Reflection Paper

BHA 4053, Financial Management in Health Care Organizations 1

Course Learning Outcomes for Unit VIII Upon completion of this unit, students should be able to:

9. Discuss the financial approach to strategic healthcare planning and how managers can participate effectively in that process.

Reading Assignment Chapter 12: December

Unit Lesson An important topic for Unit VIII of our course is professional liability in health care, specifically malpractice and malpractice insurance coverage. As a healthcare administrator, you will need a solid understanding of this topic. Doctors get sued, no surprise there, and the past several decades have seen more and more doctors getting sued. There are many reasons for that, and we should discuss those reasons here. A changing physician−patient relationship due to managed care is definitely a factor. The doctor, as longtime family friend caring for several generations of a family, is just not reality in most of America today. Managed care has brought about a much less personal and much more “all-business” relationship between doctors and their patients. The creation of primary care gatekeepers who change on a regular basis has undermined the concept of a true family doctor. A young person growing up in America today may have a dozen or more primary care providers before reaching adulthood, far different from pre-managed care days when a single doctor might take care of a child from birth to adulthood. In addition, higher patient expectations for care, related to the internet access, are also definitely a factor. Patients and families can simply go online, find out what should happen in a particular case, and compare that with the outcomes that they experienced themselves. Today there is a much higher patient and family perception that “something did not go right here.” Whether that is true or not is another matter, but the perception is easily fed by online material. Of course, another important consideration is the larger number of lawyers who are advertising and ambitiously looking for malpractice claims. A generation ago, it would have been seen as inappropriate and considered “ambulance chasing” for lawyers to openly seek malpractice cases to bring, but it is clearly the norm today. Just look at the back cover of any major city telephone book this year. There are many factors here, but only one result—more and more lawsuits being brought against American physicians these days. However, interestingly enough, some physicians and certain types of physicians are rarely sued, while others are sued on a regular basis. What makes the difference? That is what we will consider in this lesson. Who Gets Sued Most Often? The two physician specialties that are most likely to be sued are neurosurgeons and cardiovascular surgeons. That probably makes intuitive sense simply because so much is at stake when these doctors perform their services. When the outcome of neurosurgery or cardiovascular surgery is less than optimal, the patient’s life is probably changed in a very dramatic way, and a lawsuit is likely. Approximately 19% of practicing neurosurgeons and 19% of cardiovascular surgeons are sued each year. However, it is important to note that even in these high-risk fields, the actual number of payments to clients is far less than the number of suits brought. For neurosurgeons, 19% of doctors are sued each year, but only 3.5% of them experience an actual payment to the plaintiff in the case. For cardiovascular surgeons, 19% are sued, but only 4% experience a payment to the plaintiff. Another way of stating this is that the great majority of people who sue neurosurgeons and cardiovascular surgeons lose their case. This is a trend that you will notice with other

UNIT VIII STUDY GUIDE

Year-End Reporting

BHA 4053, Financial Management in Health Care Organizations 2

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medical professionals as well. The big winners in these cases that are lost are, of course, the attorneys who represented both sides and collected the legal fees (Jena, Seabury, Lakdawalla, & Chandra, 2011). Take a look at some of the other physician specialties in terms of percentage of doctors sued and percentage with a payment to the plaintiff:

Physician specialty Percentage Sued Annually

Percentage with Malpractice Payment Annually

General Surgeons 16 4

Orthopedic Surgeons 14 4

Plastic Surgeons 13 3

Gastroenterologists 12 1.5

Obstetricians 11 3

Urologists 11 3

Pulmonologists 9 1

Oncologists 9 2

Cardiologists 8 1

Gynecologists 8 3.5

Neurologists 7 1.5

Internists 7 1.5

Emergency Room Physicians 7 1.5

Anesthesiologists 7 1.5

Radiologists 7 1.5

Ophthalmologists 6 1

Nephrologists 5 0.5

Pathologists 6 2

Dermatologists 6 2

Family Practitioners 5 2

Pediatricians 3 0.5

Psychiatrists 2.5 0.5

Table 1: Percentage of Doctors Sued By Specialty (Jena et al., 2011)

As you can see, the absolute lowest risk physician specialties are psychiatry and pediatrics. While there is no definite reason for this, it is reasonable to speculate at least one key factor. These are specialties in which a long-term physician−patient relationship can be expected (Jena et al., 2011). Do All Doctors Eventually Get Sued? No, not all physicians get sued. There are remarkable physicians, or perhaps remarkably fortunate physicians, who make it through an entire medical career without being sued. However, they are few and far between. The vast majority of doctors are eventually sued. By the age of 45, we see 36% of physicians in low risk specialties experiencing their first lawsuit. By the age of 45, we see 88% of physicians in high-risk specialties experiencing their first lawsuit. By the age of 65, we see 75% of doctors in low risk specialties getting sued. For high-risk specialties, by the age of 65 we see 99% of doctors being sued. Again, it is important to note that not every doctor who gets sued will actually pay out a settlement (or actually see his malpractice insurance company pay out a settlement), but the experience of being sued is extraordinarily traumatic and extraordinarily expensive, whether there is a settlement or not (Jena et al., 2011).

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Malpractice is part of modern medical practice, and hospitals increasingly are in the same liability boat with doctors because they now employ them and/or provide staffing and management for their practices. Hopefully, this lesson has shed some light on where the risk is really focused so that we can be aware and take steps to reduce the risk wherever possible. Excellent training is now available on ways to help doctors reduce their malpractice risk. Take full advantage of such training programs, and educate the doctors of your facility in order to reduce risk. Doctors can be trained to reduce diagnostic errors in key areas such as lung cancer, breast cancer, appendicitis, colon cancer, and heart attack. In addition, they can learn ways to improve their documentation, thus supporting their own case if a lawsuit happens. They can also help us avoid prescribing problems with new E-prescribing technology. Above all else, they can develop a decent and caring bedside manner. It is very clear that rude doctors are sued more often, and that just makes sense. This is a very personal business that we work in, and the way that we treat patients at a personal level makes a huge difference when something goes wrong. Remember, when the malpractice suit comes, it is very likely that the hospital will also be named right along with the doctor. Year–End Reporting In addition to the professional liability and malpractice topic, your reading for Unit VIII also addresses year- end reporting, which is a very important aspect of healthcare financial management today. Key here is making certain that everything is fairly and accurately reported so that our year-end financials will stand the test of outside auditing with no major adjustments. No big surprises—that is clearly the goal. Your textbook presents the key steps and aspects of year-end reporting, and the topic will not be reiterated here. From the experience of a professional, there is nothing worse than reporting a profit (or excess of revenues over expenses for non-profit hospitals) on the year-end financials, only to have that profit erased by the auditors some months later when the annual audit takes place. Accurate calculation of the contractual adjustments is especially crucial here, and mistakes can greatly impact the true bottom line. This issue is especially important since the board of directors often makes go-forward decisions based upon the end-of-year financial position. There is no joy in the boardroom when decisions are made and then regretted because of audit adjustments. This is a very important lesson to wrap up our course. Hopefully, through this unit, you have learned many important things about year-end reporting and about professional liability.

Reference Jena, A. B., Seabury, S., Lakdawalla, D., Chandra, A. (2011). Malpractice risk according to physician

specialty. New England Journal of Medicine, 365, 629-636. Retrieved from http://www.nejm.org/doi/full/10.1056/NEJMsa1012370#t=articleTop

Suggested Reading The following PowerPoint presentation provides an overview of Chapter 12. Click here to access the Chapter 12 PowerPoint Presentation. (Click here to access a PDF version of the presentation.)