Beach.oliver.aafp slc 2013

PATIENTS’ COMPENSATION SYSTEM
A PROPOSAL THAT WORKS FOR PHYSICIANS AND THEIR PATIENTS
Presentation to:

AAFP State Legislative Conference
Senator Brandon Beach
District 21, North Atlanta
Wayne W. Oliver
Executive Director, Patients for Fair Compensation
November 1, 2013

ADDRESSING A SIGNIFICANT PROBLEM

SB141 represents a bold, new, innovative approach
to healthcare …
• Thousands of hours of engagement by national and
international thought leaders
• Investment into clinical research, original thought
leadership, data and analytics, actuarial reports, and peerreview studies
• Gaining nationwide attention as policy makers look for an
answer to out-of-control healthcare costs
• PCS solution saves lives, advances patient safety, decreases the
cost of healthcare, saves taxpayers, physicians and families
money and fairly and appropriate compensates legitimately
injured patients
2655 Northwinds Parkway • Alpharetta, GA 30009 • 877 248 1689 • www.patientsforfaircompensation.org
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THOUGHTFUL APPROACH

SB141 represents a bold, new, innovative approach
to healthcare …
• Based on scientific research, data analysis, medical experts and
actuarial studies
• Working with specialty and professional societies to create the
best bill
• Will work with state and national societies to replicate and pass
on lessons learned …

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WE’RE SOUTHERNS …

We like our college football …

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CURRENT TORT SYSTEM BROKEN

 Promotes Defensive Medicine
• GALLUP - 26% of overall healthcare costs
• Cost up to $650 Billion to US citizens
•

$14 billion annually to Citizens of Georgia

 Prevents Access to Justice
• Less than 20% of injured patients receive compensation
• Less than 1% receive Jury Award

 Hurdle for Patient Safety
• Unable to significantly improve under a “Blame & Shame” system…
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REDUCES BOTH LITIGATION COSTS AND
COST OF DEFENSIVE MEDICINE

Traditional tort
reform only
reduces the cost
of litigation

Patients’
Compensation
System

COST OF
LITIGATION

$31 Billion **
per year

Physicians in states with
traditional tort reform
practice same amount of
defensive medicine as
other states…
Source:
“A Costly Defense” published
by Jackson Healthcare
September 21, 2011

02/25/13

COST OF
DEFENSIVE MEDICINE

$650 Billion
per year

** Source: BioScience Valuations report
July 19, 2012

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PHYSICIANS PRACTICING DEFENSIVE MEDICINE (%)

82%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

0%
U.S.

Canada

0%
U.K.

0%

0%
Sweden

New
Zealand

U.S. physicians are only ones personally
financially liable for malpractice; and the
only ones practicing defensive medicine.

© Copyright 2013

Source:
Pacific Research Survey
June 24, 2011

8

WHY DO PHYSICIANS PRACTICE DEFENSIVE MEDICINE?

 Avoid personal financial exposure
from “jackpot justice” awards from
non-peers
 Physicians abhor defending against
lawsuits

Source:
“A Costly Defense”
published by Jackson Healthcare
September 21, 2011

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WHAT HAVE GEORGIA PHYSICIANS TOLD US?

 82% of Georgia physicians practice defensive medicine
 74% of Georgia physicians believe that defensive
medicine negatively impacts patient care

 95% of Georgia physicians support PCS Proposal
 96% Georgia physicians agree that a PCS solution would
reduce healthcare costs
Source:
“The Practice of Defensive Medicine”
Oppenheim Research
January 12, 2012
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DEFENSIVE MEDICINE IS REAL

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DEFENSIVE MEDICINE IS COSTLY

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DEFENSIVE MEDICINE IS PERVASIVE

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DEFENSIVE MEDICINE HURTS EVERYONE

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DEFENSIVE MEDICINE IS REAL

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BUSINESS LEADERS ENGAGED

Atlanta Business Chronicle, 10/21/2013
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WHY DEFENSIVE MEDICINE HARMS PATIENTS?

 Unnecessary tests & procedures

 “High risk” patients denied care
• Sometimes referred to as reverse defensive medicine

 Physicians cannot afford to admit mistakes

 Increased overall cost of healthcare
• Both health plan and out-of-pocket expenses …

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PATIENTS LOSE IN CURRENT LITIGATION SYSTEM

› Drives wedge between patient / physician
› Denies access to justice
› <5% of filed cases go to jury
› Patients receive <50% of awards
on legal & administrative costs

› 5 – 7 year process
› Stress of litigation…
Source:
PIAA, 2011 Report
Towers Watson Study, 2011
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CURRENT SYSTEM IN CRISIS :: ACCESS TO JUSTICE

Summary of Findings:
 Attorneys require $500,000 of economic damages to
take case
 Denies any “Access” to anyone that is on
Medicaid, Medicare, Out of Job, elderly, poor, young
people
 80% of all legitimate medical injuries fall UNDER
$500,000
Source:
JUSTICE IN CRISIS: Victim Access to
American Medical Liability System, 2013
Professor Joanna Shepherd Bailey, Ph.D.
Emory University School of Law

