Question of the day

A reader, a doctor, sends it in:

My question to you, and maybe you could lead me to a resource where I can learn more about this, is what is the effect of litigation on the economics of health care on the macro level. I feel like there has been no dialogue on this matter during any of these presidential debates even though this is an important issue from the health care provider standpoint (physicians, nurses, hospitals etc).

I don't have good data on the macro effects of tort reform; the trial lawyers push one set of studies, the tort reformers another, but I've never sat down and tried to pull it all apart. I do know that no one, except trial lawyers, thinks that our current system is very good. Whether you get sued has distressingly little to do with whether you were negligent (and yes, I mean that negligent doctors escape lawsuit, as well as the reverse). There are certain kinds of injuries, most notably birth defects, but also cognitive deficits, that garner sympathy awards from the jury--which is why, in states with bad tort systems, there are actual shortages of these sorts of doctors developing.

The problem mostly obsesses doctors, who are a large, but not the only, source of costs in the medical system. If there is a macro effect, it is almost certainly because of defensive medicine--unnecessary tests ordered because of lawsuits. Nor is that probably limited to states with tort problems. We've developed a medical culture that prizes exploring every remote possibility over common sense (except for primary care physicians, who get reimbursed for rushing patients through as quickly as possible). That probably wouldn't go away even if we had a better malpractice system.

Overlawyered is a very good place to start with these issues. Readers are encouraged to suggest other research or resources in the comments, or indeed just to vent about our legal and medical systems.

Comments

Are differences among the states with respect to tort-friendliness really enough to have nay macro effects?

Posted by Peter | February 6, 2008 11:40 AM

Here's a relevant anecdote, although, as Megan (I believe) pointed out, the plural of anecdote is not data.
My sister is a midwife in a Bronx hospital. The evidence is that midwives are every bit as safe as doctors in a hospital setting, where a doctor is on hand for emergency C-sections and such, and they are much cheaper. But, they are very rarely used, because they are lawyer-bait. Bad outcomes from deliveries happen, and when they do the lawyer only has to tell the jury, "There wasn't even a doctor there!"

Posted by peter | February 6, 2008 11:42 AM

Wouldn't high malpractice insurance premiums and higher hospital legal staff costs be other macro factors? In some case, I think malpractice insurance premiums for physicians can run into the six figures on an annual basis. Presumably this gets passed on in the costs of procedures.

Also, while it's true that physicians are a high cost factor, due to their high compensation, there is a positive macro effect from this: namely, some of the most capable Americans go into medicine. This isn't always the case in countries with socialized medicine. Here's one anecdotal example, of which I'm sure there are plenty. I know a South African Jew who planned to emigrate to Israel. He had an aptitude for medicine, but since he knew that Israeli physicians weren't paid well, he went to veterinary school instead.

Posted by Fred | February 6, 2008 11:45 AM

Somebody please explain "unnecessary tests" to me.

If a particular set of symptoms is always caused by condition A, and never caused by condition B, then certainly it is "unnecessary," by definition, to test the patient with those symptoms for condition B. Are doctors actually compelled by the prospect of liability to order such tests? I doubt it.

Presumably what we are really talking about are situations where there is a large chance a patient has condition A, and a relatively small -- call it X% -- chance that the patient has condition B. Testing the patient for condition B costs $Y. If the patient has condition B and is treated for condition A, she will die, or suffer long-term adverse consequences, at a cost of $Z.

To decide that the test in question is "unnecessary," it seems to me, is to make a determination that the cost of doing the test in every instance outweighs the cost of the adverse consequences to the patients who suffer if the test is never done. (No doubt economists would find a more sophisticated way to express this but the logic seems bulletproof to me.)

I am not at this point defending the current tort system. I am just asking Megan and like-minded readers: If you abolish malpractice liability, who should be making these decisions, and on what basis?

Posted by roac | February 6, 2008 11:57 AM

Look at what happened to that actor that died back some time ago of a rare heart condition and you'll see exactly what the problem is. (Guy collapsed, was taken to hospital, hospital had only time to do a few tests, tested for the most obvious stuff, didn't have time to go on for the rarer stuff, now the guy's widow is suing the hospital for "not having diagnosed correctly".) We Americans expect our medical services to cure everything and to have a 100% success rate. We also want instant diagnoses of what's wrong with us and we don't want to admit that a lot of medicine is a process of trial-and-error, process-of-elimination, and we think it our god-given-right to be able to take a pill and magically negate all the abuse we've done to our bodies with crappy diets and no exercise. Feh.

Posted by grumpy realist | February 6, 2008 12:06 PM

I discussed malpractice with my doc several months ago. His colleagues claim most malpractice claims result from "I told the patient the probability of a successful procedure was X" vs. "The doctor never informed me about success probability; he said it was a simple operation, with no complications, etc. So someone obviously screwed up."
I said, "Maybe doctors need to videorecord all consultations?" He said it would probably come to that.

Posted by creech | February 6, 2008 12:07 PM

I remember reading a study that showed money awarded to plaitiffs through malpractice suits have been rising 8% annually since 1990 (double inflation).

