With the General Election now past, the Government needs to act swiftly and decisively to protect GPs from its decision to reduce the personal injury discount rate - a decision which has substantially pushed up the cost of settling large clinical negligence claims.
In February, in what many feel was a shock decision, the Government announced a significant change to the way in which personal injury compensation payments are calculated.
The personal injury discount rate (PIDR) is the method used to calculate the required compensation payment for serious personal injury claims.
Previously set at 2.5%, the expectation was that the Government would drop the rate to between 1.5% and 1%. However, in a move that dismayed many, the discount rate was actually dropped to minus 0.75%. In addition to impacting motor insurance premiums, the rate decrease also has a consequential impact on the cost of indemnity for doctors, especially GPs.
Although the rate decrease may seem small, the effect of the decision is huge, as demonstrated in a case recently settled by East Lancashire Hospitals NHS Trust, who have almost tripled the amount of compensation they paid to a 10 year old girl left with cerebral palsy, from £3.8 million to £9.3 million1.
As a not-for-profit, membership organisation, our priority is always to act in members’ best interests. We have actively campaigned for support for GPs, and have been in detailed discussions with the Government for months, seeking to secure the best possible outcome.
Following our discussions, a pledge was made by the Government that they would ensure funding is made available to shield GPs from the additional costs. However, no details were given with regards to the amount of financial support that would be offered, nor the timescales in which this support would be made available.
We are determined that the Government delivers on this commitment, and are working hard on your behalf to ensure that they do. We have made it abundantly clear what impact this decision will have on GPs if the right level of support is not forthcoming, and have highlighted the fact that this decision comes at a time when the cost of clinical negligence is already at a worryingly high level.
We appreciate that members will have questions about this decision, and so in this article we address:
- what the PIDR is and why it matters
- what the impact of the decision will mean for you
- what we are doing to represent your interests.
What is the PIDR?
The PIDR is used to determine the size of the compensation payment that is made following a personal injury claim (including clinical negligence claims), where long-term care costs are expected to be incurred. It is used to determine the current financial value of the lump sum that would need to be invested in order to provide a future annual income that was sufficient to meet the expected cost of ongoing care.
The announcement by the Lord Chancellor that the PIDR in England would be reduced to minus 0.75%2 with effect from 20 March 2017, was extremely disappointing, as the lower the discount rate, the larger the lump sum that needs to be awarded. As a result, the overall cost of clinical negligence claims is set to increase, which in turn will impact on the cost of professional indemnity.
Following our detailed discussions with the Government, and its recognition of the significant impact that the rate change will have on GPs, the Government pledged that “the Department of Health will work closely with GPs and medical defence organisations to ensure that appropriate funding is available to meet additional costs to GPs, recognising the crucial role they play in the delivery of NHS.”2
The impact of the Government's decision
As a not-for-profit organisation, we seek only to generate sufficient income to cover the costs of claims that we expect to receive in the future, resulting from adverse events in this year. We have not yet made any changes to membership subscriptions for GPs to reflect the reduction in the PIDR, as any changes will be dependent upon the outcome of our discussions with the Government and the nature and scope of the support they are prepared to make available to GPs.
At the outset, Simon Kayll, our Chief Executive, said: “It is important that there is reasonable compensation for patients following clinical negligence, but this must be balanced against society’s ability to pay. The Lord Chancellor’s decision has tipped the balance too far, and the cost to the NHS and society risks becoming unsustainable.”
The Office for Budget Responsibility (OBR)3 has already said that the Government will be setting aside an additional £1.2billion a year to meet the extra public sector costs, but this does not include any financial contribution to offset the impact on GPs, which has yet to be agreed.
Challenging the Government on your behalf
We have actively lobbied the Government on your behalf and consistently made it clear to them that we are extremely disappointed in the rate change decision, and are deeply concerned about the impact it will have on GPs and the wider healthcare profession.
Now the election is over, we will continue to push the Government hard to ensure that they deliver on their pledge to provide appropriate funding for GPs to meet these additional costs. We have also submitted a detailed response to their consultation on how the PIDR should be set in future, arguing that the current process is defective and should be replaced with a common sense and sustainable alternative.
Simon Kayll said: “The PIDR consultation decision cannot come too soon – we must get this right if we are to avoid further sudden shocks such as this in the future. The rate should be set following thorough consideration of the potential impact on the NHS, the public purse and the affordability of professional protection.”
In the meantime, we will continue arguing for a swift decision to be made regarding the detail and timing of the support the Government will make available to GPs, and will share more information with you as soon as a decision is made.