For Doc Liability

From Obama’s big med speech:

Many .., particularly on the Republican side … have long insisted that reforming our medical malpractice laws can help bring down the cost of health care. … I don’t believe malpractice reform is a silver bullet, but I’ve talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs.  So I’m proposing that we move forward on a range of ideas about how to put patient safety first and let doctors focus on practicing medicine.

But only a small percentage of actual malpractice ever leads to a suit, and a new NBER analysis says:

Growth in malpractice payments over the last decade and a half contributed at most 5.0% to the total real growth in medical expenditures, which topped 33% over this period.  On the other side of the ledger, malpractice liability leads to modest reductions in patient mortality; the value of these more than likely exceeds the cost impacts of malpractice liability.

A Vladimir Shklovsky emailed a few weeks ago saying that under current US liability law the fact that some practice is standard in an industry is a defense against a liability suit, but it is not an absolute defense.  Except in medicine; you simply can’t be legally liable for anything you did if most other docs do it too.

I recall reading in Paul Starr’s classic The Social Transformation of American Medicine that what first gave US docs power was that at the time, local med practice was an absolute defense.  So if you didn’t play ball with the local docs, they’d refuse to defend you in such suits, leaving you open to devastating liability.

Amazingly, we are so terrified of the idea that our docs might not do everything possible to save us that we simply will not allow anyone else to question their judgment.  Not insurance companies, not academics, not legal judges or juries.  And so it seems, not even other docs.

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  • http://www.brazzy.de brazzy

    The cost of malpractice laws does *not* lie in actual lawsuits and payments, it lies in the *fear* thereof, which leads to the “defensive medicine” Obama mentions: doing extra MRTs and X-Rays and proscribing extra medications and keeping patients in hospitals longer, all very costly, and done not because doctors think they actually make sense, but because they’re not willing to risk a one-in-a-million chance of being wrong and getting sued for $100m.

    Yes, it may save a few lives, but the same money could save far *more* lives if used for things that doctors actually want to do, rather than things they’re afraid of not doing.

    Perhaps even worse than defensive medicine is defensive bureaocracy. My girlfriend is a nurse, and says that doctors and nurses spend *lots* of time documenting what they’re doing and are required to read thousands of pages of impractical guidelines that nobody can memorize – an utterly worthless waste of time that benefits nobody (but is of course paid for); in fact, they have to routinely break these cover-your-ass regulations or they wouldn’t have any time left to actually take care of patients, or would have to let someone die because they’re not allowed to administer some life-saving medication without first getting a doctor to sign it.

  • Curt Adams

    A recent JAMA study estimated 29,000 deaths per year from unnecessary surgery and direct medical errors. With medical malpractice payments at 3.9 billion in 2006, that values a life at only $134,000 – an absurdly low figure – without accounting for non-lethal disabling errors. The problem with medical malpractice is that doctors and hospitals don’t pay enough for the harms they cause. Medical malpractice reform should be directed at making lawsuits easier to file, quicker to resolve, and more evenhanded (but generally higher) in payments and fines.

    Malpractice payouts are 0.6 percent of medical costs and (as shown above) grossly inadequate as fair compensation for medical errors. If hospitals and doctors are spending a substantial fraction of medical costs on “defensive medicine” minimizing a small source of costs, the problem is idiotic business practices in the medical profession, not excess malpractice payouts.

    • http://retiredurologist.com retired urologist

      In my experience, “malpractice payouts” probably represent only a small portion of the money spent related to defending oneself from malpractice claims. The fourteen complaints filed against me cost $350M to defend, yet all were dropped with prejudice, none went to court, and no payments were made. In my final year of sub-specialty surgery practice, 40% of the income from surgical fees went directly to pay malpractice insurance premiums. I quit.

      Many are the times when front-line doctors want to tell a patient, “Your problem seems self-limiting; let’s treat the symptoms and do watchful waiting.” Rarely does it happen. The most common single allegation in malpractice tort actions is “failure to diagnose”, the claim in 40% of such actions. Tests will de done. On the margin, the results of those tests will lead either to no benefit or to actual harm.

      • Curt Adams

        Wow, spending $25 million each to defend against (presumably) unjustified lawsuits definitely counts as idiotic business practices. You could create your own top-flight law firm for that kind of money. And, even if you include lawyer’s fees and company profits, the amount spent on the entire malpractice system is less than 2% of health care expenses – about three months of cost growth.

        Plus, there is still the moral and efficiency issue that tens of thousands die each year from medical errors and those responsible are not being held properly accountable.

      • http://retiredurologist.com retired urologist

        $350M is a typo. It was meant to be $350,000.

