An interesting recent development with the potential to increase the damages for which negligent health professionals (and so their medical indemnity insurers and medical defence organisations) will be liable, is the apparently growing trend by our WA public hospitals of classifying patients as “compensable.” This then permits (or at least it is claimed to permit) the hospital/health department to charge commercial rates for the provision of its medical services.
There is considerable mystery as to how the relevant rates for services are determined. An intriguing question is whether they involve some element of “profit” over and above the actual cost to the hospital for the provision of the relevant service. This is opaque when it should be transparent.
A recent example involving a dental negligence case in which treatment costs included in the claim related to such care were claimed by the hospital to exceed $80,000. My rough guess is that had the relevant services been provided through the public system and so paid for by Medicare, such costs may have been $5-$10,000 only. By this measure, the medical defence organisation responsible for the relevant dentist, faced a liability ‘increased’ by $70,000. This roughly doubled the value of the claim.
As noted, this has the potential to increase the costs of claims for insurers/MDO’s in this space. In serious-injury (eg birth injury) claims, in which substantial future treatment is likely, this may be a very significant increase indeed.
Further, one possible consequence of this is that if the negligent party is in fact a public hospital, the hospital may “benefit” financially from their lack of care through their capacity to charge commercial rates for the provision of the medical treatment only required because of their initial negligence. This seems wrong on many levels.