Transparency and apology after medical errors lowers financial impact on hospitals, study finds

When hospitals proactively communicate to take responsibility after a medical error, patients feel better and hospitals may have fewer claims and lower defense costs, according to a new analysis published in Health Affairs.

“The bottom line is that doing the right thing is right in every way — for the patients, the providers and the hospital,” said study co-author Dr. Evan Benjamin, chief medical officer at Ariadne Labs and a leader in the movement to spread communication and conflict resolution programs.

Benjamin is the former co-chair of the Massachusetts Alliance for Communication and Resolution following Medical Injury, founded in 2012 to bring together patient advocacy groups, health care facilities and their insurers and statewide provider organizations committed to communication and resolution in cases of avoidable medical harm.

“This analysis clears up any lingering concern about the financial risks of communication and resolution,” Benjamin said. “Transparency, communication, apology and proactive compensation should be the policy of every hospital in the United States.”

To be more transparent and to promote communication with patients after medical injuries, many hospitals have implemented communication-and-resolution programs (CRP). Through these programs, hospitals openly communicate with patients after adverse events, investigating specifics, providing explanations, and, when necessary, taking responsibility and proactively offering compensation. Medical centers that have adopted this program believe it will help to improve patient safety and that it is the hospital’s ethical obligation to disclose medical errors. However, some medical centers are wary that willingly admitting errors could result in increased liability costs. Continuing uncertainty about this issue has continued to be a barrier to the widespread adoption of this program.

For the new study, a team of researchers at Brigham and Women’s Hospital, Baystate Medical Center, Beth Israel Deaconess Medical Center, Stanford University, and Ariadne Labs, evaluated the liability effects of these communication-and-resolution programs at four Massachusetts hospitals. Their results, published today in a special, “patient safety” edition of Health Affairs, found that these programs were associated with improved trends in the rate of new claims and legal defense costs at some of the sites. And they found that the approach did not expand liability risk at any of the sites. The program allowed these organizations to fulfill their ethical obligations to disclose adverse events and promote patient safety without encountering negative liability consequences.

“The CRP approach allows hospitals to ‘do the right thing’ — be honest about errors, apologize, and compensate patients who are injured by negligence – without adverse financial consequences,” said Allen Kachalia, MD, JD, chief quality officer at Brigham and Women’s Hospital and first author on the paper.

A communication-and-resolution program known as CARe (Communication, Apology, and Resolution) was implemented at BMC and BIDMC, and at two of each center’s community hospitals (Baystate Franklin Medical Center, Baystate Mary Lane Hospital, Beth Israel Deaconess Hospital–Milton, and Beth Israel Deaconess Hospital–Needham). The team examined the effect of CARe’s malpractice claims volume, compensation and legal defense costs, and the time it took to find resolutions. They compared trends in the six years before CARe and then a few years after implementation at each institution. They calculated several quarterly rates for each hospital: new claims, new claims receiving compensation, compensation cost, defense cost, total liability cost, and average compensation cost. A claim was defined as any written request for patient compensation that was brought to the liability insurer, whether initiated by the patient, family, or hospital. This is the first study of its kind that involves two centers in one state and includes comparison groups.

After CARe implementation, the team found there was a significant decrease in the rate of new claims at the implementing community hospitals and academic medical centers, a change that was not seen at hospitals that did not implement CARe. Both academic medical centers experienced a significant decrease for defense costs after CARe implementation. Additionally, there were no significant changes in total liability costs observed nor in the average compensation amount per paid claim at any of the hospitals.

“Our hope is that with these findings, more hospitals will have greater confidence that communicating openly with patients around errors and injury is not likely to create greater liability risk,” said Kachalia.