Poor quality NHS hospitals cross-subsidised by the best – will this change with the new NHSLA approach?

UK News:

According to the Sunday Telegraph  nine of the 14 hospital trusts investigated as “outliers” in terms of high mortality have cost the NHS Litigation Authority £291m over the last 5 years while only paying £203m into the scheme. While the top 10 performing trusts paid in £500m into the scheme and cost £311m in settlements.

The NHS Litigation Authority (NHSLA) scheme is essentially a pooled funds insurance scheme where participating NHS trusts pay an annual “premium” related to their size, complexity and “risk”. A key principle of a pooled funds approach (such as car insurance) is that it smooths out over time the lumpy arrival of claims – not that the prudent and careful pay for the claims of the risk junkies! Premiums are typically based on a mixture of risk factors (e.g. age) and track record (no claims discounts).

The NHSLA scheme assesses risk factors by looking at the size of the organisation and the potential exposure to claims of the services it offers (maternity is a high exposure due to the size of claims). Until this year “risk” was evaluated by assessing the compliance of the trust with risk management standards. This approach is now being abandoned to be replaced with an “outcomes focused” approach based on helping trusts to learn from safety failures. The rational is that having risk management processes in place does not necessarily equate to a safe operation and compliance can be a crippling overhead – the NHSLA should be congratulated on belatedly resisting the lobbying of the safety industry and for anticipating the recommendations of the Berwick and Keogh reports.

It is not clear how NHSLA “premiums” will be calculated from here on – presumably increasingly related to track record over time rather than the (now discontinued) risk assessment regime? But let us hope that in future trusts providing high quality care are no longer subsidising the settlements incurred by trusts that are outliers providing poor quality care.