After a 40-plus year career in the medical professional liability industry, Larry Smith is retiring as the vice president for risk management at the mid-Atlantic regional health system MedStar Health. He also served as the president of MedStar Health’s captive insurance company, Greenspring Financial Insurance Limited, Inc. of Cayman.
Smith began his MPL career as the general counsel for Tufts New England Medical Center in Boston Massachusetts where he served until 1998. He then moved west to become the vice president for risk management for UCSF Stanford HealthCare in San Francisco California. He joined MedStar in March of 2001.
In recognition of his industry service and commitment to bringing transparency and trust, Smith received a Lifetime Achievement Award at the 2026 MPL Association Annual Conference in Philadelphia in May.
Inside Medical Liability Online: What would you identify as the biggest change in hospital risk management during your career?
Larry Smith: In the late 1960s and early ‘70s, we started to see the first $1 million claims and from there, medical malpractice risk management became a significant operational practice in hospitals. First, we started to see the frequency of claims increase, then the severity. There were a couple of claims in the early 1970s that established the concept of vicarious liability for healthcare organizations that either employed physicians or credentialed them to provide patient care to hospital patients. With vicarious liability legally established, not only was the individual physician responsible, but the organization employing, contracting, or credentialing them was too. By the mid-1970s, with both frequency and severity rising, healthcare organizations began to look for a solution other than commercial insurance, which was becoming unaffordable. In response, Harvard Medical School and its affiliated hospitals formed the first healthcare captive.
From there other hospitals and healthcare systems adopted the Harvard business model. Johnson & Higgins, which had been an insurance broker, took hold of the captive concept and became the architects for several health organizations that went to either the Cayman Islands or Bermuda to incorporate. At the time, no US state insurance regulators had a framework for the formation of captive insurance companies. If a healthcare system wanted to set up a self-insurance company, it would have to meet the same financial liquidity and capital requirements that would be applied to a commercial insurance company. No nonprofit healthcare organization had the finances needed to meet these requirements. The Harvard business model, accepted by Cayman and eventually Bermuda, relaxed these financial requirements, making it possible for healthcare captive insurance companies to begin business.
IML Online: How did risk management programs emerge in the industry?
Smith: Over time, the commercial insurance companies continued to leave the business of providing first-dollar coverage, so healthcare organizations were drawn into captives as a logical alternative to commercial insurance. When I formed my first captive insurance company in the mid-1980s, one of our board members asked me what kind of risk management program we would have. I probably looked dumbfounded, because I hadn’t even begun thinking about risk management. It wasn’t a concept that was prevalent in healthcare organizations, because mostly they insured their liability through commercial insurance companies. Captive insurance programs gave birth to healthcare risk management. Risk financing structures and risk management programs have become integral parts of every healthcare organization.
IML Online: What kinds of claims proved most preventable in hindsight and how have hospitals improved their risk management practices to mitigate those risks?
Smith: The true answer is that we’re still figuring that out. In some other businesses, there are routines that are performed over and over again until they are virtually automated and perfected. You can’t do that in healthcare. The provision of healthcare is dependent upon the judgment and individual performance of human beings operating under very difficult and often stressful circumstances. We’ve had the most success in error prevention where the risks are discrete and measurable. For example, where we can develop checklists and specific protocols for how something should be done. Since we know such-and-such is happening over and over, let’s develop a standardized protocol to provide to our staff. To make implementation successful you need expertise to devise the protocol and tools for training the staff on how to use the process: you need risk managers, who are good salespeople and who can market the solutions.
IML Online: How do you convince experts like surgeons, who maybe are inclined to do things the way they were taught or how they’ve always done it, to buy into current risk management practices?
Smith: When I first arrived at MedStar, I presented before a group of OB-GYNs at one of our hospitals about standard processes we wanted to introduce. One of the physicians told me this: “I’ve been doing the same thing every day of my life for the last 30 years, and I’m not about to start learning from someone who never went to medical school and has no idea what it’s like.”
IML Online: How did you respond?
Smith: I said, “I get that, but maybe through data I can help you understand how this way might be better.” It’s hard, but you have to be able to sell it. You can’t just say this way is better. You have to demonstrate how. That’s for situations where you can develop some standard processes or algorithms, like the early recognition of sepsis. However, there are procedural and diagnostic risks that involve complex clinical judgment that cannot be standardized, here our job is to implement systems that ensure that the staff involved have the training, experience and expertise necessary to do this work safely. These exposures are much more resistant to risk management techniques, because they are dependent on humans, not processes.
