Legal Aspects In Healthcare Management

Running head: LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 1

Legal Aspects in Healthcare Management

Name

Institution

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 2

Table of Contents

PART 1: CRITICAL THINKING .................................................................................................. 4

Abstract ........................................................................................................................................... 4

Introduction ..................................................................................................................................... 5

Forms of Healthcare Insurance Policies ......................................................................................... 5

Claims-Paid Coverage .................................................................................................................... 5

Occurrence Coverage ...................................................................................................................... 6

Claims Paid-Coverage .................................................................................................................... 6

New York Medical Malpractice Insurance ..................................................................................... 7

Methodology ................................................................................................................................... 8

Findings........................................................................................................................................... 8

Costs of Malpractice Insurance Rates in New York ....................................................................... 9

New York’s, Medical Malpractice Claims Analysis .................................................................... 10

New York Medical Malpractice Payout Analysis ........................................................................ 11

Malpractice claims in New York compared to other states. ......................................................... 12

Conclusion .................................................................................................................................... 12

Part 2: CASE STUDY .................................................................................................................. 13

Mazarei verses University of Pittsburgh Medical Center ............................................................. 13

Definition of Issues ....................................................................................................................... 13

Provider Discussion ...................................................................................................................... 15

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 3

Root Cause Analysis ..................................................................................................................... 17

Root cause analysis diagram ......................................................................................................... 21

References ..................................................................................................................................... 23

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 4

PART 1: CRITICAL THINKING

Abstract

The healthcare administration practice presents a continuous array of ethical issues

embedded in everyday activities. Healthcare Professional Liability Insurance also is known as

the Medical Malpractice Insurance. It is a form of medical liability insurance that protects

physicians and other medical specialists such as nurses, dentists from liabilities that arise from

wrong property damage, medical expenses, and the cost of laws suits that relate to such claims

(Gupta et al., 2016). This paper discusses the various forms of healthcare professional liability

insurance, defines such as both provider coverage and hospitals within the New York State,

United States. It will involve determining the various insurance types available in the state for

different disciplines of healthcare including an estimate of annual premiums, the amount and

purpose of coverage, and issues in coverage such as excel liability coverage.

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 5

Introduction

Professional Medical Liability Insurance covers harm to the body, damage to property in

addition to personal injury liability. Discovering negligence is a complex process that results in a

higher percentage of medical dollars that go into the defense and the process of cost containment

(Motta et al., 2015). Thus, professional medical liability insurers often spend substantial amounts

of money in the investigation and defense of claims with adverse patient outcomes that do not

result from negligence.

Forms of Healthcare Insurance Policies

There is three basic malpractice insurance, and they include claims-made, claims paid,

and occurrence. The most common type of this insurance coverage is the claims-paid coverage.

Claims-Paid Coverage

This form of coverage covers policyholders for the acts of misconduct that occur and

reported during the period of the policy. The first few years of this policy comes with lower

premiums because of the significant gap between the filing of claims and the administration of

treatment (Paik et al., 2015). As a result, the claims made premiums tend to increase annually in

continuous scale until it reaches a stage of “mature” risk in about years 5 to 7 for individual

physicians (Gupta et al., 2016). An advantage of this form of coverage is that the insured do not

need to pay for future liability with premium rates based on the occurrence at present and past.

Besides, the claims paid coverage to enable physicians to increase the limits of liability when

they find it necessary. For instance, the liability limits in effect at the inception of the policy may

not be enough to cover a settlement incurred today. Thus, the physician can opt to increase his or

her liability limits. For the physicians, the claims made policy that are most desirable will

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 6

establish the liability limits available to the holder of the policy as those in effect the time

reporting a claim rather than the occurrence of the incident.

Policyholders need to be wary during the switching of carriers or in terminating coverage

because claims made policies cover only reported claims, and those arising from claims that

occurred during the time of policy effect (Motta et al., 2015). Thus, when they terminate their

coverage, the physicians should ensure that they extend their reporting coverage to a retroactive

coverage from their old carrier. These coverage cover claims recounted after the end of the

original period of the policy for occurrences that ensued when the program was in effect.

