Medical Intermediaries: Where did they come from? Where are they going?
Medical Intemediaries - EWI Jan 2010 - Click to open
Medical Intermediaries: Where did they come from? Where are they going?
By Dr. Harry Brünjes
January 2010. EWI Newsletter. www.ewi.org.uk
Although difficult to define accurately, it is probable that the concept of a medical intermediary in personal injury reports is twenty years old. As with all new business sectors, the early days were very much the forum for the pioneer and entrepreneur. The arrival of a medical intermediary was, in reality, a response to marketplace forces.
The traditional professional interface was between ‘High Street solicitor’ and ‘High Street medical expert’. The majority of personal injury work was undertaken and propagated on a local basis. The advent of legal expense insurance was the first major change. On purchasing an insurance policy an individual could also, for a small fee, pay for legal expense cover.
Subsequently, legal expense insurers appointed their own panel of solicitors. Once that model proved effective legal expense insurers appointed their own medical intermediary. If a High Street solicitor was on a ‘panel’ their work was no longer necessarily local in origin and as a result they might have to find medical opinion from all round the country. This was a task many attempted themselves, but they struggled. Therefore, a more simple and cost-effective model was to outsource this task to an intermediary with a medical database and relationships with experts nationwide.
From the commercial point of view another significant landmark in the personal injury process was the development of claims management companies who ’sourced’ the injured party and entered into a commercial agreement with law firms. From the process point of view the introduction of Lord Woolf’s protocols on 26th April 1999 was also fundamental. Both parties relied on a joint expert which meant that previously preferred experts may no longer be agreed. As a consequence the process became less adversarial and medical intermediaries were viewed as a source of independent medical opinion.
As with all new and maturing sectors, there have been casualties along the way. The greatest problem has been financial diligence and governance on the part of certain medical intermediaries and, indeed, medical experts. Traditionally lawyers were not paid until the end of case. Similarly medical companies, in order to become established, offered delayed payment schemes. The problem was that medical experts requested normal credit terms which then created severe cash-flow difficulties for medical intermediaries.
The early part of this decade was of particular interest. A debate occurred over a period of years which focused on the principle of agencies and the recoverability of fees. This was discussed by various stakeholders such as the Civil Justice Council, Association of British Insurers and the British Medical Association. At the time I was.Chairman of AMRO (Association of Medical Reporting Organisations) and involved in an elongated set of negotiations trying to settle the issue. However, as is often the case, it required litigation to achieve resolution. The case of Woolard v Fowler (2003) became high profile and addressed the argument regarding the principle of agency and, subsequently, following a period of mediation a tariff (fixed fees) for medical opinion in the fast-track sector was created. More recently there has been some concern regarding the introduction of VAT which, by and large, has been settled but there are still some minor residual concerns. To bring us up to date, the Ministry of Justice will announce changes in the personal injury process within the next twelve months. This is the first major review since Lord Woolf’s protocols were introduced. However, on this occasion the medical report is accepted as a fundamental part of the process. Although not possible to predict, it is very likely that the fast-track level for cases will be raised and at some time in the future there could well be further discussions regarding fixed fees for multi-track cases, employment and public liability injuries and, a long way down the line, clinical negligence.
Medical intermediaries for ‘rehabilitation’ have, to a certain degree, followed a similar pattern. Rehabilitation as a concept is now approximately ten years old. At the turn of the century there was a momentum in the view that rehabilitation could help an injured party recover more promptly. This was not an unreasonable view as rehabilitation has been part of a clinician’s normal practice for centuries!
The commercial argument also was pertinent. The injured party would recover quicker, there would be smaller professional fees, the file would be closed more promptly and the damages would be less. As such, medical intermediaries focusing on rehabilitation became established in order to provide a service on a nationwide basis.
As with the early days of medical intermediaries, this sector has been fragmented. There are several established companies but it has taken a few years for critical mass to be achieved. In fact, it is only recently that one or two companies have grown considerably in size as a result of natural consolidation, organic growth and strategic relationships. Ten years on, there remain some insurers who are pro-rehabilitation, some who have not been in favour of rehabilitation, some who are uncertain and those who have been involved in rehabilitation but subsequently altered their strategy. There continue to be failings in the medical intermediary sector, both involving medico-legal and rehabilitation. The over-riding issues are financial diligence, cash flow and the ability to control costs externally and internally. This has been amplified by the current financial climate and the inability to raise credit. This has resulted in medical and rehabilitation experts not being paid and being at the mercy of the administrators.
In many ways the future is clear. There will be discussions with the various stakeholders in terms of reasonableness and proportionality of all fees. As in all sectors, cost will always be vulnerable to marketplace forces. There will be continuing consolidation in both medical and rehabilitation intermediaries. Individual practitioners should not be flattered by topline fees or a high volume of work from intermediaries, particularly the new entrants. Each practitioner would be advised to undertake due diligence on their supplier. They should negotiate their own requirements and ensure that the medical intermediary complies with best practice, not just clinically but financially as well. Medical/rehabilitation experts should do a credit search, ask for banking references and, importantly, ask their accountant to do all the necessary checks such as requesting updated accounts from Companies House. None of these criteria will ensure safety but it is better than entering into a relationship without any pre-existing knowledge of the company who could be providing a large proportion of the clinician’s private practice. To be blunt, you would not lend thousands of pounds to an individual stranger, so why lend thousands of pounds to a company you have minimal knowledge of. Although some of the medical intermediaries have been poorly run, many expert witnesses have also been too trusting and have not implemented standard business practice. Twenty years on, the larger medical intermediaries have become more corporate in function and structure. The initial relationship between lawyer and medical expert is changing. Increasingly business relationships are subject to a professional procurement process; this is diluting margin and therefore necessitating process change. IT sits at the centre of this, i.e., workflow, electronic data interchange, web services and electronic patient records. The natural step is that a parallel form of IT requirements will also become established in the rehabilitation sector. There is a risk that the use of these systems will become mandatory to individual practitioners who want to receive work within this sector. It is also no longer uncommon for practitioners to have to ’sign up’ to service level agreements in terms of IT and timescales. There are some interesting professional bodies in the marketplace. The Expert Witness Institute provides excellent support and is particularly active in the debate (in association with the Home Office) for the increasing need for accreditation of experts. Only very recently there has been the formation of the British Association of Rehabilitation Companies with more than thirty providers having signed up or expressed an interest in joining.The larger medico-legal and rehabilitation companies are now firmly part of the process. Many have relationships with major insurers, legal expense insurers, claims management companies and solicitors on a nationwide basis. The majority would score well in a normal financial health check. The data monitor report confirms that the marketplace, although not increasing, is not diminishing. There is now an established demand for medical and rehabilitation intermediaries on a national basis and all those who offer best practice, service level agreements, IT compliance and fees that are reasonable, proportional and recoverable, should flourish.
The author is Chairman of Premier Medical Group.