In response to this:

"If you abolish malpractice liability, who should be making these decisions, and on what basis?"

It obviously should be physicians and professional associations who make the decisions on the basis that they are the experts. According to Atul Gawande, no conservative stalwart, there is no evidence that the current tort system prevents doctors from making mistakes. Also, I don't think anyone wants to abolish malpractice liabaility, they just want to cap it.

Posted by jj | February 6, 2008 12:13 PM

I've read (I forget where, perhaps at washingtonmonthly; take that as you will) that medical malpractice claims were only about 1 or 2% of the total health care costs in the country, and that there are really not many huge awards going to plaintiffs. While it sounds good to say "let's limit lawsuits", the practical effect would be to prevent valid claims from going to court. This is a trade off between access to the courts for the valid claims and preventing claims with no merit. In MA, I believe, a panel of judge/lawyer/doctor have to approve any claim before it can go to trial. Seems like a reasonable filter, doesn't it?

Posted by anonymous | February 6, 2008 12:56 PM

It's not easy to win a malpractice suit in court; the doctor will usually have good reasons for doing what he did, and juries do like and trust doctors. But winning a lawsuit will probably cost the doctor's insurer half a million dollars, and can cost several times that. So even if big awards--or any awards at all--are rare, lawsuits are expensive.

Posted by Rob Lyman | February 6, 2008 1:23 PM

I think the current malpractice system sucks but might be better than alternatives. My problem is this:
We were involved some while ago in trying to help an older surgeon friend who has become severely paranoid schizophrenic -- thinks God talks to him, he can control the weather, Arnold Schwarzenegger is protecting him from people trying to steal his ideas, and more (no exaggerations here). One of his patients did try to get his medical license revoked. We were trying to help that revocation -- stop the poor guy before he hurts someone, in the perhaps misled belief that at some level he'll know about it and be crushed.
That trial was a farce. Old med school buddies of the guy came out and talked about how brilliant he was --yeah, thirty uears ago! -- and how diligent. Other doctors cam forward to talk about how good his work was, and the medical community basically closed ranks to protect him. Now, the patient hadn't been injured --so far nobody has been -- just noticed that the guy is nuts. Which, sadly, he is.
As we learned more about it, I decided, damn, it's hard to remove a guy's license to practice. You have practicing doctors out there who've been busted with drug abuse problems or have known severe mental illnesses and so on. And basically physicians fight like hell against taking anybody's license to practice away until somebody dies.
So whenever I hear some doc bitching and moaning about lawsuits and malpractice costs and the necessity for tort reform, I think: sure. But first, you better make it lots easier to police your profession and stop pretending you guys are somehow not to have your competency judged by mere mortals. Because for now basically all I can do to remove the incompetents, is to sue them until they can't stand: it sucks but it's the only choice the doctors will give me.

Posted by Sanjay | February 6, 2008 2:00 PM

Megan, you got this one right. The malpractice issue (which is genune in the sense that lawyers don't sue forthe right reasons) is an obsession with doctors that has little real impact on the practice of medicine or the economy. It is largely an expression of narcissistic rage by a profession who thinks their good intentions are reason enough for them to command (and take home a substantial cut of) unlimited resources and to be unaccountable to anyone. The trial lawyers actually do doctors a favor by providing defensive medicine as an all purpose excuse for wasteful practices that they would largely continue even if malpractice suits entirely disappeared. I say this as a physician who sees this every day.

Posted by Cervantes | February 6, 2008 2:05 PM

Megan, you got this one right. The malpractice issue (which is genuine in the sense that lawyers don't sue for the right reasons) is an obsession with doctors that has little real impact on the practice of medicine or the economy. It is largely an expression of narcissistic rage by a profession who thinks their good intentions are reason enough for them to command (and take home a substantial cut of) unlimited resources and to be unaccountable to anyone. The trial lawyers actually do doctors a favor by providing defensive medicine as an all purpose excuse for wasteful practices that they would largely continue even if malpractice suits entirely disappeared. I say this as a physician who sees this every day.

Posted by Cervantes | February 6, 2008 2:06 PM

I've read (I forget where, perhaps at washingtonmonthly; take that as you will) that medical malpractice claims were only about 1 or 2% of the total health care costs in the country, and that there are really not many huge awards going to plaintiffs.

Anonymous, PLEASE stop contaminating the discussion with this ridiculous meme. That figure completely ignores the majority of the costs associated with a substandard tort system:

-The settlements that don't go to trial.
-The money spent on lawyers, for cases that do, and do not, culminate in any payment.
-Like Megan_McArdle said: the defensive medicine. Doctors have to do all kinds of stuff not medicially justified *simply because it sounds good to a jury*. If you honestly believe it's "not a cost" when a handsome trial lawyer flashes images of a dead baby to convince a jury of the merits of an obsure, widely-rejected medical theory, your reasoning skills are deficient enough for me to recommend you stay home on election day.
-Medical costs that have become astronomically high because most doctors have bailed, or have to pay high malpractice insurance costs, *that do not change when they adopt superior safety protocols*. And before you say, "Big evil insurance companies, blah blah blah", keep in mind, most malpractice insurers are doctor-run.

