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Teaching Hospital Update - October 31-November 4, 2011


Email Alert
November 4, 2011
By Sarah Kitchell

Stanford Cuts Liability Premiums With Cash Offers After Errors

Stanford University's hospitals and clinics have saved $3.2 million in annual premiums since establishing a program to disclose and investigate adverse events and offer an apology and compensation to patients when the bad outcome has been deemed preventable.

The results come on the heels of other successful experiments with a more transparent method of dealing with adverse events. The University of Michigan Health System, for example, says it has cut litigation costs by $2 million a year and seen new claims fall by 40% with a similar disclosure, apology, and compensation initiative.

Stanford's program was implemented in 2007 by the Stanford University Medical Indemnity & Trust Insurance Co., which covers the 1,800 faculty physicians at Stanford University School of Medicine, the 613-bed Stanford Hospital & Clinics, and the 311-bed Lucile Packard Children's Hospital, all in Northern California. Claim frequency has dropped 36% compared with the two years before the program started.

As part of the Stanford program, the insurer investigates harmful adverse events reported by physicians, other staff, or patients within ninety days of the bad outcome, so long as no legal action has been taken. Investigators try to assess within a week, through consultations with internal physician experts, whether the event could have been prevented. If investigators determine that the adverse event was avoidable, the family is contacted with the results, offered an apology, and compensation is discussed.

Stanford's results, verified by an independent actuary, were shared publicly for the first time in an Institute for Healthcare Improvement white paper released in October that offers guidance on how healthcare organizations should manage serious adverse events.

Kevin B. O'Reilly, Stanford Cuts Liability Premiums With Cash Offers After Errors, AMA News (Oct. 31, 2011).

White Paper: Conway J, Federico F, Stewart K, and Campbell MJ, Respectful Management of Serious Clinical Adverse Events (Second Edition), Institute for Healthcare Improvement (2011).

Health Guideline Panels Struggle With Conflicts of Interest

When a federal panel recently recommended against prostate cancer screening for most men, it tried to steer clear of any suggestions of commercial bias. All sixteen members of the U.S. Preventive Services Task Force were vetted to ensure they had no financial conflicts that would prohibit them from voting, according to the panel's vice chairman Dr. Albert L. Siu.

But three other federal panels that are quietly developing major public health guidelines on the leading causes of cardiovascular disease--hypertension, cholesterol, and obesity--operate under less stringent ethics recommendations. And one potential conflict after another has surfaced among the members, with some receiving speakers' fees from drug companies, others consulting for pay, and others doing company-financed research.

In all, about twenty of the three panels' members, including some co-chairmen, have been advised that they should not vote on crucial issues as they prepare to issue the health guidelines next year--because they are too closely connected to industries with a keen interest in the panels' recommendations.

Nearly a decade ago, the work of similar panels was so marred by charges of industry bias that the National Institutes of Health extensively heightened the scrutiny for individual panelists. But the decline in federal financing for medical research continued to pose problems, leaving many researchers to rely more heavily on private industry support. Specific new rules have been adopted to reduce the impact of conflicts of interest on guideline-writing panels.

Duff Wilson, Health Guideline Panels Struggle With Conflicts of Interest, The New York Times (Nov. 2, 2011).

Physician Practice Purchases Already Surpass 2010 Levels

The number of physician practices involved in mergers and acquisitions in 2011 already has beat the number consummated in all of 2010, according to an industry survey.

Sixty deals involving physician practices were reported for 2010. By the end of the third quarter of 2011, however, a total of seventy deals were made, according to quarterly reports by Irving Levin Associates Inc., a healthcare finance market research firm in Norwalk, CT.

A majority of the deals involved hospitals buying medical practices. Only large, publicly announced deals were included in the report.

Physician practice mergers and acquisitions fell slightly from twenty-seven deals reported in the second quarter of 2011, to twenty-five in the third quarter. However, the number of third-quarter deals are nearly double those made during the corresponding quarter of 2010. Healthcare system reform has been the driving force behind a lot of the merger-and-acquisition activity.

Irving Levin said physician practices were the third most active segment of healthcare mergers and acquisitions in the third quarter of 2011. It did not report cash values for those deals.

Pamela Lewis Dolan, Physician Practice Purchases Already Surpass 2010 Levels, AMA News (Nov. 2, 2011).

