Feature / Collective protection

While the NHS appreciates the value of a risk-pooling approach to meeting the costs of clinical negligence claims, there have been calls for changes to current contribution arrangements. Tom Fothergill outlines the NHS Litigation Authority’s proposed response

Change is happening fast at the NHS Litigation Authority (NHSLA). We’re making important changes to the Clinical Negligence Scheme for Trusts (CNST), which provides indemnity cover for the NHS in England. It follows the release of an independent review by insurance broker Marsh, commissioned by the Department of Health, in January.

The review was tasked with finding out whether the NHSLA continued to offer value for money and its approach and functions remained fit for purpose for the new NHS. It concluded: ‘The NHS risk pooling scheme is a valid concept which is widely accepted and endorsed and its stewardship and administration under the NHSLA has been effective’.

NHSLA’s new chief executive, Catherine Dixon, arrived last April, shortly after the report’s publication. Along with me and other members of the senior management team, she began a whistlestop tour of trusts in England, meeting chief executives, finance directors and risk and claims managers to hear about their issues and concerns. At the last count we had met key stakeholders from 200 trusts.  

The results are already taking shape. We’ve embarked on a significant programme of change to deal with Marsh’s recommendations and to introduce other improvements trusts have told us they want.

Contribution setting

The first area of change is in contribution setting. The NHS will see the financial impacts of the planned changes in late 2012 when the NHSLA issues contribution letters for CNST for the 2013/14 financial year. The new approach will, in broad terms, address the key issues raised by directors of finance.

We want all members to see the value for money membership of the NHSLA schemes delivers for them by ensuring member payments in are closely aligned to payments

out over time. This will result in relative reductions in some members' contributions and relative increases for others that more accurately reflect risk over time and financially reward members with good claims histories. We will ensure realistic and sensible transition arrangements for members who have large volumes of claims while signposting the direction of future travel for all.

While making greater use of past claims experience will enable members to see the link to contributions, it is also important to remember that current and future activity and risk profile are vital, so we will retain an appropriate balance between the two factors in our revised contribution setting model.

A significant part of our discussions with members over the past six months has been about sharing their data with them, showing the value over time of risk pooling and highlighting the gaps that have accumulated for some trusts – sometimes in their favour, sometimes in ours. We’ve found that hard-pressed chief executives and directors of finance have welcomed the chance to see how well the books balance in their trust’s favour or against, and in some cases it has highlighted understandable dissatisfaction with the current arrangements.

The approach has enabled us to identify and develop a new, more appropriate methodology for setting contributions from 2013/14 that will, for those trusts with gaps between monies in and out, help them to smooth costs over time. We will be working with scheme members to explain our revised approach.

And we will also be working closely with the Department to minimise the impact of change for trusts that in the past have paid less into CNST than has been paid out on their behalf. We’re delighted to have had so many useful discussions with trusts about CNST as it has enabled us to design a new approach that we believe addresses most of their key concerns. 

In particular, our members appreciate the value of risk pooling and support the principle that while payments in and out may not balance in a single year, they should broadly balance over time. This is a key benefit of a pay-as-you go risk pool.

We expect to use trust 'activity' data (published HES data) alongside workforce information to ensure the contribution formula looks at the risk profile of the member and appropriately takes account of the ratio of staff to activity – preventing the risk that we reward lower staffing levels. Through this means, we hope to address a key concern of members who understandably feel higher staff numbers to activity ratios must represent a safer environment for patients and thus present a lower risk of claims.

 We also expect to take greater account of members’ claims experience, through a more appropriate weighting of their recent history of both resolved and unresolved claims. Previous claims experience weightings had been set at a relatively low level, so its impact on contributions was felt by only a few members. Giving greater weight to this will enable those with a positive claims record to see benefits, while members whose claims history hasn’t been as positive will, we hope, recognise the fairness of being asked to contribute more to the risk pool to reflect that experience.

A further driver for change is the growing importance of the independent sector in NHS care. As the NHS commissions more treatment and care provided by doctors and nurses in non-NHS settings such as private clinics, hospitals and community organisations, so the complexity of indemnifying NHS services against risk increases.

The NHSLA is working in partnership with the Department, which will be seeking the views of ministers, to consider changes to the CNST scheme structure. These changes would allow independent sector providers to become members of the scheme with effect from

April 2013. We are also able from 1 October to offer indemnity arrangements to both the NHS Commissioning Board and clinical commissioning groups.

Risk management

In addition to placing greater emphasis on experience and getting more sophisticated with risk profiling, the NHSLA is also reviewing its risk management standards and the way members are assessed. We are working towards ensuring an outcome-focused approach to risk with a view to reducing harm to patients and thereby reducing the volume and value of CNST claims.

During 2013/14 formal assessments of

trusts’ risk management standards will only take place for members who are either due a level 2 or 3 assessment of their maternity services or, alternatively, if a member requests an assessment.

This ‘mini moratorium’ on assessment will enable the NHSLA to complete consultations with members and other experts on ensuring we are looking at the right things and that any assessments we decide to do are proportionate and appropriate.

Importantly, it will also give us the chance

to discuss the plans with the Care Quality Commission and Monitor in order to try to avoid situations where several organisations

ask for the same information, sometimes in slightly different forms – a time-consuming duplication of effort for NHS staff. During the moratorium, members will not be financially disadvantaged, as existing discount arrangements will be honoured.

We hope to pilot any revised approach in

the next financial year. We aim to make it simpler and focused on aspects that are known to affect the outcomes and rate of claims. We are keen to ensure that innovations that improve outcomes are properly recognised. We want, for example, to work with members to identify and discuss changes to practice that they believe will improve patient safety and reduce the number of claims.

We also want to be able to work with them to monitor the results, so that, if successful, we can give them appropriate credit in their next CNST contribution.

Learning lessons

One of the most important ways the NHSLA plans to contribute to making the NHS better and safer for patients is through more comprehensive use of the information in our unique claims database.

This database covers approaching 17 years of claims since our creation in 1996 – it’s a massive store of information about events that have led patients to seek compensation and we are determined to put it to even better use.  

One way we will be doing this is through the launch of our new extranet for members early next year. The system will enable members – chief executives, finance directors, medical directors and risk and claims managers – to have secure online access to data about their trust’s claims history.

It will include easy-to-read dashboards of information, populated by key claims data held by NHSLA on a live basis. It will enable members to make real-time comparisons across service areas within their organisation, make comparisons with national trends and, in the longer-run, benchmark their performance against other NHS organisations with which they have agreed to share claims data.

The site will enable members to initiate discussion forums with NHS colleagues about risk management and it will give them access to case studies and educational material prepared to help improve risk management and clinical practice.

We have spent much of 2012/13 sharing our proposals and ideas for change and development with members and we will spend much of the coming financial year on delivery. We aim to play a more active role in patient safety while, critically, working hard to turn the tide on claims, and reduce claims costs.

NHSLA will be exhibiting at the HFMA annual conference in London in December and we will also lead a breakout seminar at that event. We look forward to seeing and hearing from our members there.

Tom Fothergill is director of finance at the NHS Litigation Authority