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The Malpractice Problem

We can't have health care reform without tort reform.

12:00 AM, Oct 27, 2009 • By STANLEY GOLDFARB
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The extra imaging study, the extra day in hospital at the end of an admission, the repetitive laboratory testing, the admission to the hospital to be "sure" about the diagnosis are all inherent in the culture of American medical care. The avoidance of litigation has become ingrained into all aspects of medical care. Since physicians are not liable for the increased costs of care but are liable for any error or missed diagnosis, it would be foolish for them to act in any other fashion. The costs of this mindset cannot be easily assessed by surveys.

No one can identify how the current health care bills being debated and apparently continuously modified in Congress will reduce the cost of health care. They may produce a reduction in insurance premiums for some, but just paying less for health care does not magically produce a diminution in the actual cost of health care. The latter would only occur if there were large profits in the overall health care enterprise that could be trimmed without changing the basic character of the system. But no one has identified such profits. The president points to for-profit insurance companies, but for-profit insurance companies only make up 25 percent of the system and they are not that profitable, ranking 85th among all U.S. industries. "Reform" will redistribute the money, not reduce the overall cost. This is pretty much what the American Health Insurance Plans study, so denigrated by the president, concluded. Unless the costs of health care fall, lowering insurance payments in one segment of the populace will inevitably cause an increase for some other group.

There is much that can be done to make our system more efficient. Tort reform is a great place to start. Medical errors are common and fairness demands that compensation be paid when someone is injured. However, the price for the current system is enormous. The view from the left is that the direct costs of the current malpractice system -- the actual payout of dollars in lawsuits -- are pretty minimal compared to overall health care spending. The indirect costs, the use of tests and procedures to avoid lawsuits, are also said to be overstated in studies, as those who answer surveys about this issue are assumed to be biased. The view from the right is precisely the opposite and ascribes an important component of health care spending to malpractice costs. This view also blames the lawyers.

The experience in Texas, where there is a law capping payments for pain and suffering to $250,000, suggests some benefit. For example, as reported in the Wall Street Journal, malpractice suits have been dramatically reduced. The year before the caps on pain and suffering payments took effect, there were over 1,100 medical liability suits filed in Dallas. Only 142 cases were filed in 2004. In addition, there was a surge of physicians entering Texas to set up practice as malpractice premiums fell by about 50 percent. Texas also is actually a state with low health care spending. According to the National Center for Policy Analysis, although Texas is fifth highest in Medicare spending per capita, it is 43rd in per capita spending for the state's entire population. Whether the malpractice caps in Texas account in any way for these data is uncertain but the pattern is encouraging.


The problem for physicians is not only about the money expended in malpractice insurance premiums or about excess payouts to plaintiffs. It is also about the time and effort that defending against lawsuits requires. It is also about the potential for a trial and the stress associated with the experience. Avoiding these legal troubles is as much an influence on doctors as the desire to avoid a potential increase in insurance premiums following a malpractice suit.

New approaches that do more than simply reduce the direct payouts for patient injury and for insurance premiums are needed. Medical courts where experts decide the legitimacy of a lawsuit and assign responsibility for any errors are worthy of careful study as a potential answer to the problem along with control of malpractice premiums and payouts for pain and suffering. The current malpractice system has contributed to an overall health care system that is inefficient. The large awards to a few have contributed to the unsustainable costs for many. This should not persist. Cutting the cost of health care will require a real reduction in the costs associated with delivering care, not just the cost of health insurance premiums.

Stanley Goldfarb MD is associate dean of clinical education at the University of Pennsylvania School of Medicine and a nephrologist.