Healthcare Reform and Defensive Medicine

My esteemed colleague, Dr. Charles S. Day's thoughts on health care.
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On July 20th, I wrote an article that amongst several issues emphasized the hidden financial burden created by the current medico-legal climate that exists in most of America. 'The deviation of sound medical practice, induced by the threat of liability is known' as defensive medicine and is practiced by a significant and growing number of high quality physicians throughout the US.

Real doctors from small towns to the ivory towers of academia are screaming for relief. I pray that average Americans heed the warning, before the very real fear of crippling litigation prevents your doctor from dropping everything and sprinting to the emergency room to provide care in your time of need.

If despite my best efforts I have failed to awaken you, maybe my esteemed colleague, Dr. Charles S. Day, the Chief of Hand & Upper Extremity Surgery at Harvard Medical School and Beth Israel Deaconess Medical Center may be a bit more persuasive.

Medical Liability: Shouldn't we be discussing this?
By Charles S. Day, MD, MBA and Srinidhi Reddy

Access to quality health care has improved drastically, but the cost of health care has spiraled out of control. The reforms proposed by the Obama Administration, while making a concerted effort to maintain the quality of care, do not address one aspect of health care that contributes directly to the cost, medical liability. Tort reform, or the revision of the civil justice system that awards compensation for harm done, is one viable solution that would institute an upper limit on malpractice damages. However, President Obama in his speech to the AMA states specifically that he is "not advocating caps on malpractice awards." This political stance impedes the reform of the health care system by incurring billions of dollars in extraneous costs that result from the threat of medical malpractice.

Malpractice is the most problematic issue for physicians today, as the number of lawsuits and the cost of fighting them continues to rise. With damage payments easily amounting to hundreds of thousands of dollars, insurance companies are weary of providing malpractice insurance - evidenced by over 2,000 physician policies being dropped in one summer in California. Insurance premiums have increased four-fold in the last decade, particularly for physicians in specialties with a high number of risky procedures. The rising insurance premiums and increasing malpractice damage costs has motivated physicians to be overly cautious. This mindset results in the ordering of superfluous diagnostic tests and can even drive physicians to avoid certain procedures or patients altogether. This trend in medical practice is referred to as defensive medicine. Though it is practiced to avoid potential lawsuits and payouts, defensive medicine has actually become one of the greatest sources of unnecessary health care costs today.

Defensive medicine is defined as "a deviation from sound medical practice, induced primarily by threat of liability." It is divided into two categories, assurance and avoidance behaviors. Assurance behavior, or positive defensive medicine, is practiced by most physicians and involves the supply of additional services of negligible medical value to reduce adverse outcomes, deter patients from filing malpractice claims, or persuade the legal system that the standard of care was met. Avoidance behavior, also known as negative defensive behavior, reflects physicians' efforts to distance themselves from potential legal risk. They do so by restricting their practice, refusing to perform high-risk procedures, and avoiding patients with complex problems or patients perceived as litigious. This type of behavior usually stems from a fear of uninsured non-monetary costs driving the physician out of business or the view that the downside of malpractice is greater than the upside of treatment. To demonstrate the prevalence of defensive medicine, the Harvard School of Public Health and Columbia Law School surveyed physicians practicing in Pennsylvania, a state infamous for having the highest malpractice insurance premiums in the country. The study, conducted in 2005, received responses from over 800 physicians in six specialties, with approximately 93% of doctors responding affirmatively when asked whether they practiced medicine defensively.

Defensive medicine is accompanied by an unexpectedly high overall cost, masked by the fact that these costs are split between doctors, patients, insurers, and the government. To gauge the burden of defensive medicine, Daniel P. Kessler and Mark B. McClellan compared healthcare costs in the 28 states with laws that limit punitive damages that can be paid out in malpractice lawsuits with states that do not. The effects of malpractice liability reforms were analyzed using data on Medicare beneficiaries treated for serious heart disease in 1984, 1987 and 1990. Kessler and McClellan found that liability reforms could reduce defensive medicine practices. This led to a 5.3% reduction in medical expenditures for acute myocardial infarction patients and a 9.0% reduction for ischemia patients without any effect on mortality or medical complications. States with capping laws had average per capita health expenditure levels that were 3.4% lower than in states without such laws. In the 6+ years these laws were in effect, the mean reduction in health expenditures due to caps was $92 per capita. The savings were even greater for elderly patients with estimated costs of liability-pressure-induced intensive treatment more than $500,000 per year of life saved.

In a similar example, California passed the Medical Injury Compensation Reform Act of 1975 (MICRA), imposing a $250,000 cap on damages deemed to be non-economic such as pain and suffering. The subjective nature of these complaints is difficult to quantify leading to years of litigation. In these cases, attorneys benefit the most while plaintiffs are financially burdened by the length of the case and the legal costs taken out of their award. Since the passing of MICRA, malpractice premium increases have been 75% less than the rest of the nation and plaintiffs received their awards in one-third the time.

The results of Kessler and McClellan's study have been applied to current health care expenditure to approximate the cost of defensive medicine across the nation. These statistics applied to the nation's $1.4 trillion annual health care expenditure in 2005 (estimated to be over $2 trillion this fiscal year by President Obama), show that health care costs could have been reduced by $124 billion overall and government expenses by $50 billion per year. Adding the cost of defending malpractice cases, paying compensation, and covering additional administrative costs (a total of $29.4 billion), the average American family thus pays an additional $2,000 per year in health care just to cover the costs of defensive medicine. With the national health care costs expected to be over $4.5 trillion by 2017, the cost of defensive medicine to the average American could triple in the next 10 years.

Overall, while defensive medicine, particularly assurance behavior, may not seem like a negative trend in medical care, the costs associated with it are. Healthcare in the United States is already a financial burden for many Americans, and the added cost of defensive medicine with no added health benefit exacerbates this problem. Studies have shown that the rising costs associated with malpractice are to blame. Therefore, the solution to reducing the cost of defensive medicine is to reform laws pertaining to malpractice lawsuits. By placing caps on punitive fines for these lawsuits through tort reform and lowering the price of malpractice insurance, the practice of defensive medicine can be reduced, alleviating the burden on the average American while maintaining the high standard of health care in this country. These issues are intrinsically connected to rising health care costs and cannot be ignored in the current political debate.

Articles Referenced:
Hellinger, FJ, WE Encinosa. "The Impact of State Laws Limiting Malpractice Damage Awards on Health Care Expenditures." American Journal of Public Health 96(8)(2006): 1375-81.

Kessler, DP, N Summerton, JR Graham. "Effects of the Medical Liability System in Australia, the UK and the USA." Lancet 368(9531)(2006): 240-6.

Manner, Paul A.. "Practicing defensive medicine--Not good for patients or physicians." AAOS Now (2007).

Studdert, DM, MM Mello, WM Sage, CM DesRoches, J Peugh, K Zapert, TA Brennan. "Defensive Medicine among High-Risk Specialist Physicians in a Volatile Malpractice Environment." The Journal of the American Medical Association 293(21)(2005): 2660-2.

Weinstein, Stuart L.. "The Cost of Defensive Medicine." AAOS Now (2008).

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