Occurrence Coverage

This policy insures policy holders against incidents occurring that occurred at the time the claim

was filed. In this policy, the insurance premiums paid will consider the future projections in

addition to the current experience. These claims are known as incurred but not reported (INBR)

(Paik et al., 2015). The occurrence insurance rates will increase very significantly due to their

difficulty in projecting the future claim expenses. Under this policy, the liability limits are those

that are already in effect at the time of incident occurrence. The advantages of this program are

that it is neither retrospective nor tail coverage is not required when ending the coverage.

Claims Paid-Coverage

This coverage is the most common among trusts. Under this policy, the payments are paid only

on the claims settled in a previous year and currently projected (Paik et al., 2015). These policies

are accessible often still accessible for a couple of years after termination of the policy.

Furthermore, they have restrictive claims under which a summons and complaint must be

received before the claim is considered formally made (Gupta et al., 2016). This means that the

policyholders that may wish to change from claims-paid from claims made will most likely find

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 7

it hard to obtain the retroactive coverage from new carriers. On the other hand, policyholders

leaving the claims paid carrier will be forced to buying a more costly tail coverage from the

claims-paid carrier.

New York Medical Malpractice Insurance

New York State boasts of the largest number of doctors in the country, but the insurance

environment is very unfriendly for them. Two largest indemnification corporations take up the

largest portion of the New York's insurance market, with the market being too tough that it had

required the intervention of the government in the past couple of years. It led to some doctors

shifting to Risk Retention Groups (RRG's) to handle the high costs of insurance (Farley, 2014).

In the New York, the statutes of limitation give patients thirty months to file a medical

malpractice against the physicians or healthcare providers. However, there are exceptions to this

period such has when a foreign object is left on the patient’s body of if the patient was a minor.

Exceptions also exist for mentally challenged and mentally challenged complainants and in cases

of physicians leaving the state after the incidence occurrence (Motta et al., 2015). In this case,

the plaintiffs are allowed more time. As such, doctors need to ensure that they consider Medical

Malpractice Insurance because of the possibility of finding themselves under lawsuits years after

the occurrence of the incidences. Furthermore, in the New York, there are not caps that dictate

what the complainants should be aware. Thus, there is a need for the physicians to have a

considerable coverage.

However, New York does not limit the attorney contingency fee. For instance,

complainants can work with an attorney and receive a $ 2 million award, usually pays less than

10% of this cost to the attorney. As a result, added to the co cap to damages, an ample

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 8

environment is created that favors the plaintiff and less favorable to the physicians (Paik et al.,

2015).

Methodology

To understand the professional liability coverage in New York, this study interviewed with the

nursing home risk manager. The questions involved testing on such issues as the experience of the medical

practitioner regarding health practice professional liability, personal attributes of the workers such as

creativity, personal relationship with clients, job satisfaction, rewards, and views on recognition. It also

included organizational issue like the culture in the hospital culture.

Findings

The findings of the interview showed that professional education is very important for

developing leadership abilities with one respondent stating that effective leadership is not being a

boss but about inspiring. Furthermore, creative thinking was found to be helpful in addressing

issues in the profession although it requires a balance with the many regulations that govern the

industry. It was also found that communication is among the major causes of misunderstanding

and frustration among the workers and worse, medical errors.

According to Geerling, Chernofsky, & Pratt (2014), the care of patients is a team sport.

This means that it is not only the surgeon that makes a difference in the care of the patient but the

hospital provider, staff and even administrators should work together across all levels of the

system to foster the right patient outcomes. Research has proven that without a good teamwork,

anything can go wrong in the care of patients from wrong doses or type of medication, treatment

of wrong illness, or the patient may even acquire life threatening infections from equipment that

are contaminated among many other possibilities. Thus, as these findings indicate, it is important

to ensure that training among the medical staff is conducted to ensure that the risk of medical

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 9

errors is reduced. Such training must include the importance of communication, which crucial

for fostering teaming among the healthcare teams for better patient outcomes.

