Hospital Corporate Responsibilities in Medical Malpractice Cases

Medical malpractice claims cost the healthcare industry billions of dollars, but the costs include more than just dollars. Often there is accompanying damage to a hospital's reputation and to staff morale. It can be especially damaging to the leadership of the organization as they find that their credibility is lessened when they discuss patient safety and quality of care, and staff know that their actions may not match their words. Can hospitals and physicians proactively prevent these damaging blows to their financial health and reputations?

The answer to this is yes. 

Medical malpractice cases require stringent and comprehensive clinical review, and hospitals always employ medical experts to review their cases. The clinical issues are always analyzed, but often overlooked is the evaluation of the corporate responsibilities of the hospital involved in the matter. It is becoming increasingly likely that the hospital will be included in the claim as plaintiff attorneys are very aware that courts are finding corporate negligence as a factor in many claims, and more and more states are recognizing corporate negligence as a contributing issue.

As a consultant and expert witness, I see many cases that could be avoided with some thoughtful review and analysis. Typically, the cases I review are either related to the hospital not following Joint Commission standards, either by ignoring required policies and procedures, or physician credentialing and privileging matters. Hospitals and physicians that do not take these matters seriously will often find themselves in situations that could be avoided. Examples of preventable problems include such things as not updating rules and regulations annually (putting a new date on an old policy is not an annual review) or allowing a physician to perform a new procedure without demonstrating the training required for it. It only takes one circumstance for the oversight to result in a case that is difficult to defend. Most importantly, the hospital must ensure that standards and policies are actually followed in practice and do not just exist on paper. This is all too common in my experience.

It is also important to note that physicians typically depend on their hospital to effectively manage their risk management program.  All too often, the physician involved in a case finds that the hospital could have prevented it by adhering to all applicable standards, and this can lead to an unhappy, and perhaps vocal, medical staff member. The organized medical staff of a hospital has the responsibility to provide oversight of the delivery of care at their hospital and cannot delegate this responsibility. Given this responsibility, making certain that the hospital has a risk management program that involves physicians appropriately is essential in protecting physicians from unnecessary incidents and claims. This is an area that truly requires teamwork.

In reviewing its own situation, it is important for a hospital to utilize a person who has actually worked as a hospital administrator, and indeed, many states require a person actively engaged in the field to serve as an expert. While many physicians and nurses feel that they have hospital administrative experience, their focus is often on the clinical issues; they may not fully evaluate hospital compliance with accreditation standards, licensure regulations and administrative policy and procedures.

The hospital always has an interest in every malpractice case as patient safety and the quality of care are central to their mission. Additionally, the discovery of systemic problems, adverse publicity, potential financial loss and poor staff morale are extremely important to the hospital's leadership. The organization can best determine the hospital's corporate responsibilities through engaging an experienced healthcare executive to evaluate the case.

Hospital policies, licensure and accreditation
The administrative expert relies on the physician experts to determine if clinical errors were made and utilizes this information to perform a review of hospital policies and licensure and accreditation standards. The hospital administrative expert will review the appropriate Joint Commission Hospital Accreditation Standards manual to evaluate the degree of compliance of the hospital with the standards. For example, if a case involved a wrong-site surgery, the administrative expert might determine that the hospital did not follow the required Joint Commission standards regarding the identification of the patient and the surgery site, nor did they perform the mandatory time-out procedure prior to starting the operation, even though the required form was filed. Hospital employees could have and should have made certain that the surgeon followed the correct procedures. Here, there may be indications of corporate negligence, and the hospital had some responsibility in the case. Moreover, the hospital thought that the time out policy was being followed when it was not.

Another important review performed by the administrative expert is to look at hospital policies and procedures. This evaluation includes determining if the hospital has the required up-to-date policies in place, and then ascertaining if they actually followed them. A case I recently reviewed involved policies for the handling of critical test results, and it was readily apparent that the hospital had the required policies in place and that they did follow them when a radiology examination showed a life threatening situation for an emergency department patient.  In this case, the hospital followed the accreditation standards and had no corporate liability in the matter. Having an outside expert review the situation gave the hospital's leadership an objective look and added greatly to the handling of the matter.

Credentialing
Another often overlooked area of investigation whether credentialing procedures complied with the appropriate standards. Hospitals must comply with very definitive standards for initial credentialing and re-credentialing physicians and other licensed independent practitioners. It is important to evaluate if the correct procedures were carefully followed, particularly as the standards have been changed in recent years and focus more on an ongoing review process rather than the familiar biannual review. I often see cases where the credentials committee takes shortcuts in the process due to friendships between physicians or ignorance of the actual standards. Again, having an outsider look at the committee's work, either during a general review (preferred) or when a case is filed, can be helpful.

Another area of focus is that of new procedures and new equipment. Did the hospital formally approve the new procedure or the new piece of instrumentation used in the procedure? Were hospital staff members adequately trained in the new procedure? Did the materials management department purchase the new equipment per their policy or did the physician or surgeon bring it in – something I have seen more than most would expect? Have the surgeon's privileges been expanded to include this new procedure? Many hospitals do this extremely well and others do not. It is important to review this area thoroughly.

Reviewing corporate responsibilities should take place in nearly all medical malpractice cases and can benefit patient care, as well as providing clarity as to the hospital's compliance with their responsibilities. It is important to remember that for many staff, the Joint Commission standards are unfamiliar and an administrative expert can assist them in navigating these voluminous and constantly changing standards.

Reducing medical malpractice claim exposure requires leadership, a commitment to formulating an administrative system that will be adhered to and taking a long-term view to the issue, not the typical 'flavor of the month' approach that happens when the institution has a serious loss.  Hospital leadership must look at how the hospital actually manages the business of credentialing physicians, approving new procedures, empowering the nursing staff and others to report incidents and stop practices that should not be happening. Reducing exposure starts at the top, engages all members of the hospital staff and makes the difficult decisions needed to eliminate poor practices. 

Dr. Samuel H. Steinberg, currently a hospital consultant and expert witness in medical malpractice cases, has been involved in health care administration for nearly forty years. He has served as a hospital CEO, a medical school administrator and as a consultant to hospitals, health systems, and universities. In addition, he created and has served as the CEO of a captive insurance company. He has been a speaker at the ACHE Annual Congress and at many other regional and national meetings. He is also the author of “The Physician’s Survival Guide for the Hospital,” published in 2006, and contributed the chapter, “Organization and Operating Structure” in the book “Leading Your Healthcare Organization Through a Merger or Acquisition” published in 2010. Dr. Steinberg is currently an adjunct faculty member at the University of Phoenix and at Argosy University. He is a Fellow of the American College of Healthcare Executives. He can be reached at samuelhsteinberg@hotmail.com.

More Articles on Malpractice:

U of Michigan Health Offers Guidance for Medical Error and Malpractice
Massachusetts Initiative Aims to Improve Patient Relations After Medical Errors

Ohio's Malpractice Tort Reform Linked to 40% Drop in Claims

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