Stop Routine Use of Heparin in Hospital, Group Says

New guidelines from the American College of Physicians recommend against the routine use of heparin to prevent venous thromboembolism in hospitalized patients, calling instead for physicians to first weigh the risk of bleeding. A review of the data found that heparin prophylaxis in nonsurgical patients did not reduce total mortality, may have contributed to fewer pulmonary embolisms, and increased bleeding events, Frank Lederle, MD, of the Minneapolis Veteran Affairs Medical Center, and colleagues found.

In those with stroke, prophylaxis heparin had no effect on outcomes except for an increase in bleeding events, researchers reported in the November 1 issue of Annals of Internal Medicine.

Even though prophylaxis heparin is an optional core measure adopted by The Joint Commission, its value has been questioned. Evidence from studies is a bit inconsistent, but largely shows no statistically significant reductions in mortality or improvements in clinically evident outcomes.

Judith Groch, Stop Routine Use of Heparin in Hospital, Group Says, MedPage Today (Nov. 1, 2011).

Study: Frank A. Lederle, et al., Venous Thromboembolism Prophylaxis in Hospitalized Medical Patients and Those with Stroke: A Background Review for an American College of Physicians Clinical Practice Guideline, 155 Ann. Internal Med. 602-615 (2011).

APHA: Hospitals May Have to Mandate Flu Shot, Panel Says

Hospitals and clinics where fewer than 90% of healthcare workers get an annual flu shot should consider mandating vaccination, according to draft recommendations by a federal advisory committee.

In recent years, only about 40% of healthcare workers received a seasonal flu shot, despite many public health and medical groups calling on every healthcare worker to get one. During the 2009 H1N1 pandemic, that rate bumped up to 62%, according to data from the Centers for Disease Control and Prevention.

The vaccination should be mandated at hospitals and other healthcare facilities with rates under 90%, according to draft recommendations from the Health Care Personal Influenza Vaccination subcommittee of the National Vaccine Advisory Committee. The committee is tasked with making recommendations to the U.S. Department of Health and Human Services (HHS) on how to achieve 90% coverage for healthcare workers.

Healthy People 2020, HHS' detailed plan to reduce health risk factors and disparities, listed getting 90% of all healthcare workers to receive regular flu shots as a goal by 2020.

Emily P. Walker, APHA: Hospitals May Have to Mandate Flu Shot, Panel Says, MedPage Today (Nov. 3, 2011).

Key Health Industry Leaders: We Can Control Costs Ourselves

A group of influential healthcare executives and academics is finalizing a proposal that would allow Massachusetts hospitals and insurers to try to control rising medical costs on their own for three more years, in an effort to head off more immediate state action.

If they don't succeed, only then could they face possible outside controls.

The plan is being developed by the Eastern Massachusetts Healthcare Initiative that includes the state's largest hospital and physician networks, such as Partners HealthCare, and insurers, including Blue Cross and Blue Shield of Massachusetts.

Stuart Altman, a professor of national health policy at Brandeis University in Waltham, who chairs the group, said the plan differs in two key ways from legislation Governor Deval Patrick (D) proposed to slow the rise in costs. The group wants a commission of "independent experts'' and "stakeholders'' to oversee the transition to a less expensive healthcare system--rather than a commission heavily comprised of government officials, as Patrick favors, Altman said in an interview on November 3, 2011.

Altman's group wants the commission to monitor medical spending at first, with the goal of keeping annual spending increases to about 5% after three years, and 4% after five years. During the first three years, the commission would develop enforcement mechanisms for providers and insurers that don't reach the targets.

The governor wants to go further, giving the insurance commissioner additional power to scrutinize insurers' contracts with providers, and reject insurance rate hikes that are based on excessive payment increases to hospitals and doctors.

Liz Kowalczyk, Key Health Industry Leaders: We Can Control Costs Ourselves, Boston Globe (Nov. 3, 2011).

*We would like to thank Sarah Kitchell, Esquire (McDermott Will & Emery LLP, Boston, MA), for providing this week's update.

AHLA Teaching Hospital Updates are intended to provide quick summaries of cutting-edge issues of interest to teaching hospitals and their counsel. Additional information and more in-depth coverage on these topics may be available from AHLA Health Lawyers Weekly and appropriate AHLA Practice Groups.

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