1

Financing Potential Malpractice Suit

Name

Institution

Course

Professor

Date
 2

Financing Potential Malpractice Suit

Internal memo
The risk financing issue includes potential malpractice suits in the chronic health care

facility. The cause of the risk is the noncompliance with the healthcare regulatory requirements.

The financing issue includes the patient's compensations for the injured patients due to

healthcare professional's negligence. Errors in treatment, diagnosis, health management, and

aftercare interventions contribute to negligence in the facility. The key performance indicators of

potential malpractice include patient satisfaction which determines health care quality. It impacts

the clinical outcomes and presents an effective indicator of identifying facility and health care

staff success (Lyu et al.,2013).

Adverse events and errors present a performance indicator of malpractice. The adverse

events include medical injury, while errors include mistakes. They result in patient harm while

receiving medical care leading to prolonged stay in a facility, disability, additional treatment, or

death (Hauck et al., 2012). The classification of errors includes latent and active errors. Latent

errors incorporate defects such as incorrect installation of medical equipment, poor design, and

faulty maintenance. Active errors occur at the frontline providers, which includes wrong

medication dosages. Adverse events and errors offer a basis for measuring malpractice liability.

Accountable care organization (ACO) presents healthcare professionals coordinated

groups accountable to third–party payers and patients regarding the cost, quality, and Medicare

overall care. ACO ensures the patients get the proper care at the appropriate time and evades

redundant services duplication and medical errors.ACO shares the achieved Medicare program

savings after succeeding in high-quality care delivery. The attainment of value-based outcomes

becomes effective by inspiring healthcare providers and hospitals to coordinate patient care

efficiency clinically. The providers of healthcare get financial or professional bonuses due to the
 3

effective delivery of quality clinical care. The basis of the ACO framework includes risk and

reward, where the facilities and providers agree on financial risk-sharing and, in return, acquires

the opportunity to get rewards upon achievement of cost goals and healthcare quality. It has legal

and ethical financial risk obligations.

The legal obligations include the healthcare provider to provide a full continuum of care

to a minimum of five thousand beneficiaries of Medicare. The beneficiaries must hold the

facility accountable for quality and cost of care. Stark law forbids referrals from physicians to

specific health services payable by Medicare. The physician or close family members must not

have a financial link with the referred facility except for exceptional circumstances. The facility

must have a sufficient number of primary care experts and satisfactory expert information

payments and beneficiary assignments.

Antitrust laws in ACO prohibit competitor collaborations, resulting in increased prices

and fewer consumer payers and consumers' choices (Iglehart, 2011). The facility must agree to

collaborate for three years and institute a plan to manage care through physicians and specialists.

The ACO's ethical financial risk obligations include protecting the health professionals related to

financial incentive design. Developing quality and cost-control improvement strategies that

support the existing health care provider's ethical obligations becomes essential. Resource

allocation present ethical obligations where it includes fair distribution of the shared savings.

Advancement of reasonable decision process exhibit ethical considerations, which includes

confirming that representatives of the board's beneficiaries correctly represent the ACOs patient

(DeCamp et al.,2014).

The ways of identifying the potential malpractice suits include incidence reports.

Incidence reports record patient complaints, medication errors, malfunctioning of a medical

 4

device, or patient or staff injury. It presents a formal report written by staff members, nurses, or

practitioners. The individual writing the incidence report focuses on the incident cause and all

the contributory elements (Wald & Shojania, 2001). Inclusion of all the underlying issues but not

the 'final error' becomes essential in the report. The elements include understaffing possibility,

poor performance, and design of systems, and insufficient skills levels. Risk financing

Management of potential malpractice suits includes malpractice insurance. It involves

purchasing insurance coverage that protects healthcare personnel against filed malpractice suits

(Mello, 2006).

The facility obtains insurance coverage through private insurers or medical risk retention

groups (RRGs). The two elements of malpractice insurance include the “occurrence” policy and

the “claims-made” policy. Occurrence policy includes a claim for an event that occurred during

the coverage period. A claims policy offers coverage in the period the event happened and when

filing the lawsuit. The risk financing management of the malpractice suits also includes

instituting robust policies and procedures. They mitigate malpractice suits by preventing a

problem from happening that could have led to lawsuits.

The procedures lessen the success of a possible lawsuit by demonstrating effective

following of policies and procedures. Updated policies lessen practice variability that may result

in patient harm and substandard care. Education and training to all healthcare professionals

significantly reduce malpractice suits. It creates high-quality care and impacts the staff with

skills that improve patient outcomes. The recommended best option of financing potential

malpractice suits in the facility includes defensive medicine. It entails overusing medical

resources to protect against malpractice claims. It leads to increased use of valuable medical

resources. Defensive medicine adds treatments, procedures, and tests to protect the healthcare
 5

provider from liability but not to further treatment or diagnosis of a patient (Hermer &

Brody,2010). The health care professionals who face a high probability of being sued uses

defensive medicine.

Another recommended best option includes incurring additional costs in the development

of interprofessional care groups. They should accomplish the patient’s needs in utilizing the

skills and manage care in the facility setting. The groups include physicians, medical and nurse

practitioners, behavioral health professionals, and health workers. The combined effort of the

professionals leads to the reduction of malpractice suits. The facility includes instituting health

information technology. It analyses, records, and shares the health data of the patient. The

facility institutes tools that increase communication and efficiency among the health practitioners

that reduce malpractice suits. The technology enhances the quality of care that promotes

guidelines adherence. It supports therapeutic and diagnostic decision-making, averts adverse

events, and offers clinical warnings and alerts.

 6

References

DeCamp, M., Farber, N. J., Torke, A. M., George, M., Berger, Z., Keirns, C. C., & Kaldjian, L.

C. (2014). Ethical challenges for accountable care organizations: a structured

review. Journal of general internal medicine, 29(10), 1392-1399.

Hauck, K., Zhao, X., & Jackson, T. (2012). Adverse event rates as measures of hospital

performance. Health Policy, 104(2), 146-154.

Hermer, L. D., & Brody, H. (2010). Defensive medicine, cost containment, and reform. Journal

of general internal medicine, 25(5), 470-473.

Iglehart, J. K. (2011). The ACO regulations—some answers, more questions. New England

Journal of Medicine, 364(17), e35.

Lyu, H., Wick, E. C., Housman, M., Freischlag, J. A., & Makary, M. A. (2013). Patient

satisfaction as a possible indicator of quality surgical care. JAMA Surgery, 148(4), 362-

367.

Wald, H., & Shojania, K. G. (2001). Incident reporting. Making health care safer: A critical

analysis of patient safety practices, 41.