Overview of Madanes Medical Malpractice Operations
The Madanes Group
The Madanes Group, one of the largest insurance brokers in Israel, was founded in 1972 by Mr. Shuki Madanes who is the main share-holder in the company, together with Harel Insurance Co. Ltd. (25%) and Bank Igud (10%). Madanes specializes in professional liability insurance, particularly medical malpractice insurance. Madanes currently employs a multi-disciplined staff of 300 employees of which, 40 serve exclusively the medical malpractice insurance line.
Over the years, Madanes Group has acquired an international reputation for its invaluable assets in the domain of brokering reinsurance and insurance for professional liability. Furthermore, Madanes has the unique capabilities and know-how needed to assist in the formation of, training and the support of underwriting, claims handling as well as risk management activities.
Medical Malpractice in Israel - The Madanes Approach
Madanes has been the main provider of medical malpractice insurance in Israel since 1979. It was the exclusive representative of the MDU (Medical Defence Union) in Israel from 1979 to 1991. When the MDU withdrew from the market in 1991, Madanes replaced the MDU membership benefit with a comprehensive insurance program supported by Munich Re as the lead reinsurer until 2008 and as from 2008 with a top rated reinsurers' panel.
Madanes handles all policy administration, underwriting processes, risk management, claims handling claims data analyses, claims funds administration and reporting operations vis-a-vis insurers and reinsurers.
The insurance program includes integrated risk management services incorporated as a value-added component of the policy and a unique claims handling methodology, both developed by Madanes. These two elements are operated by a risk management subsidiary of Madanes, the Medical Risk Management Company (“MRM”), and a claims handling subsidiary, Medical Consultants International (“MCI”), that work as an integrated unit.
Madanes presently has a market share of around 70% of the commercial market in Israel. Its portfolio includes Health Funds (HMO’s), hospitals, professional associations, physicians, dentists, paramedical practitioners and all related healthcare professions. Policies are underwritten on a group, semi-group and individual basis.
Madanes recognized already in the early 90ies that in order to enable a stable long-term Med-Mal insurance coverage, there was an urgent need to develop the necessary procedures and activities to assure that:
- The risk would be adequately rated and the necessary mechanisms would be in place to monitor the development of the risk over the years; and
- All the techniques relevant to reducing the risk would be utilized in the long run in order to control the risk.
Madanes formed MRM to develop and provide medical risk management services. MRM was appointed by the risk carriers to develop risk control programs for insureds. The mission of MRM is to:
- Develop tools to detect risks in clinical practice and procedures;
- Develop techniques to reduce the risks and their consequential costs;
- Improve patient's safety and the quality of care.
Operations of MRM are structured on widespread cooperation between its staff and insured healthcare providers. The preferred national model in Israeli medical institutions which was initiated by MRM, is an internal risk management unit in each hospital/medical institution, appointed by the insured to operate and oversee the institution’s risk management program. The RM unit is composed of a team of a doctor and a nurse, who either works with or reports directly to the management of the hospital. The reasoning behind the combined team is that it promotes interaction between the medical and nursing staffs which is crucial to running a successful risk management program. The RM units work in close cooperation and with the support of with MRM's team.
The philosophy underlying the operations of MRM is that reducing risks, improving patient's safety as well as healthcare quality by the provision of risk management services is for the mutual benefit of the patients, the insureds and the insurers.
The program developed by MRM is based upon the following elements:
- Reporting adverse events (occurrences that could be reasonably expected to give rise to a claim in the future) according to a lists of specific events to be reported as developed by MRM, and the subsequent assembling of the relevant medical data by the RM referent;
- Regular contacts between MRM’s risk manager and the RM referent on behalf of the insured for the purpose of transmitting information, detecting focal points of risk, and executing the program in order to proactively prevent risks on the basis of conclusions and recommendations drawn from analysis of adverse events;
- Maintenance of a computer database using proprietary software developed to support the MRM program which facilitates categorization and analysis of adverse events responding to needs of the specific insureds or on a global basis., The database allows for identification of “highly exposed” activities by patient demographics, providers demographics, code of event, medical discipline, result, procedure, etc.;
- Coordinated work with MCI, the claims handling unit, which enables an examination of each adverse event from two aspects: risk management and claims handling. The two systems are both supported by expert medical and legal consultants;
- Conducting a Risk Management Forum comprised of MRM risk managers, and prominent medical and legal experts specializing in medico-legal issues. The Forum discusses and analyzes adverse events to identify and evaluate “risk factors” and how they relate to existing procedures in the healthcare system. The purpose is to draw conclusions and formulates recommendations for interventions required to reduce the risk;
- Initiation of project task forces in areas detected as high-risk in order to formulate recommendations to devise measures that will reduce the risk of injury to patients and consequent claims;
- Provision of training in risk management and medico-legal issues to insureds and educational seminars and conferences including I-study to various sectors in the healthcare community;
- Publication of newsletters, statistics and educational literature on the subject of medical risk management which are distributed on a national basis or via the internet site of MRM;
- Performance of benchmarking, root causes analysis and related research in risk management.