Costs of Malpractice Insurance Rates in New York

Due to a large number of frivolous claims against physicians and nursing homes, the high

costs of healthcare in the state forces doctors to move away from New York because of their

inability to pay medical malpractice insurance plan (Gupta et al., 2016). This situation seems to

be fuelled by the fact that New York seems to encourage groundless prerogatives by permitting

the use of ideas of evidence laws, which in other states are well below the minimum standards in

other states (Mello, Studdert & Kachalia, 2014). For instance, under the New York witness laws,

the law permits podiatrists to provide testimonies to cases of neurosurgery. Furthermore, the

complainant's attorneys do not even need to provide the names of the witnesses until the

beginning of trials. In fact, there is no requirement for disclosing witnesses name, but they have

to be "requested" according to the state's law (N.Y. CVP LAW § 3101). These problems in the

law have transformed the state's justice system in an unethical game that is only played for profit.

Lawsuits against doctors is one of the major reasons for the increase in the cost of

malpractice insurance. There is an increase in the number of these lawsuits and there is no law

that puts a cap on the amount a petitioner can be awarded by the courts. This causes the

insurance firms to charge very high premiums in order to cover these costs and remain profitable.

There is need to make reforms in order to ensure that these costs are reduced.

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 10

New York’s, Medical Malpractice Claims Analysis

The New York state also has few insurers include Physicians Reciprocal Insurance (PRI),

Medical Liability Mutual Insurance Company (MLMIC), and Medical Malpractice Insurance

Pool admitted as the only carriers. It means that there is little or no competition among the

malpractice insurers, which is also part of the reason for driving up the costs of access the

insurance (Mello, Studdert & Kachalia, 2014). Over the past couple of years, there have been

emergences of Risk Retention Groups (RRGs) which offer a more feasible option for the

hospitals through their modest rates in addition to providing new competitive forces.

The average liability restrictions in the states are either $1.3 million per claim with a 43.9

million aggregate limit or a $ 1 million per claim limit with a $ 3 million summative limit.

Hospitals will necessitate the carrying of at least the latter by the physicians (Mello, Studdert &

Kachalia, 2014). New York also uniquely written a large number of occurrence policies. These

dogmas cover the claims centered on their date of occurrence. Despite the fact that they are

costly, they will provide indefinite coverage to doctors. New York also remains among the few

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 11

state still writing unlimited occurrence policies. As an alternative to the written claims-made

policies, they maximum maturate is eight years.

New York Medical Malpractice Payout Analysis

With these challenges facing the physics in New York, there is a continuous debate

among legislators regarding the effort to make reforms to torts. However, the failed aspects

continue to cause most challenges for the physicians who keep in paying high medical

malpractice insurance costs (Smith et al., 2014). Despite the existence of caps on retributory

indemnities, there are not monetary and non-economic caps which results in paying significantly

among of gaps to complainants. These payouts have dramatically increased over the last three

decades to a staggering $ 500 million paid as damages by the malpractice insurance companies.

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 12

Malpractice claims in New York compared to other states.

Conclusion

Thus, one of the most important decisions for healthcare organizations and physicians to

make in providing healthcare includes the purchase of medical professional liability insurance.

The insurance sector is a regulated field and varies from state to state. Therefore, some coverage

may not be available in some areas. It is important to determine first the type of policy that is

right. The three major policies available include the claims-made, occurrence, and the claims-

paid. While these policies are similar largely, their major differences arise from when the

coverage is triggered (Mello, Studdert & Kachalia, 2014). New York State has one of the

toughest insurance environments in the country with two largest insurance companies taking up

the largest portion of the New York's insurance market, with the market being too tough that it

had required the intervention of the government in the past couple of years.

