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Enterprise liability, risk pooling, and diagnostic care

Enterprise liability, risk pooling, and diagnostic care
Enterprise liability, risk pooling, and diagnostic care
The safety of patients is an important responsibility of health care providers, and significant compensation costs may arise if providers are negligent. A widely debated option involves liability for such compensation being placed with the hospital rather than the individual clinician, a system known as “enterprise liability.” In the United States, partial adoption of enterprise liability and proposals for its universal introduction have accompanied high-profile “malpractice insurance crises” in the last two decades. Hospitals in England and Wales have been subject to this system since 1990, and risk-pooling arrangements have emerged subsequently allowing hospitals to transfer their liability risk to an agency known as the National Health Service Litigation Authority. We explore some of the mechanisms used by this agency to provide hospital management with financial incentives to take care. We estimate the influence of these arrangements on the use of diagnostic imaging tests within hospitals, using a panel data set covering the period 2000–04, during which period a policy shift took place leading to a form of “natural experiment.” Our results suggest that the use of diagnostic tests did not respond to the incentives created during this period. We speculate that certain types of patient care activity, including the use of diagnostic tests, may be less responsive to incentives placed at the level of the hospital by comparison with incentives placed at the level of the clinician. Our findings may have implications for jurisdictions contemplating a move to enterprise liability as well as wider implications for public-sector organizations faced with financial incentives to improve service quality.
1053-1858
225-242
Fenn, Paul
9df4bbe2-1892-44f0-bae8-319014301fb1
Gray, Alastair
0ecaf719-32ca-402c-9af5-78fd0538a2cf
Rickman, Neil
b874c333-894f-4d14-b5ce-d87649e372e5
Vencappa, Dev
13a20a1f-d396-4f98-8d78-3003a71ea8a4
Rivero, Oliver
615657ef-c742-4a58-8d3a-9fd12668b28f
Lotti, Emanuela
e3a301e8-bfbe-4ac7-ba41-5020251171a5
Fenn, Paul
9df4bbe2-1892-44f0-bae8-319014301fb1
Gray, Alastair
0ecaf719-32ca-402c-9af5-78fd0538a2cf
Rickman, Neil
b874c333-894f-4d14-b5ce-d87649e372e5
Vencappa, Dev
13a20a1f-d396-4f98-8d78-3003a71ea8a4
Rivero, Oliver
615657ef-c742-4a58-8d3a-9fd12668b28f
Lotti, Emanuela
e3a301e8-bfbe-4ac7-ba41-5020251171a5

Fenn, Paul, Gray, Alastair, Rickman, Neil, Vencappa, Dev, Rivero, Oliver and Lotti, Emanuela (2010) Enterprise liability, risk pooling, and diagnostic care. [in special issue: Incentives and Public Service Performance] Journal of Public Administration Research and Theory, 20, supplement 2, 225-242. (doi:10.1093/jopart/muq026).

Record type: Article

Abstract

The safety of patients is an important responsibility of health care providers, and significant compensation costs may arise if providers are negligent. A widely debated option involves liability for such compensation being placed with the hospital rather than the individual clinician, a system known as “enterprise liability.” In the United States, partial adoption of enterprise liability and proposals for its universal introduction have accompanied high-profile “malpractice insurance crises” in the last two decades. Hospitals in England and Wales have been subject to this system since 1990, and risk-pooling arrangements have emerged subsequently allowing hospitals to transfer their liability risk to an agency known as the National Health Service Litigation Authority. We explore some of the mechanisms used by this agency to provide hospital management with financial incentives to take care. We estimate the influence of these arrangements on the use of diagnostic imaging tests within hospitals, using a panel data set covering the period 2000–04, during which period a policy shift took place leading to a form of “natural experiment.” Our results suggest that the use of diagnostic tests did not respond to the incentives created during this period. We speculate that certain types of patient care activity, including the use of diagnostic tests, may be less responsive to incentives placed at the level of the hospital by comparison with incentives placed at the level of the clinician. Our findings may have implications for jurisdictions contemplating a move to enterprise liability as well as wider implications for public-sector organizations faced with financial incentives to improve service quality.

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Published date: July 2010

Identifiers

Local EPrints ID: 174531
URI: http://eprints.soton.ac.uk/id/eprint/174531
ISSN: 1053-1858
PURE UUID: 2cdebbab-1f34-4a8b-9798-0037a2156c5c

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Date deposited: 14 Feb 2011 13:45
Last modified: 14 Mar 2024 02:34

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Contributors

Author: Paul Fenn
Author: Alastair Gray
Author: Neil Rickman
Author: Dev Vencappa
Author: Oliver Rivero
Author: Emanuela Lotti

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