As Irish medical staff operate in an increasingly litigious arena, hospitals must cut the economic and human cost of risks, writes Gabrielle Monaghan

The often-berated Irish healthcare sector now has the leading risk-management practices in Europe, according to a top executive at Marsh, the world's biggest risk and insurance services firm.

While Irish hospitals have one of the highest number of claims against them in Europe, the introduction of a Marsh IT system that tracks clinical incidents and near-misses in hospitals has given the sector an edge over its European peers, said Rob Wendin, the US company's European healthcare practice leader.

Mr Wendin will address more than 500 healthcare executives on how to reduce the cost of risk at the European Association of Hospital Managers Congress.

The conference, which will be held in Dublin for the first time in the event's 21-year history, will deal with the key challenges facing healthcare managers.

Risk management is of growing importance in the global healthcare sector, as increasing litigation against hospitals and clinics boosts the cost of medical malpractice insurance.

Few underwriters are willing to take on the high losses that are seen in hospitals, says Mr Wendin. "Many hospitals in Ireland kept seeing their insurance premiums going up, with no relief in sight. Marsh said Ireland should take control of the cost of risk before insurance costs got out of control."

Marsh Ireland, which employs more than 300 people, participated in the creation of the Clinical Indemnity Scheme (CIS) in 2002, which now covers more than 68,000 front-line medical staff at 87 hospitals, community care services and facilities that care for people with intellectual or physical impairments.

The CIS provides clinical indemnity based on enterprise liability - this means the hospital or clinic where the alleged negligence took place takes liability for all employees.

The CIS is also building a national database of adverse incidents based on Marsh's Stars system. Stars aims to cut risk insurance costs and improve patient care by recording medical malpractice events and claims as they occur. The data is analysed to measure the nature and frequency of incidents and claims, enabling healthcare managers to identify areas of concern and take action to prevent such incidents.

The Department of Health announced the introduction of the system in February 2004.

"We have this employed in some parts of the UK, and hospitals groups in other countries in Europe are looking at it too," said Mr Wendin. "Stars is the largest incident-tracking analysis system in the US. Ireland, like the US, is highly litigious and needed some intervention."

In April, the State Claims Agency said it had recorded 1,300 claims for alleged medical negligence, leaving the State facing a bill of more than €160 million. The largest health-related settlement in Ireland was made in 2002, when a young man with cerebral palsy received a €4.7 million settlement of his High Court action against Dublin's Rotunda Hospital.

The average cost to a medium-sized hospital in Europe of a preventable adverse drug event, such as administering the wrong drug or dose, is €1 million, according to Mr Wendin, citing a Marsh study.

"There are many risk-management solutions available. In the case of the adverse drug event, one solution is the Physician Order Entry System, which will disallow a physician from ordering the wrong drug," he said.

However, developing the right culture in a hospital can go a long way in reducing risk.

"Statistics suggest that 95 per cent of hospital error is the result of systemic errors and not the error of an individual, which is why it is so important to focus on a systemic approach rather than blaming people," he said.

"Nurses, doctors and management have to see this as a team game, and there has to be a realisation that reporting adverse events is a good thing. Most adverse events go unreported, mostly because people don't want to get fired, or because of egos or ignorance."

Mr Wendin has worked on healthcare risk-management strategies with governments in Ireland, the US, Spain and France, as well as other countries.

In Britain alone, where he is based, his clients account for about 70 per cent of the entire private healthcare market.

Marsh itself is a subsidiary of Marsh & McLennan Companies, Inc (MMC), a global professional-services firm that employs about 55,000 people and generates annual revenue of around $12 billion (€9.3 billion).

The hospital managers' conference, sponsored by Marsh, will be held in Trinity College over three days, from August 30th.