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THE SOLUTION

Replace Tort System with an
Administrative Compensation System:

Patients’ Compensation System

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HOW DOES IT WORK?
Patient Advocate
1

2

6

Quality
Improvement
Department

Medical Review
Department

3

5

Independent
Medical
Review Panel

Administrative
Law Judge

4

Compensation Department
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PATIENT ADVOCATE
1

1. Patient Advocate
› Helps patient navigate
through the system…

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MEDICAL REVIEW DEPARTMENT

2

2. Medical Review
Department
› Headed by CMO – Physician
› Gathers all pertinent medical
records

› Interviews all relevant parties
› Makes prima facie determination
of medical injury

› Appoints expert panel…

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INDEPENDENT MEDICAL REVIEW PANEL

3. Independent Medical
Review Panel
› Pre-approved physicians and
other medical experts

› 3 physicians – if only a physician
3

is involved

› 3 physicians plus 2 other experts
if system is involved

› All identifiers of patient and
providers are redacted

› RESULT: Rules claim as a
“Medical Injury” – “Yes” vs. “No”

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COMPENSATION DEPARTMENT

4. Compensation
Department
› Total compensation may not
exceed total malpractice costs
for 2013

› Creates compensation
schedule for each type of
injury & severity

› Awards compensation if panel
says medical injury has
occurred…
4

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ADMINISTRATIVE LAW JUDGE

5. Administrative
Law Judge
› Ensures process is
applied in accordance to
the law
5

› Limited appeal of
process only…

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MORE EFFICIENT USE OF EXISTING FUNDS

Current System
20%
Injured Patients

17.5%

3-5 years

Malpractice
Costs

Patient Compensation System

100%
Injured
Patients

180 days

80%
Malpractice
Costs
Source: PIAA, 2011 Report
Towers Watson Study, 2011

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PATIENT BENEFITS

 All complaints are reviewed
 Faster payment of claims – months vs. years
 Reduces exposure to unnecessary tests
 Guaranteed funds for avoidable medical injury
 Increased patient safety
 Increases Access to Justice
 Injured patients are fairly compensated …

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PHYSICIAN BENEFITS

 Physicians will never be sued again … Ever
 No personal financial risk

 Does NOT assign blame
 Safe to admit mistakes
 Medical malpractice premiums will decrease …

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WHO IS THE OPPOSITION?

 Those who profit from the current system where

doctors, healthcare professionals and hospitals are sued
…
• Trial Attorneys

• Medical Malpractice Insurance Companies

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IMPACT ON MALPRACTICE COST

Average GA
Medical
Malpractice
Carrier –
Current Tort
Liability

Patient
Compensation
System
Alternative

Percentage
Change

Collected Premium

1.00

0.92

-8.1%

Paid to Patients

0.23

0.51

119.8%

Paid to Defense Attorneys

0.30

0.09

-68.9%

Administration Costs

0.17

0.17

0.0%

Insurance Company Profit

0.30

0.15

-50.0%

Patient Claims

2880

4796

66%

Patient Awards

864

1918

122%

Categories (Cents per Dollar)

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NO INCREASED COSTS

 Awards may not exceed the fiscal year 2013 aggregate
costs of medical malpractice as determined by an
independent actuary
 Significantly decreases defensive medicine
saving billions annually for Georgia families
 Medical malpractice rates decrease under
predictable PCS model
 Georgia taxpayers reap savings which is currently
being wasted on defensive medicine and med-mal
defensive attorneys

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NO INCREASED REPORTING
The bill specifically limits the power of the medical
review panel to determining avoidable harm.

 No Negligence / No Lawsuit
 No blame / No increased reporting
 Bill specifically prohibits reporting
 Shall provide Medical Board with information
upon request
 Public Safety Issue: May notify Medical Board of
“risk of harm to the public”

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IMPACT ON GEORGIA

Two Actuarial Studies :: AON and BioScience
Valuation
Peer review by David Frisvold (Assistant
Professor, Department of Economics, Emory
University) determined the following
 Significant decrease in medical malpractice
insurance rates & healthcare expenses

 Savings to State of Georgia

› $3.1 Billion
› $3.8 Billion
$6.9 Billion

Medicaid
State Employee Healthcare Costs
Total Savings in First 10 years

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SUMMARY…

 PCS is a Solution to Completely Replace the Current Tort System
•
•
•
•
•
•
•
•
•

No more medical malpractice lawsuits
Strong legal precedent

Slashes defensive medicine costs
Eliminates bad press
Increases access to justice
Enhances patient safety

More efficient use of existing funds
More patients receive more compensation
No Cost to Georgia Taxpayers …

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37

QUESTIONS?
Contact Information:
Wayne W. Oliver
Executive Director, Patients for Fair Compensation
E-mail: WOliver@PatientsForFairCompensation.org
Tel:

678-690-7970

Beach.oliver.aafp slc 2013

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