      • Grant

        retired urologist,

        I’d always thought those seemingly-unnecessary (and often painful!) tests were primarily ways to milk money from the insurer. Do you think they would still occur in a more efficient malpractice environment?

        How could we go about estimating the costs of defensive medicine? It seems like a difficult thing to measure.

      • http://retiredurologist.com retired urologist

        Grant,

        Assuming physicians reflect a cross-section of society, I feel certain there are many who maximize the patient’s bill for their own benefit, especially if they know the insurance deductible has been met, and the patient’s out-of-pocket expense will not increase (until he gets his premium increase!). Those who do so would seem unlikely to alter their behavior should malpractice tort reform occur.

        As to estimating the costs of defensive medicine, perhaps a mathy reader (you?) could come up with some analysis of the health spending in countries that deliver similar results as the US at much lower cost. We’ve looked at the ones with better results for less spending, but I haven’t seen the analysis of the *same* results with less spending. Whatever countries those are almost surely have no contingency-pay tort system, since we seem to be alone in that category.

      • scott clark

        don’t let M be a typo, it’s the roman numeral for a thousand, so you you were dead on accurate. a million would be MM, a thousand thousand.

      • http://lesswrong.com/ CannibalSmith

        MM is two thousand just like XX is twenty and not hundred.

  • Aaron

    It seems plausible that the overtesting described by brazzy and retired urologist could be a significant driver. Is there a way for the NBER to check? I have no idea how difficult it would be to access the necessary data, but it would seem what is necessary is a count of how many testing procedures were done and how many came up finding nothing. Remove the false positives, and you have your testing to diagonosis rate (or some more accurate title for the measure). Any medical system, be it completely state run or free market, would like to have this number be relatively high, while still maintaining a low undiagnosed to able to be diagnosed rate. It seems that these efficiency measures would need to be known first, before improvements in this area of health care could be made.

  • http://cognitionandevolution.blogspot.com Michael Caton

    I also wouldn’t argue that malpractice costs are a major part of the increase in healthcare costs. The big impact on the practice of medicine is concentrated on physicians, who bear the cost of malpractice insurance, and can leave localities that are affected. Pennsylvania and Illinois are good examples (PA link: http://www.pewtrusts.org/news_room_detail.aspx?id=19190).

    If the goal is to increase access to care for patients, then these states’ models (which favor plaintiffs strongly) are clearly not the way to go.

    Nationally, it’s hard to imagine people moving abroad to practice medicine, but it is less hard to imagine fewer people going into medicine because there is no income reward for years of study and debt. News bulletin: medicine is hard, and if there’s no reward, people won’t do it. And again, patients won’t get their care.

    For the pro-cap, anti-public option people – are you calling and writing and meeting your Democratic reps and making reasoned (i.e. non-teabagger) arguments? Or are you spending that energy on blogs?

    • Aaron

      Mike,

      What would you say is driving the cost increase in medicine? It seems like the best leverage the medical industry can get in this debate is speaking to the other 28% increase in costs not addressed by malpractice. Ultimately we’re having this discussion due to cost exceeding what people can pay for services they otherwise need. Is it regulatory, overprescription of testing or medication, or something else?

      Aaron

  • http://cognitionandevolution.blogspot.com Michael Caton
  • Bill

    I think you have to disaggregate the cost of medical malpractice insurance from the cost of the alleged defensive practice of medicine. States with high insurance malpractice costs may have low medical costs and states with low medical malpractice costs may have high medical costs.

    What I see in the real world are costs unrelated to medical malpractice costs.

    1. Doctors doing tests because, guess what, they make money for doing tests and procedures. Texas has low malpractice costs, and its doctors make oodles of money running tests. Obama has singled out one such enclave in Texas, but you can also find them in Fla, Ga, and elsewhere…would be an interesting research study looking at med mal rates and frequency of testing procedures associated with certain diagnostic related groups. Also, if med mal rates are uniform across the state, there would not be such a money making disparity of “defensive” but well paying medicine across a state.

    2. There is probably a bigger correlation between defensive practices and whether the doctor owns an interest in the equipment or lab, whether the doctor is an employee of the hospital which owns the equipment, or whether he practices on his own and uses the hospitals facilities.

