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Treasury must give GPs respite from spiralling indemnity costs

MDU urges Treasury to commit to radical intervention as NHS compensation costs rocket

Louise Prime

Thursday, 22 September 2016

The Government must take urgent action to provide respite for GPs from spiralling indemnity costs and to address the clinical negligence crisis facing the NHS, the Medical Defence Union has insisted. It urged the Treasury to commit to a “radical intervention” to curb rocketing compensation costs.

The MDU pointed out that claims inflation has been rising 10% year on year – faster than either wage, house or retail price inflation – and that damages awards in England are higher than in most countries in the world, including many US states. It reported that the NHS litigation authorities’ liabilities for known and future claims were estimated at £56.4 billion on 31 March 2016, equivalent to £2,217 per English taxpayer. And, it added, its own experience shows that claims costs double every seven years, so a claim that costs £9 million today is likely cost over £18 million in 2023.

In its submission ahead of the budget and autumn statement, the MDU said: “The Treasury should take urgent action to address the clinical negligence crisis to boost funds available to the NHS and to provide respite for GPs from indemnity costs.” It called on the Treasury should commit to a “radical intervention” to stop “rocketing compensation costs”.

The MDU said that a “toxic claims climate” is causing GPs’ indemnity subscriptions to spiral faster than wage or house price inflation, which is frustrating GPs as they have no control over, or responsibility for, the rising costs of claims. It has asked the Treasury to prioritise a number of legal reforms that would allow negligently damaged patients still to be properly cared for, but also result in the NHS and local authorities gaining additional billions of pounds to spend on all patients. It advocates, among other proposals:

  • repeal of an “outdated” 1948 law (S2(4) of the Law Reform (Personal Injuries) Act) that means compensation must be calculated on the basis of private rather than NHS care
  • defendants such as medical defence organisations should be able to buy defined local authority and NHS care packages that meet patients’ reasonable needs – currently these must be funded privately.

The MDU is also campaigning for reform of how compensation awards are calculated; caps on the level of damages awarded for future care; and damages for loss of earnings to be capped at three times the national average salary per year.

MDU head of professional standards and liaison Dr Michael Devlin said: “The clinical negligence crisis is putting a strain on the NHS by diverting funds that should be used for all NHS patients to the independent sector. The toxic claims climate is also affecting GPs directly as their indemnity subscriptions are increasing at rates higher than wage or house inflation …

“We understand GPs’ frustration, as they are not responsible for the rising costs of claims and have no control over them. The Department of Health … has recognised that rising indemnity costs could ‘act as a break [sic] on willingness’ of GPs to join or remain in the profession or increase their workload, which is worrying.

“Rising claims costs will not go away and are only going to get much worse. Something must be done to relieve the pressure on GPs and the wider health service. The reforms we advocate would see patients compensated appropriately but in a fairer and more affordable way.”

NHS England has previously commented: “A key concern within general practice in recent years is the ongoing rise in the costs of indemnity. GPs have made clear that they feel they have been subject to unsustainable, above-inflation rises in the amount they must pay to buy indemnity against clinical negligence. Concerns have also been raised about the potential for rising indemnity in discouraging GPs from taking on certain work, like out-of-hours care.”

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