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Managing the costs of clinical negligence in trusts

The government needs to take a stronger and more integrated approach if it is to rein in the increasing cost of clinical negligence claims across the health and justice systems, according to the National Audit Office.

Over the last ten years, spending on the Clinical Negligence Scheme for Trusts has quadrupled from £0.4 billion in 2006-07 to £1.6 billion in 2016-17, while the number of successful clinical negligence claims where damages were awarded has more than doubled, from 2,800 to 7,300. The cost of clinical negligence claims is rising at a faster rate year-on-year, than NHS funding, adding to the financial pressures already faced by many trusts, which can have an impact on patients’ access to services and quality of care. In addition, trusts spending a higher proportion of their income on clinical negligence are significantly more likely to be in deficit. In 2015-16, for example, all 14 trusts which spent 4% or more of their income on clinical negligence were in deficit.

The increasing number of claims accounted for 45% of the overall increase in costs, while rising payments for damages and claimant legal costs accounted for 33% and 21% respectively. The fastest percentage rise was in claimant legal costs, which has risen from £77 million to £487 million over the same time period. This is mainly due to an increase in both the number of low- and medium-value claims of less than £250,000 and their average cost. In 2016-17, the claimant’s legal costs exceeded the damages awarded in 61% of claims settled.

According to the NAO, the Department of Health and NHS Resolution’s proposed actions to contain the rising cost of clinical negligence claims are unlikely to stop this growth. The Department of Health and NHS Resolution have taken action to contain the rising cost of clinical negligence claims. For example, NHS Resolution has reduced the average cost per claim of its claims operations. It also challenges excessive charges of claimants’ legal firms, saving £144 million in 2015-16 by challenging claimants’ legal costs.  A number of further schemes are proposed to contain the costs, however, even if successfully implemented, these will only save some £90 million a year by 2020-21. By contrast, the spending on the Clinical Negligence Scheme for Trusts is expected to double to £3.2 billion by 2020-21.

The government lacks a coherent cross-government strategy, underpinned by policy, to support measures to tackle the rising cost of clinical negligence. The Department and NHS Resolution, working with others including the Ministry of Justice, have identified many of the factors contributing to the rising costs of clinical negligence. But some of the biggest factors influencing costs fall within the remit of more than one government department or are largely outside the health system’s control. They include developments in the legal market and the increasing level of damages awarded for high-value claims.

“The cost of clinical negligence in trusts is significant and rising fast, placing increasing financial pressure on an already stretched system. NHS Resolution and the Department are proposing measures to tackle this, but the expected savings are small compared with the predicted rise in overall costs. At £60 billion, up from £51 billion last year, the provision for clinical negligence in trusts is one of the biggest liabilities in the government accounts, and one of the fastest growing. Fundamentally changing the biggest drivers of increasing cost will require significant activity in policy and legislation, areas beyond my scope.” 

Amyas Morse, head of the National Audit Office, 7 September 2017

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