Seventy-two NHS trusts have consulted with a private insurance broker over leaving the NHS Litigation Authority for a commercial alternative, it has been claimed.
In an interview with HSJ, a key figure at broker RK Harrison said the company had held “active discussions” with 72 NHS organisations about their leaving the clinical negligence scheme for trusts.
RK Harrison client services manager Mark Riley-Pitt said the trusts were from all sectors and their turnover ranged from £80m to £800m.
The NHSLA scheme sees organisations pay into a risk pool according to the volume of work they do, with a 10, 20 or 30 per cent discount available depending on whether they attain specified safety standards. Trusts must give one year’s notice before leaving.
RK Harrison’s cover is comprehensive, like the clinical negligence scheme, and the broker believes some trusts will find paying premiums cheaper than their annual Litigation Authority contribution.
Lancashire Care Foundation Trust has issued a tender, which closes at the end of this month, to find an alternative to the clinical negligence scheme. If the trust does leave, it will be the first trust in the country to abandon the NHSLA.
Minutes of a trust board meeting in January show finance director Dave Tomlinson saying “the current system was becoming unsustainable” and “low risk organisations [like Lancashire] were subsidising others”.
Airedale Foundation Trust in West Yorkshire confirmed to HSJ it had considered leaving the scheme but was remaining with the NHSLA.
The NHSLA collected £858m from providers for the clinical negligence scheme in 2010-11, with an average contribution of £3.5m per trust.
HSJ spoke to finance and commercial directors at a large teaching hospital, a mid-size trust and a smaller district general hospital who all said they had considered leaving the NHSLA scheme. One said: “The real issue is that the private sector has more freedom to settle quicker and lower.
“The public sector has to show it has gone through long due process before getting to a settlement and thereby ends up paying much more to [the claimant’s] solicitors as well as their own. This is where most of us think the savings can be made.”
RK Harrison is the sixth largest “representative” of the Lloyd’s insurance market. Mr Riley-Pitt said the company had examined the UK health market since 2009, despite perceptions among insurers that the NHS was “a poor risk”.
“We didn’t accept that and 14 months of detailed actuarial analysis and many gigabytes of data later we were pleased to say we were right. It is a good risk,” he said.
In an HSJ interview in February, departing Litigation Authority chief executive Steve Walker said the “overwhelming majority” of trusts had no interest in leaving and he did not anticipate a situation in which enough trusts left the scheme to endanger its viability.
A Department of Health spokesman said the NHSLA scheme was voluntary, but as trusts needed to give 12 months’ notice to leave, “the current membership will remain until at least April 2013”.
A DH review had found the NHSLA was “performing well” but also made recommendations for improvements which are now being implemented, he said.