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 13

Part 2: CASE STUDY

Mazarei verses University of Pittsburgh Medical Center

Definition of Issues

A very unfortunate medical malpractice where a sharp surgical tool was left in a patient’s

body calls upon the medical facilities and surgical teams to be more attentive and careful at every

major step of their procedures to prevent further mishaps. In 2008, an elderly Pennsylvanian

man, Daryoudh Mazarei, aged 76 had to endure a none-month excruciating pain after a surgeon

at the University of Pittsburg medical Centre- Presbyterian left a 10-inch surgical tool in his

abdomen. Daryoush was undergoing a surgery that meant to insert a stunt in his chest meant to

drain fluid from his brain. A retractor is a surgical tool that can be likened to a pair of tweezers

that is during surgery to pull back skin or hold an item in place. In this unfortunate case,

Mazarei's lawyer contends that the surgeon assigned the operation failed to hold the retractor

throughout the length of the procedure as required and it ended up being sawed into him after the

end of the procedure. The surgical device remained in Mazarei's abdomen for a whole month

creating serious pain and discomfort to him.

According to hospital administrators and medical experts, it is rare to find medical errors

of this category. The New England journal of medicine reports that for every 30 million inpatient

operations conducted in hospitals and medical facilities in the united states annually, there are

only slightly more than 1500 cases of medical devices being left inside the patient's bodies.

During such occurrences, the devices most likely to be left inside the patient's bodies are

scalpels, sponges, and retractors. However, these occurrences are very traumatizing and warrant

major public policy making and decision making efforts to ensure they are prevented in the

future.

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 14

Perry, Mazarei's injury lawyer, explained that no policy that covered medical errors of

this capacity because no medical administrator of professional anticipated the possibility such

large objects being left in such a manner in a patient's body. Mazarei's daughter first spotted the

retractor when she saw it sticking under his ribs. She also stated that her father kept saying that

he felt as if something kept poking him. It led to Mazarei approaching the physician and the

surgical team who had operated him, but instead of the problem is properly addressed, he was

told to go to a psychiatrist instead, without the matter being resolved. According to Mazarei's

daughter, the medical team felt that he was lying or that the feeling was in his head.

However, after their persistence, a CT scan was conducted, and it revealed that there was

a retractor lodged in his abdomen. It led to Mazarei filing a lawsuit against the hospital. In the

lawsuit, Perry stated that his client was already experienced pain due to the retractor of his body

and the order to go to a psychiatrist worse the ordeal.

This case clearly showed a case of failure in the part of the physicians and medical staff

to take care of the wellbeing of the patients. Considering the good standing of the hospital in

regards to facilities and staff, it is clear that the medical malpractice that the 76 year-old man had

to endure was a result of a failure in the human components of the system. This means that the

medical error resulted from poor working coordination among the surgeon and his assistants,

which could have led to confusion with the team failing to understand clearly their specific roles

in the surgery. According to Geerling, Chernofsky, & Pratt (2014), the care of patients is a team

sport. This means that it is not only the surgeon that makes a difference in the care of the patient

but the hospital provider, staff and even administrators should work together across all levels of

the system to foster the right patient outcomes. research has proven that without a good

teamwork, anything can go wrong in the care of patients from wrong doses or medication,

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 15

treatment of wrong illness, or the patient may even acquire life threatening infections from

equipment that are contaminated among many other possibilities.

Provider Discussion

The University of Pittsburgh Medical Center is one of the leading American health care

providers and has been ranked by us news and world report's "Honor Roll" as the among the top

fifteen to twenty top hospitals in America continuously for 15 years. As of 216, the hospital was

ranked 12

nationally among the best US hospitals and the second best in Pennsylvania. The

medical malpractice that occurred to Mazarei in the hospital was, therefore, a shock to the world

considering their high standing of the hospital.

After Mazarei filed a lawsuit gains the hospital, the hospital responded to the suit through

the facility administrators and their legal team seeking mediation between the parties. Perry

alters stated that hospital apologized for the mistake to his client. As a result of the mediation

efforts, Mazarei did not take the case to court and the hospital administration did not allow the

court to look at the CT scan showing the ten-inch surgical tool in Mazarei's anatomy for a who

month. He had to endure excruciating pain and discomfort in addition to the psychological

discomfort when he was told to go to the psychiatrist by his doctors.