    3. Here are some examples of where you pay
    a. Hospitals generally provide for “free” autopsies if requested–rolled up into your hospital bill–they claim for quality assurance.
    b. JCAH may mandate tests for a hospital to be certified, even though those tests are useless…Case in point: test is required by JCAH if patient presents himself with certain symptoms; tests are returned in 3 days from the lab; in three days the doctor or nurse (ande even well instructed patient) would have been able to see the symptoms without the test.
    4. When doctors own equipment, and get paid for using it, they use it even though there is marginal utility. Case in point: medical device and disposable reduce symptom and discomfort for 6 months; at the end of 6 months, patient receives surgury, or is better. In Europe, this device and disposable is not used because doctors go directly to surgery. So why is it used in the US…because there is a drg code for it and docs make money twice–one treatment with the device, and then the surgery. Go figure.

    • http://retiredurologist.com retired urologist

      The Heart Hospital of Lafayette, a for-profit facility, was conceived and built by doctors, who own the facility, all its equipment, and the laboratories, as well as providing all the services. It’s results are superior to the three non-profits in town in all areas: mortality, complications, length of stay, and cost per diagnosis treated. Patients and their families vote it tops for service. It gets the best results for the lowest price. It is in the Top 100 Heart Hospitals in the US. Go figure.

  • Robert Speirs

    When exactly did Obama “talk to enough doctors”? I do not believe him. How many is “enough”, anyway? This is a fellow who got the reimbursement for an amputation wrong by at least an order of magnitude. Why does nobody hold his feet to the fire on such statements? Oh, and calling people “teabaggers” is hardly reasoned debate. In fact, it’s offensive and utterly undercuts any other arguments the offender may make.

  • Tony

    We limited malpractice damages in Ohio in 2003, and it hasn’t done anything to slow health care costs.

    I think the big cost driver is the sheer number of uninsured people. Hospitals know they’ll be hit with a certain percentage of charity care, so they pass on costs to insurers. Insurers usually have a few middlemen, who all pass on costs (plus a bit extra for safety).

    Then they have to jack up the price further, because a lot of people will go bankrupt and won’t be able to pay. You gotta save some room for the collections agency.

  • adam

    I agree with retired urologist. I have practiced in Europe and am now practicing in the US. In addition to the costs for extra tests mentioned by him/her, I am simply less productive here in terms of patients examined and treated per hour. Causes include 1) increased documentation requirements (needed for liability protection), 2) ordering and interpreting extra tests (needed for liability protection), 3) extensive consenting patients for even simple procedures (needed for liability protection), 4) exhaustive repeats of training on prodecural matters (the institution needs for liability protection), for example HIPAA.
    Physicians are used to base most of what they do on scientific evidence. However, there is surprisingly little or no evidence, across the board, for these ‘legal’ requirements. Nevertheless there is ever more of this.
    [I am making exceptions for specific measures such as presurgical time-ouits, which have been shown to work.]
    In my opinion, physicians in the US are markedly better trained, but less productive, for the reasons cited above. Though small in number, there should be enough physicians who have practiced on both sides to allow comparisons to be made.

  • Bill

    Responding to retired urologist on heart hospital results:

    1. Medicare and other payment systems have overcompensated heart procedures as a way to funnel money to tertiary hospitals for their uncompensated care. Heart docs figured this out, and had the incentive to build their own hospitals. Now, there are some efficiency benefits from this–scheduling, etc.and having dedicated staff.

    2. There may be differences in outcomes, but not on a risk adjusted basis. You see, if it is really risky, and where you have a systemic risk, the docs do it in the hospital. They also like to do the no-pays in the hospital as well. What a surprise.

  • http://retiredurologist.com retired urologist

    @ Bill: “There may be differences in outcomes, but not on a risk adjusted basis. You see, if it is really risky, and where you have a systemic risk, the docs do it in the hospital.”

    Not in our community. The figures *are* risk adjusted. Our docs purposely take the risky cases to our hospital because it has the best post-op care and the best chance of patient survival. In reality, the results have caused one of the local non-profits to shut down their heart program, and to buy a percentage of our facility. It is *the hospital*.

    True enough about the Medicare compensation when we started, but there have been *huge* cutbacks, and our margin in quite small. It’s nor nearly as good an investment as say my wife’s Merle Norman cosmetic franchise.

  • Josh

    It’s actually a good signaling subject.

    Malpractice insurance itself is not a large expense for most doctors (OB/GYN and neurosurgeons being the most serious exceptions).

    In my conversations with doctors, they have admitted to me that defensive medicine is primarily practiced not to avoid money costs, but because doctors don’t like being sued. It’s a reputational and personal embarrassment.

    As a practical matter, if true, that suggests that tort reform which handles suits quietly and discreetly, with a minimum of aspersions cast upon the doctor and a minimum amount of time required from the doctor to defend himself, would be far more effective at reducing the cost of defensive medicine than tort reform that reduces malpractice awards, even if they reduce them very substantially.