IML Online: What are some effective methods for managing more complex situations?
Smith: Well, look at surgical site errors, since we put in place the universal protocol for procedures such as surgery, we now have a checklist to help prevent errors before the surgery even begins. We should have had this years ago. Such an intervention allows us the opportunity to eliminate very preventable mistakes. But for this to be effective, this checklist has to be followed, it has to be enforced, and then it can be used to demonstrate over time what a remarkable difference it makes. Success breeds further acceptance. We can do the same thing with medication errors and bar coding for example.
IML Online: In what other areas are you finding solutions?
Smith: We haven’t entirely solved patient falls, but we have done a really good job of developing procedures involving bed alarms, hourly rounding, and other techniques which allow us to do a better job than we had done before. Again, this depends on staying on top of the procedures, measuring and monitoring them to ensure that staff are doing what they’re supposed to, and bringing the data back to the clinical staff to make sure they see how important it is.
IML Online: How about hospital acquired infections?
Smith: With hospital acquired infections, we now have protocols such as central line bundles and hand hygiene campaigns to make sure we are doing what we can to reduce infections. We’ve been able to significantly drive down catheter-associated bloodstream infections, and other infection rates are down significantly. We continue to improve at managing those risks.
IML Online: How are early resolution programs making a difference in MPL?
Smith: Many healthcare systems across the country have adopted CANDOR, communication and resolution programs. Ours is called Early Intervention. If a patient experiences harm, the first thing we do is to wrap our arms around the patient and family and do what we can to clinically support the patient and emotionally support the family. The next thing we do is to learn as best we can what happened; then we communicate with the patient openly and honestly about what we find out. This may expose us to liability up front, because sometimes it involves admitting that we have some level of responsibility for the outcome.
IML Online: Isn’t admitting fault counter-intuitive in some ways?
Smith: I honestly don’t know any way to run a risk or claims management program for a healthcare organization other than to be honest with your patients. I believe you actually avoid more liability in the long run—working with patients and their families to resolve these issues without being dependent on our very broken legal system.
When we are transparent and honest with our patients and their families, we can avoid creating an adversarial relationship on top of a harm event. Often when we use this approach, we are able to maintain a positive relationship with the patient or family and achieve a fair and reasonable resolution. If care did fall below our standard of care and the outcome should not have occurred, they have every right to be angry. However, when this process works, and it often does, they can feel positive with how we responded and that can further build trust with the patient or their family.
IML Online: What’s been the effect of this policy on staff?
Smith: This process ends up being better for the staff too, because they participated in doing the right thing by the patient. The mere threat of litigation causes providers to close down. With this approach they feel freer being able to honestly communicate with the patient or their family about what did occur.
IML Online: Can you give us an example of how the early resolution works in practice?
Smith: During a spine surgery procedure, a patient, a man in his sixties who had been very active, suffered an injury that left him as a semi-quadriplegic. As a result of running this through the Early Intervention program, I became close with the patient. He felt our process was right, that we had done right by him and his family. In addition, after we reached a resolution of the matter, the surgeon said to me, “Thank God this happened where this is the approach we chose, because I didn’t have to worry about what I said to the patient or his family. I only had to tell them the truth.” I’m hoping that this approach will continue to spread. As I retire, one thing I’d like to pursue is volunteering in this area, to help others across the country understand how these programs can be managed successfully.
IML Online: How have hospital risk education programs evolved and how are they making a difference?
Smith: When I started in the field, as I told you, I’m not sure we could even define risk management. Now, we’ve got tremendous educational programs to help those who do this work. The American Hospital Association has the American Society for Healthcare Risk Management, an organization that provides everything you might need to know about healthcare risk management as told by those who have been working in the field for decades. There are experienced practitioners passing on their education and experience through these programs. Also, the International Center for Captive Education provides programs both in risk financing and in risk management aimed at both the beginner and the most experienced of risk professionals. I think these educational programs are great, because breaking into the field isn’t easy, and these programs make a huge difference to those in the field and provide folks who can help educate you.
