We need urgent legal reform to reduce the overall cost of litigation on the NHS which currently sits at a staggering £65 billion, writes Mike Devlin

Source: © Royalty-Free/CORBIS

Any work aimed at reducing the overall cost of claims to the NHS is welcome, but it is misleading to make a link between this activity and improvements in patient safety.  The important work being done by the Getting it Right First Time team to get to the bottom of why there is variation between NHS trusts in litigation levels was highlighted recently in HSJ

The article explained that one focus of the team would be on ”how clinical practice could improve, reducing the potential for future litigation”. But while many studies over the last few decades have tried to demonstrate a link between safety and reduced numbers or costs of claims, the overwhelming majority fail to do so. 

Rather than focus on patient safety what is needed to make any substantial difference to overall claims levels in the long term, is to reform the way damages are calculated in clinical negligence claims.  

We can all agree that clinicians in the NHS and independent sector should provide the safest, most effective care that they can reasonably be expected to provide. It is right both professionally and ethically, and it is what patients would expect from their nurses and doctors. But it is wrong to assume that a perceived lack of patient safety is the principal driver of compensation payments in negligence claims.

Complex mixture of factors

Given that a patient who suffers harm and sues because of negligent care would succeed in getting compensation, it’s an attractive idea for researchers and policy makers that getting on top of patient safety will result in fewer, less costly claims. In reality, the drivers of claims costs are a complex mixture of economic, social and legal factors. 

The main drivers are legal and economic factors that doctors and NHS trusts have absolutely no control over

The NHS sees ever increasing numbers of patients every day, treatments are increasingly complex and patients’ expectations of successful outcomes rises. Meanwhile, healthcare provision is actually getting safer over time. A recent study found UK’s healthcare system is the best out of 11 of the world’s most developed countries.

And where attempts are made to measure harm there is no evidence suggesting that it is rising (Health Foundation (2015): Is the NHS getting safer? and the NHS Improvement Safety Thermometer). Although of course that shouldn’t stop our continued quest to make care even safer.

So if it is not a deterioration in patient safety that is causing increasing compensation costs, what is it? The main drivers are legal and economic factors that doctors and NHS trusts have absolutely no control over, such as the recent change to the discount rate – the mechanism used by the courts to adjust compensation payments to take account of future investment returns. 

The change to the personal injury discount rate from 2.5 per cent to minus 0.75 per cent from 20 March 2017 has increased NHS liabilities exponentially. In its annual report and accounts for 2016-17 NHS Resolution chair, Ian Dilks, noted that its total provision to meet the claims it was responsible for increased by 250 per cent from £26 billion in 2014 to £65 billion in 2017. 

The chancellor, in his Spring Budget, announced that he was making nearly £1.2 billion a year available for the next three years only to help public services to meet increased compensation payments resulting from this change.

Lag of years

What is more, the discount rate also applies retrospectively to claims where the incident has already happened but claims haven’t been settled. 

This is a feature of clinical negligence claims: there is often a lag of many years, sometimes decades, from the incident leading to the claim and litigation being brought against the hospital or GP.  So the cost to the NHS of settling claims from 20 March will just keep going up and up. 

Even if the avoidable harm rate could be magically reduced to zero by the end of this year, which plainly it cannot, years of compensation payments will still be made and will need to be funded from the public purse.  

For GPs, who have to pay for their own indemnity, the implications are particularly acute. These increased compensation payments must be reflected in their indemnity payments. A survey of MDU GP members found that a third say they will quit the NHS over indemnity costs, while 38 per cent have already given up certain work, such as out of hours sessions, or reduced their hours because of indemnity costs.

Even if the avoidable harm rate could be magically reduced to zero by the end of this year, years of compensation payments will still be made and will need to be funded from the public purse

The MDU is working with the Department of Health as the government has promised financial support to help GPs meet this additional and unaffordable costs burden. If it is not addressed it is likely to have a catastrophic impact on many GPs, and in turn on the sustainability of general practice in the longer term.

Even if the financial problems caused by the discount rate are addressed, indemnity inflation continues to rise at 10 per cent per year and personal injury law needs root and branch reform. The law requires bodies such as NHS Resolution and the MDU to disregard the availability of NHS care when making compensation payments in clinical negligence claims. 

In other words the claim is costed and compensation must be paid on the basis that future clinical care will be provided in the private sector. This means NHS funds leaving the NHS to be spent in the private sector. Surely it makes more sense for NHS Resolution funds to be retained to pay for care by the NHS and for defendants such as the MDU to be able to pay the NHS to provide care? This could add billions of pounds to the NHS budget to the benefit of all NHS patients.

Any attempts to identify where patient safety can be improved are welcome. But let’s not kid ourselves this will reduce the overall cost of litigation on the NHS, which currently sits at a staggering £65 billion. We need law reform, urgently, and information about the MDU’s campaign for fair compensation can be found on our website. www.themdu.com/faircomp