MRM employees are multi-disciplined and include medical recorders, nurse risk managers with clinical experience in high-risk areas, medical consultants, legal consultants, aviation safety consultant and statisticians.
MCI is a Madanes subsidiary appointed by the risk carriers to handle medical malpractice claims in accordance with the terms and conditions of the policies. MCI receives processes, investigates, evaluates, assesses, arranges for proper legal defence, settles and pays out claims. MCI’s activity is closely intertwined with that of MRM.
MCI employs qualified lawyers and medical consultants whose professional role is to legally and medically evaluate the adverse events and claims reported by the insureds.
Due to the intensive efforts of MRM in assembling and processing information on adverse events, thereby promoting and advocating reports of such events by insureds, over 3,000 reports are received annually and they are evaluated on the basis of potential damage and potential for future claim.
MCI conducts a Claims Forum which is comprised of legal consultants as well as medical consultants who specialize in various medical disciplines. The Forum reviews and discusses cases of a more complicated nature from both the medical and legal aspects, with the purpose of assessing both the probability of an adverse event to become a court claim in the future as well as assessing the cost of a claim. The Forum also recommends in which instances it is advisable to reach a settlement thus avoiding undesirable legal proceedings.
In addition, MCI lawyers respond to daily queries from insureds pursuing legal advice in medico-legal matters. The number of such queries has been steadily growing since the inception of the program.
MCI lawyers also provide to insureds legal services and support which go beyond the standard legal defense provided in case of a malpractice civil claim for indemnity. These services consist of legal consultation and representation before investigative committees of the Ministry of Health, disciplinary proceedings, criminal proceedings and labor disputes.
MCI’s claims management structure is based on early reporting and assessing of adverse events by a combined team of lawyers and doctors that fosters and advances efficient claims handling. The system allows the insurer to make an informed decision, when there is liability, to propose an early settlement in order to save the additional costs entailed in prolonged litigation and avoid the risk of exaggerated judgments in favor of the claimants. In instances where there is a good defence, the claims are litigated in court by experienced reputable lawyers engaged by MCI.
To sum it up, MCI claims handling methodology is based on aggressive good faith negotiation with claimants and early settlement if and when warranted.
MCI operations include:
• Deciding issues of insurance cover and allocation of claims
• Handling demands and claims made against insureds
• Assisting insureds in responding to complaints and letters of demand
• Providing legal consultation and representation to insureds
• Operating a 24-hour on-line emergency assistance
• Ongoing legal advice in medico-legal issues
• Conducting settlement negotiations
• Appointing/supervising external lawyers to handle claims in court
• Managing the Claims Forum
• Setting and periodical updating of financial reserves (Quantum) in reported claims
• Reporting to risk carriers and obtain approvals of settlements.
Exporting the Know-How
Madanes' vision is that the know-how it has would be exported to other markets overseas. Madanes firmly believes that its accumulated experience is relevant not only for the Israeli territory, but also for other markets mainly the EEU countries.
Given the reputation that Madanes has abroad which is based on its accomplished results and know-how, Madanes was engaged as consultant on behalf of the World Medical Association (WMA) and by EURO-FDI (European Regional Organization – Federation Dentaire International), These two renowned organizations retained its services to develop a world-wide survey regarding the status of the health systems including related information, such as number of professionals, the legal status, medical malpractice issues, details of existing professional liability insurance, legal and public environment, risk management activities etc. in all countries, members of the organizations.
Recently, after couple of years of research in several EEU countries Madanes selected Poland as its target territory for expansion overseas. In August 2013 Madanes established a broker in Poland. The broker (Madanes Risk Management (MRM)) started cooperation with Willis Poland in marketing TPL (Med-Mal) insurance for hospitals combined with Medical Risk Management services.
Madanes employs a team of experts in insurance, law, medicine and nursing and is now in the process of qualifying them to provide risk management services in Polish Hospitals.