SWOT Analysis

Strengths

The hospital is among the top 15 hospitals in the United States and send in Pennsylvania – a

strong brand name, has strong community empowerment initiatives, a large market share/

monopolistic advantages and large marketing budgets.

Weaknesses

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 16

The major weaknesses of the hospital include monopolistic practices destroy hospital brand nam,

too much focus on overseas operations at the expense of domestic ones, public criticism for

excessive profits, and low wages to workers.

Opportunities

Despite the weaknesses, the hospital has the following opportunities, a focus on domestic

operations to improve reputation, the potential for improving worker morale through increased

salaries, and hospital alignment with other radiology practices to gain market share to attract

baby boomers

Threats

The hospital faces the following threats: high worker turnover due to low wages, ruined

reputation resulting from medical malpractices, increasing competition, decreasing

reimbursements, and increasing after hours work

Settlement/Legal Determination

After successful mediation efforts, another operation was conducted on the senior man

and the device removed. The hospital and the doctors could not explain what transpired so that

the errors took place. Perry commented that he was shocked and could not imagine how qualified

and experienced surgeons or physicians, assistants, and scrub nurses could fail to notice a device

that big, leaving it in their patient. As such, this case was determined out of court through a

mediation effort.

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 17

Root Cause Analysis

To effectively address a problem and prevent future recurrence, it is important to

understand its cause. For instance, in medicine, there is the difference between the treatment of a

problem and the treatment of a symptom. Taking painkillers for a broken wrist, for example,

could be helpful for reducing the pain, but it does not heal the bones properly because it only

takes away the symptoms. As such, there is need to provide a better treatment which can help the

bones to heal properly. The Root Cause Analysis provides a good method of that can help to

determine the reasons why the problem occurred in the first place. Thus, the Root Cause

Analysis identifies the primary causes of problems by determining what happened, determined

the reasons why it happened, and figuring out actions to reduce the likelihood of the same

problem recurring (Geerling, Chernofsky, & Pratt, 2014).

Root Cause Analysis assumes the interrelations of systems and event, stating that once

action triggers another action, which also triggers another and does on. Thus, by tracking back

these actions, it is possible to discover where the problem began and how it grew to become what

it is now. The major causes of problems often include physical, human, and organizational

causes. Physical causes arise from the real failure of some materials such as an accident caused

by the failure of car brakes. Human causes, on the other hand, human cases result from people

doing something or failing to do something. For example, car brakes may fail because of a

failure to fill the brake fluid. Organizational causes, on the other hand, result from faulty

systems, processes, or policies that people use in making decisions (Makary & Daniel, 2016).

For instance, when everyone assumes that another person has filled the brake fluid of the car

with no specific person responsible for maintenance and the car's brakes fail causing an accident.

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 18

The Root Cause Analysis can be used to determine the cause of the medical malpractice

in University of Pittsburgh Medical Center, which led to a surgeon abandoning a surgical tool in

the patient’s body. According to Geerling, Chernofsky, & Pratt (2014), the types of problems

that cause medical errors can be categorized into several factors. They also state that there is

evidence showing that the current medical culture is faulty because it promoted dishonesty and

conceals errors to the degree that it becomes difficult to learn from them for improving safety.

Makary & Daniel (2016) links the “slips” to the distractions that at eh normal routine of task

completion and mistakes with the application the wrong rules during the processing of

information. He also links knowledge deficit errors the lack of critical information. He also

found that some physical and psychological factors such as fatigue, illness, frustration, boredom,

anxiety, fear, alcohol, and drugs could also increase the probability of error occurrence. The Root

Cause Analysis is a retrospective technique that can identify the factors that can contribute to

mitigations efforts that are more effective.

The initial step in the Root Cause Analysis of determining the cause of the University of

Pittsburgh Medical Center malpractice is the definition of the problem. This step involves

understanding the occurrence regarding the visible happenings and the specific symptoms of the

problem (Makary & Daniel, 2016). In this regard, the problem is wrongly abandoning a surgical

tool in a patient’s body. The symptoms of this problem included serious pain and discomfort to

the patient and a sticking device under his ribs.

