicitors Regulation Authority—to improve sharing and collection of data about complaints, incidents, and negligence claims throughout the system, to help inform and improve claims management.

Spending on the Clinical Negligence Scheme for Trusts has quadrupled in 10 years, from £0.4bn (€0.44bn; $0.52bn) in 2006-07 to £1.6bn in 2016-17, and the number of successful clinical negligence claims where damages were awarded has more than doubled, rising from 2800 to 7300.

The fastest percentage rise was in claimants’ legal costs, up from £77m to £487m over the same 10 year period. This is mainly due to an increase both in the number of low and medium value claims under £250 000 and in their average cost. In 2016-17, claimants’ legal costs exceeded the damages awarded in 61% of claims settled.

NHS Resolution has reduced the average cost per claim of its claims operations. It also challenges excessive charges by claimants’ legal firms, saving £144m in 2015-16. Further schemes are proposed to help contain costs, but, even if successfully implemented, the NAO said that these will save only £90m a year by 2020-21. By contrast, spending on the Clinical Negligence Scheme for Trusts is expected to double to £3.2bn by 2020-21.

The cost of clinical negligence claims is rising more quickly year on year than NHS funding, the report highlighted, adding to the financial pressures many trusts already face. Trusts that spend a higher proportion of their income on clinical negligence are significantly more likely to be in deficit, it said: in 2015-16, all 14 trusts that spent 4% or more of their income on clinical negligence were in deficit.

Amyas Morse, head of the NAO, said, “The cost of clinical negligence in trusts is significant and rising fast, placing increasing financial pressure on an already stretched system. NHS Resolution and the Department [of Health] are proposing measures to tackle this, but the expected savings are small compared with the predicted rise in overall costs.”

He added, “At £60bn, up from £51bn last year, the provision for clinical negligence in trusts is one of the biggest liabilities in the government accounts, and one of the fastest growing. Fundamentally changing the biggest drivers of increasing cost will require significant activity in policy and legislation, areas beyond my scope.”

Meg Hillier, chair of the House of Commons Committee of Public Accounts, commented, “The Department of Health and Ministry of Justice have been too slow to work together to turn the tide . . . actions to save £90m a year by 2020-21 [are] a drop in the ocean in the face of forecast costs of £3.2bn a year by 2021. We need the government to take a good hard look at the financial and personal costs of clinical negligence.”

References

  1. National Audit Office. Managing the costs of clinical negligence in trusts. Sept 2017. [Link] .

Ingrid Torjesen London

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