IML Online: How has the development of analytics in MPL and risk management changed the approach of hospitals and risk managers?
Smith: I’m honestly disappointed with what healthcare has done in the world of analytics and risk management. Almost every other industry understands to make their product better the entire industry must share lessons learned and errors experienced in order to make the entire industry stronger and safer. Healthcare is often unfavorably compared to aviation when it comes to identifying and eliminating potential safety risks. The approach in aviation is built on full transparency, acknowledgement, accountability, and a strong universal culture of safety. Fundamental to this approach is sharing lessons learned across the entire industry. In healthcare, there still is a real reluctance, even resistance, to sharing the information we all have regarding patient injuries and professional liability events.
IML Online: Why do you think that is the case?
Smith: We are not transparent. When something bad happens, we fear that transparency will increase our exposure to liability. Also, in the competitive market environment in which healthcare operates it could reflect badly on our organization. Since we don’t share this information, other healthcare systems do not get the benefit of the lessons learned in the way they could if we shared this information across the country. My hope for the future is that healthcare will become more like aviation and see every adverse outcome as a tremendous opportunity to make an entire system of care better.
IML Online: How do you think this lack of standardization in data can be addressed?
Smith: I’ll give a “shout out” to a couple of folks. WTW, which has accumulated a lot of information about malpractice over the years, has been doing a good job sharing, as has CRICO/Candello. But even with their data, while it provides a good view from 10,000 feet, it doesn’t provide the ground-level information that we need to understand the underlying causes of harm events, and that is what we need to enable us to make effective change.
IML Online: What are the two or three biggest challenges in risk management facing hospitals in the next three to five years?
Smith: First, I have become increasingly concerned that the civil liability system is unfairly harming healthcare organizations on a number of fronts. The medical malpractice liability system is no longer about fair compensation; the cost severity we are experiencing threatens the financial security of every healthcare organization. If healthcare finances don’t get better, and liability costs continue to climb, something will inevitably break. In this broken legal system, medical professional liability, sexual molestation (SAM), and cyber liability claims all have the potential to financially devastate any healthcare system. In our role as risk managers, we must ensure that we are doing everything we can to support ongoing efforts to prevent any of these from getting out of control, which means whole organizations have to recognize the importance of managing medical professional, SAM, and cyber liability exposure as much as we can.
IML Online: What do you see as a potential turning point for further impetus for improvement?
Smith: I met with the board of our captive insurance company a little while ago. One of the board members said, “years ago, even up until recently, I looked at medical malpractice liability as being a line item on my budget to which I didn’t need to pay much attention, because it didn’t vary all that much. I now look on it as a bottom line that can make a huge difference in our ability to produce capital.” That got my attention. I believe issues of third-party liability on a number of fronts have increased the importance and visibility of risk management in healthcare. Risk management is not only an operations level issue, but also an executive and board level focus. This will undoubtedly provide an impetus for improvement.
IML Online: How can the medical professional liability profession contribute to humanizing providers in the way you’re suggesting?
Smith: We recently tried a case in Virginia where during trial we focused on getting the jury to better know the provider as a person as well as cardiologist. We allowed him to talk on the stand about why he went into the field: When he was young his mother had a cardiac condition that took her life. He explained to the jury that he wanted to practice medicine to save other people who were experiencing what she experienced.
IML Online: That’s really amazing.
Smith: There’s more. At the end of the trial, which he won, one of the jurors approached him and asked how she could make an appointment to see him. We can do a lot to show the humanity of providers by telling their story, have them talk about the kind of care they provide, and what the team who tried to save this patient or take care of this patient are like and why they do what they do every day. The stories of our providers are just as important and as powerful as the stories of our patients.
IML Online: It’s a tough time to be a risk manager. To close, what would you share with people who have recently entered the field or who might be having a hard time with the work?
Smith: I would tell them how lucky they are to be in this field. I didn’t know what to expect when I started this work. In retrospect, I was provided with an opportunity to work with, to be friends and colleagues with some of the most amazing people you could ever know. And what makes it even more special is that through this role, they entrust me to take care of them as they take care of patients. I feel really honored to be given that trust and responsibility, and it has brought me such joy. Work isn’t going to get any easier, but as hard as it might get, you are doing something worthwhile.