The second step involves collecting the data. This step involves looking for evidence that

proof the existence of the problem, the time the problem has persisted and the impact of the

problem. Thus, this step involves a careful analysis of the situation to ensure a full understanding

before looking at the factors that contributed to it. To this step to be effective, the experts and

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 19

frontline staff must be brought together to provide information about this problem. In the case of

Mazarei, the hospital administration and the surgical team could not explain how the retractor

remained in the patient's body. However, the patient was feeling as if something had gone very

wrong with a feeling go being a poke in addition to serious pain and discomfort. The problem

lasted for a whole month after the patient repeatedly seeking help and being turned away.

The third step in this RCA is to the identification of the potential causal factors of the

problem. It includes the sequence that led to the problems, the conditions that allowed the

problems, and other problems surrounding the occurrence of the central problem. It involves four

steps including appreciation, the five whys, drilling down and drawing a cause and effect

diagrams.

In this case, the possible reason that could have caused the problem may include

communication problems among members of the surgical team, incompetence among the

surgical team's members, poor staffing patterns, or inadequate policies and procedures. It is then

followed by a narrower analysis of these problems to determine their potential role in the patient

harm. Regarding communication, there could have been a lapse in communication among the

surgical team members causing a lack of clear roles in the surgical procedure (Makary & Daniel,

2016). It is a common practice that a person holding the retractor to keep skin apart on hold an

item in place should do so through the course of the procedure. Once the process is competent,

the person is then expected to remove the tool from the area of operation. A communication

problem could have confused in this area. Poor communication leads to a lack of clarity in

individual roles played by the team members. It means that different individuals will switch from

different roles increasing the chances medical errors.

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 20

Poor staffing patterns can also be analyzed further to identify the cause of the problem. In

this regard, an inadequacy in medical staff could lead to overworking of a few physicians, which

leads to fatigue, and an increased probability of medical errors. An incompetence among the

team members cold has also led to the medical error due to a lack of knowledge of the medical

procedures and processes.

Running head: LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 21

Root cause analysis diagram

Inadequate staffing and

Workflow

Human problems

Organizational transfer

Inadequate policies

Organizational transfer

Staffing patterns

Organizational transfer

of knowledge

Inadequate policies

Technical failures

- Poor communication

-Inadequate staff

Environment

Management

Equipment

Processes

People

Materials

Communication problems

Patient-related issues

Secondary factors

Running Head: LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 22

With the identification and narrowing down of the potential cause of the errors, the fourth

step is the identification of the causes. It involves selecting the most probable causes because

after carefully selecting an analyzing the potential causes. In this regard, the causes of the

problem are poor communication and poor staffing methods. It is because University of

Pittsburgh Medical Center is one of the best hospitals in the USA (Makary & Daniel, 2016). It

means that it hires qualified and experienced workers in its facilities. Therefore, it is improbable

that the surgical team members lacked the required knowledge and skills to operate effectively.

However, typical of large organizations, there is a high chance of workers being overworked,

which could lead to fatigue, and consequently medical errors (Makary & Daniel, 2016). Besides,

when a health facility has more patients to serve and fewer workers, there is a chance that some

workers will be distracted continuously by the need to see different patients concurrently. Thus,

there is confusion regarding the roles played, as they will keep moving and reassigning duties,

which ultimately leads to medical errors. Thus, the causes of the University of Pittsburgh

Medical Center medical malpractice were ineffective communication and staff fatigue due to

overwork.

The fifth and final step in the Root Cause Analysis process is to recommend and

implemented solutions. The major problem that the facility faces which led to the medical error

is staff fatigue, which resulted from a few staff serving large number patients. Overworked staff

tends to have lower morale and are less accurate in their work and prone to making mistakes. As

such, the organization needs to employ more surgeons into the organization to ensure that the

workers are not overwhelmed by the work they do, preventing further medical malpractices.

LEGAL ASPECTS IN HEALTHCARE MANAGEMENT 23

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