Healthcare providers must deal with increasingly severe malpractice or liability claims, and corresponding reality that the number of these cases continues to rise, two new property/casualty insurance industry studies have determined.

The severity of claims from teaching and children’s hospitals continues to land much higher than the national average, and average healthcare claims severity has grown steadily, Zurich North America found in its ninth annual Healthcare Risk Insights study of hospital professional liability claims. (At the same time, the study concluded, overall claim frequency rates remain “quite stable.”

Specialist healthcare insurer Hiscox, meanwhile, found that medical malpractices claims for losses above $5 million in the U.S. healthcare insurance sector are accounting for an increasing part of total dollars spent on claims.

Hiscox Vice President Justin Keith said in a statement that the malpractice claims dollars trend is “worrying” for U.S. healthcare, and he noted that numbers for 2014 should make that figure even worse.

Glen Curley, head of Zurich North America’s Healthcare Professional Liability division, said in prepared remarks that the industry must understand why healthcare liability claims severity is increasing.

“At a time when the industry is experiencing dramatic change and uncertainty, it is essential for providers to accurately understand risk trends and their impact on patient safety and overall quality care,” Curley said.

Here are some of the Zurich North America study findings:

  • The percentage of claims above $1 million jumped 44 percent from 2003 to 2011 for acute care hospitals, but grew by 62 percent over the same period at teaching hospitals.
  • Average claim severity grew steadily since 2006, though it leveled off in 2008 and 2010.
  • The percentage of claims above $1 million and $5 million, respectively, have grown steadily over time.
  • There may be a link between high claims severity from children’s hospitals and interest rates. The reason: a spike in claims severity from children’s hospitals in 2007 that corresponded to interest rate decreases. Researchers argue that low interest rates could have boosted the present value of life care plans found as part of claims coming from children’s hospitals.
  • Claims that close with no payment have grown over time, but remained steady since 2007.
  • Claim severity from urban facilities remains higher than claims in rural and suburban locations.

Highlights from the Hiscox study:

  • The percentage of U.S. healthcare insurance sector losses above $5 million hovered around 7.5 percent to 10 percent in the early 2000. That number now lands in the 15 percent to 25 percent range with expectations of further climbing.
  • Losses above $50 million are continuing, and 50 percent of the largest medical malpractice claims in history came in over just the past 5 years.

Keith said that U.S. healthcare reform has helped to a degree, leading to better risk management and better patient safety programs. What’s more, he said, Accountable Care Organizations have helped improve quality and claims handling.

But continued M&A activities among healthcare facilities and the business shift in how healthcare is delivered has led to a disruption in the market that may be a factor in higher jury awards, Keith noted.

At least one other market analysis contrasts in some ways with the Zurich and Hiscox findings. A federal review of hospital medical records and related data found a 17 percent drop in infections, drug mistakes, bed sores and other preventable errors from 2010 to 2013, the Associated Press reported.

Sources: Zurich North America, Hiscox, the Associated Press