Indemnity: Rising indemnity costs are a threat to general practice

Rising indemnity costs must be tackled or the NHS risks losing many talented GPs, argues Dr Anu Patel.

The Lord Chancellor, under the Damages Act 1996, recently reduced the discount rate used to calculate compensation awards for serious personal injuries.

This change has huge ramifications for us in healthcare. The Guardian estimates that the increase in pay out of clinical negligence claims could be £1bn. Already submerged in an indemnity crisis, this recent change places additional pressure on costs for us GPs and practices.

Health minister David Mowatt has suggested that GPs will in future be protected from rising indemnity costs, including the impact of changes to the discount rate, by receiving extra funding.

But will this statement be followed by a robust and immediately actionable plan? The indemnity crisis, or rather fire, has been burning for a while and not received a robust solution to date.

Indemnity crisis

Is the only solution to simply continue to fund or supplement the increased indemnity costs when the cost of claims is projected to double approximately every six years?

The NHS Litigation Authority (NHSLA) currently pays out £1.5bn a year for clinical negligence claims.1 Primary care is not covered by NHSLA and it is not clear how much of the projected £1bn extra costs due to the change in the discounted rate will fall in primary care territory.

But, does it matter if you pay indemnity yourself as GPs do or whether your employer pays for you as in hospitals, or, indeed, whether NHS England will pay for any extra costs? Either way, providing supplements for indemnity fees only provides short-term relief and falls short of addressing the core issue. In a cash-strapped system, we cannot afford to throw money onto a fire.

Life is full of risk and we try to manage such as best as we can. When it comes to the NHS, risk management should be effectively and efficiently covered under the clinical governance umbrella.

Can we honestly say that risk management is a continual process that is ingrained in our culture and tackled in a unified and meaningful manner across all stakeholders? Perhaps not to the scale and speed that is required to ensure delivery of care which is safe and with optimal outcomes - thus reducing risk and reducing claims paid out.

Desperate need for action

The indemnity crisis is now in desperate need of expedient action. Some believe the answer may be found in multispecialty community providers (MCPs), where GP indemnity costs are covered by the corporate entity.

I am not sure this type of model provides a full and robust solution because it will not encapsulate all GPs, especially those who value autonomy, GP locums or those have portfolio careers. Moreover, shifting costs to providers doesn’t put out the fire.

The white elephant in the room is the required legislative changes that can instantly reduce the costs of claims.

We need implementation of tort law (capping legal fee amounts per case) and capping of claims with respect to the amount paid per condition, whilst also delineating a reasonable time period for reporting a claim after the date of the incident.

America and Scotland have made some headway here. Our NHS (excluding Scotland) has an open door for the legal industry and without legislative reform the fire will continue to rage in an NHS that is struggling to cope.

If we don’t take steps to address this it will be hard to prevent GPs from leaving for a better life abroad or away from clinical practice to other industries. The priority is much-needed legislative change and tackling the risk management to do list.

These legislative changes need to be expediently driven by central NHS organisations, defence organisations, the BMA, the RCGP and, ultimately, the government. Time to start putting out the fire before it engulfs us all.   

  • Dr Anu Patel is a GP in London and founder of indemnity comparison tool indemi

Reference
1. NHS Litigation Authority Report and Accounts 2014/15

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