Why are medical indemnity fees rising?

Why has the cost of medical indemnity for GPs increased so significantly and what can be done to address the issue?

The cost of medical indemnity has risen sharply in recent years (Picture: iStock)
The cost of medical indemnity has risen sharply in recent years (Picture: iStock)

Most GPs in England and Wales will have seen the cost of their medical indemnity rise in recent years. For some, these increases have been significant.

At this year’s LMCs conference, delegates warned that GPs were being forced out of the profession because they can no longer afford soaring medical indemnity costs. One LMC representative said a GP in his area had been quoted indemnity cover at a staggering £85,000 a year.

Out-of-hours care has been particularly hard hit. Dr Aqib Bhatti, clinical director at out-of-hours provider Derbyshire Health United, says his organisation now has difficulty recruiting GPs to work shifts as a direct result of rising indemnity fees.

‘Four or five years ago you couldn’t get a shift and now we have to contact clinicians to ask them to do extra work because the number of people working for us is going down,’ Dr Bhatti says. ‘GPs tell us that they no longer want to work for us because the indemnity costs are so prohibitive that it’s not worth their while.

‘I have a GP who paid £8,000 a year a few years ago, £10,000 the year after, £15,000 the year after and now they’re being asked to pay £29,380. That’s a 100% increase in one year. If you pay this over 10 months that means you are being asked for £3,000 a month for your indemnity. That’s literally half of what you might be earning.’

Dr Bhatti says this is also affecting areas piloting new ways of working and seven-day opening. ‘The cost of medical indemnity is a big sticking point that will stop some GPs getting involved,’ he says.

Why are fees rising?

All of the indemnity providers have increased the cost of subscriptions or payments for GPs in the past few years – although GPs in Scotland will have seen much smaller rises, or even no rise at all. The reason for the increase, say the MDOs, is the steep rise in the cost of clinical negligence claims.

‘The amount of claims is rising in terms of number and what each claim is costing,’ explains Dr Michael Devlin, the MDU’s head of professional services and liaison.

The medical defence organisations (MDOs) admit that GPs working a significant number of out-of-hours shifts will have seen their costs rise most sharply. All say that ‘some’ out-of-hours work would be covered by a GP’s basic subscription, but more than one or two sessions a week would usually result in a fee increase. ‘This is because we have seen a significant increase in claims against GPs working out of hours,’ says Dr Devlin.

The situation in Scotland is different, and always has been. ‘There are a substantially lower number of claims and these are generally settled at a lower cost,’ says Chris Kenny, chief executive of the MDDUS. This is in part because Scotland has a different legal system, but also because the NHS itself is different. As a result, GPs in Scotland pay less for indemnity.

Clinical negligence claims

The figures involved in clinical negligence claims are huge. The NHS Litigation Authority, which indemnifies hospitals and other organisations in England and Wales, revealed in its annual report in July 2014 that it had paid out £1bn that year in claims. But, the total amount it had set aside for clinical negligence claims for the year was almost £26bn.

‘Claims inflation is running at 10% each year, so this amount will double every seven years,’ says Dr Devlin. ‘By 2021, the NHS will be facing liabilities of £50bn.’

These figures relate to the hospital sector, but GPs have not escaped the trend of rising claims.

‘A GP can expect to be sued about twice in an average 35-year career,’ says John Tiernan, MPS executive director of member engagement. ‘Over the last seven years our own figures have shown that the risk of a GP in England and Wales being sued has doubled.’

This is not because standards of clinical practice have fallen. If anything, says Dr Tiernan, medicine is performing at the highest level it ever has. But rising patient expectation, greater complexity of care in general practice, an increase in the number of GP consultations and the fact that patients are now more likely to sue all contribute to the rise in claims.

Smaller claims, which might result in damages in the tens of thousands, make up the bulk of claims against GPs. But GPs can also face very large claims, for example in a case of missed meningitis in a child, where there have been settlements of £5m or £6m.

If a claim is settled, the GP’s indemnity cover also pays the legal costs of the claimant and these can be substantial, in some cases outstripping the compensation payment itself.

The indemnity providers take into account where a GP practises, how many sessions they work and the type of work that they do when determining the rates GPs pay.

The three MDOs are not-for-profit, membership organisations. As such, they say the increase in subscription fees is to ensure they have sufficient funds to cover the cost of any claims against members. ‘There’s no one taking any profit out of this,' says Mr Tiernan.

Crown indemnity

So what can be done to halt the rise in fees or reduce the financial burden that falls on GPs? Dr Bhatti is so concerned about the issue that he brought it to the attention of NHS chief executive Simon Stevens at the NHS Confederation’s conference in June. Mr Stevens publicly pledged to look at the situation.

Dr Bhatti believes the solution lies in extending crown indemnity to cover GPs. ‘This would ensure that more GPs would potentially do out-of-hours shifts,’ he says. ‘Many GPs would like to supplement their income, but they don’t want to do it if there’s hardly any money to be made because of the cost of their indemnity.’

But many GPs believe crown indemnity would be a disaster. ‘Crown indemnity only works because the NHS trusts pay into the NHS Litigation Authority’s indemnity scheme, if it was extended to GPs who would pay for it?’ asks Dr John Canning, chairman of the BMA professional fees committee and a member of the GPC.

‘If practices had to pay it would be a huge hit. Or if it was paid for by the NHS, a certain element of our fees and allowances would be top sliced to cover some of the cost.’

Dr Canning also points out that crown indemnity would not cover GPs for GMC hearings or any non-NHS work, such as insurance reports or private medicals, so they would need separate indemnity arrangements anyway.

He believes the answer is some form of direct reimbursement, which could work like rent reimbursement. ‘It wouldn’t be for 100% of the cost of indemnity, because there is a percentage that doesn’t relate to NHS work, but a system like this would help,’ he says.

Cutting the cost of claims

The MDOs believe the solution lies with tackling the problem at source – the rising cost of clinical negligence claims.

The MDU is campaigning for legal changes to bring damages payments under control. The organisation wants a reform of personal injury law, including a repeal of a 1948 law which means compensation must be calculated to pay for private, rather than NHS, care. It also wants caps on damages awarded for future care and loss of earnings payments capped at three times the average UK salary.

The MPS and MDDUS both believe there should be a fixed cost regime for small value claims to prevent huge legal bills from claimant lawyers. Like the MDU, the MDDUS says compensation payments should take account of NHS and statutory services.

The MPS also says there should be a limitation period on bringing claims and wants a limit on the number of claimant expert reports to support a case and a cap on expert witness fees.

The government ihas recently proposed a £100,000 cap on legal fees involved in clinical negligence cases. While welcome, this will only have a small impact on the overall cost of claims and with out-of-hours care facing imminent crisis it is clear there needs to be significant change.

‘I’m extremely worried about what the future holds,’ Dr Bhatti says. ‘Without change, the current model of out-of-hours care will fail.’

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