Clinical risk in healthcare: the real cost is not what you see in the budget
It is time for structures, regions, institutions, actuaries and insurers to build a common language so as to make resources more efficient for the benefit of the whole system
by Delia Roselli *
How much does clinical risk really cost an Italian healthcare facility? The question seems simple but the answer, until recently, was almost always the same: 'it depends'. It depends on the year, the region, the number of open litigations, the sensitivity of the CFO. With the implementing decree of the Gelli Law (Ministerial Decree 232/2023), this answer evolves. Each healthcare company is now called upon to justify its choice of cover with numbers and actuarial models: full insurance, self-insurance, mixed solution. A challenge that concerns the entire ecosystem: hospitals, regions, insurers.
The conference organised a few days ago by the Università Cattolica and AmTrust Assicurazioni put legal experts, clinicians, actuaries, CFOs and insurers around the same table for the first time. A valuable dialogue, because clinical risk is one of those topics where each actor only looks at his or her own piece of the table and the sum of the pieces never gives the real picture.
Numbers in the field
The figures presented by Professor Nino Savelli, Professor of Risk Theory at the Catholic University, help to frame the scope of the issue. On a typical 22,000-bed region, the expected annual cost of health liability claims is around EUR 294 million. This is the 'average' value, the one one would use to construct a budget. But the average budget only tells half the story: simulating 100,000 possible scenarios, in the worst 5% of cases the cost rises to 381 million - almost 90 million more, a 30% increase over the expected. In the extreme, albeit very unlikely scenarios, it rises to 541 million. This means that a healthcare facility that only plans on the average value has a one in two chance of overspending, and to be reasonably covered it must be able to count on an additional reserve that many budgets do not yet provide for.
We need a cultural change of pace
This is the point on which the new decree calls for a cultural shift in the sector. It is no longer enough to decide, in a binary perspective, insurance or self-insurance: the choice must result from a reasoned resolution of top management, supported by quantitative analyses. It is a posture that also protects the decision-maker, because it provides a documented technical basis for assessments of administrative liability, and makes it possible to better calibrate allocations to Provisions for Risks and Claims Reserve Funds: balance sheet items whose effects emerge over time, when health disputes, which are notoriously 'slow', reach closure. An illustrative figure: in medical malpractice, only 6% of the final cost of a claim generation has been paid after one year. After ten years, this rises to 76%. If we compare this with motor liability, we find that after one year 35-40% has already been paid.
It is a sector, therefore, where today's decisions weigh on tomorrow's financial statements, even in fifteen or twenty years' time, since the exponential growth of the claims reserve exposes the healthcare facility to a significant risk that the claims reserve set aside may be insufficient due to unfavourable trends in the phenomena implicit in the valuations (e.g. claims inflation, changes in case law or in the legislation on the valuation of personal injuries). It is no coincidence that the statutory auditor's certifications, also introduced by the new legislation, for these items will be able to use actuarial control methods where size permits.