While it sounds good to say "let's limit lawsuits", the practical effect would be to prevent valid claims from going to court

Absolutely false. Having a modified procedure to handle malpractice claims does not at all imply that more, or less, deserving people won't be paid out. Such procedures, which already exist to great success for "vaccine malpractice" can in fact provide greater, more predictable accuracy than the tort system.

Posted by Person | February 6, 2008 2:13 PM

Doctors have to do all kinds of stuff not medically justified *simply because it sounds good to a jury*. If you honestly believe it's "not a cost" when a handsome trial lawyer flashes images of a dead baby to convince a jury of the merits of an obsure, widely-rejected medical theory, your reasoning skills are deficient enough for me to recommend you stay home on election day.

This is the closest anyone has come to answering the point made in my 11:57 post, so I will reply.

In the federal system, you can't introduce testimony about "obscure, widely-rejected medical theory," because of the gatekeeping function exercised by the judge pursuant to the Supreme Court's Daubert decision. Nothing gets to the jury that doesn't have respectable science behind it.

This is one very useful fix to the malpractice system. I don't know how many states have adopted this rule. No doubt the plaintiff's bar fights it, more shame to them.

Another fix that sounds good, at least, is required screening of claims by a panel of experts, as suggested by an earlier commenter. This is not a new idea and is in force in some states, I don't know how many. There must be studies assessing its effectiveness.

What is NOT a good idea is the damages cap. The (relatively rare) very high awards that you read about often reflect the very high costs of care for a totally disabled person. Preventing full recovery in those cases shifts the costs from the insurers and their policyholders onto the taxpayers via Medicaid. So the cap hurts legitimate claimants while doing nothing to stop people from filing totally bogus payments and settling them for nuisance value. A rule that you get paid if your name starts with A through M, and not if you are in the bottom half of the alphabet, would be fairer.

The problem is that the groups with a financial stake in the issue don't care about fairness. The doctors and insurers want to reduce the total payout as much as possible. The plaintiffs' lawyers want to increase it as much as possible. The victims of future malpractice (and if you tell me there isn't any such thing, I tell you are deluded) have no way of organizing and hiring lobbyists, because they don't know who they are.

Posted by roac | February 6, 2008 2:43 PM

The Oregon Supreme Court (all 7 justices of which were appointed by Democratic governors), found the $200,000 malpractice damages cap, protecting OHSU, the state university medical school, invalid recently. OHSU, in January, announced $30,000,000 in annual budget cuts to cover the anticipated additional costs, at what is unanimously agreed to be the state's best hospital, of the additional malpractice claims.

Multiply this real-world example nationwide, and you have some idea of the absurd costs imposed by our current malpractice lottery system.

Posted by Jennymoose | February 6, 2008 2:54 PM

roac: It's a long, long way from the restrictions in Daubert to your claim that the jury never gets to award damages in accordance with a junk theory. As a crude reality check that your claim nonetheless fails, trigger-happy C-sections wouldn't have waited until big jury awards, for hospitals to start doing them in an "attempt" to stave off birth defects.

Regarding damage caps, I support them, but instead of arguing that point, let's focus on the root of the problem, that gets people consider them in the first place: because awards are so random. Unlike with physical property, the jury has no price list to compare the harm done. You never hear about "runaway factory eqiupment damage awards". With no reference price for the damage done, accurate actuarial tables can't be generated, so malpractice insurance costs will have a giant risk premium, with no way to contain one's liability exposure.

So, the effective, but offensive solution to the root problem is: define some reasonable cost for each kind of medical malpractice injury: $X for a lost arm, $Y for a death, etc. Think it undervalues the cost to you of such a loss? Pay for a tag-on insurace policy in advance. Then, when something goes wrong, the victim gets paid immediately as per a table, and then insurers on both sides can sort if there was genuine malpractice. Since the victim is already satisfied, and damages are well-defined and limited, both sides can switch their liability assignment method to a more rational, optimized procedure, that is consistent across all patients and not lottery-like.

Posted by Person | February 6, 2008 3:25 PM

Unlike with physical property, the jury has no price list to compare the harm done.

There's no price list for pain and suffering, but there certainly is for lost income, additional medical expenses, etc. The big runaway awards are pain and suffering and punitive damages. There's no reason to cap damages for somebody with a provable need for lifetime care, say, but also no reason to allow millions to flow to otherwise-recovered victims to punish doctors.

Then, when something goes wrong, the victim gets paid immediately as per a table, and then insurers on both sides can sort if there was genuine malpractice.

Why include the wasteful second step? Just get paid per table, a la worker's comp. Assign the liability to one side or the other and let it factor in to premiums. That system has problems--is the lost arm attributable to bad treatment, or to pre-existing diabetes? But there's no return whatsoever in having the fight if the payout is fixed and not contingent on the outcome. Lawyers are expensive.

Posted by Rob Lyman | February 6, 2008 3:42 PM

Rob_Lyman: There's no price list for pain and suffering, but there certainly is for lost income, additional medical expenses, etc. The big runaway awards are pain and suffering and punitive damages.

Yes, and it is those for which there is no price list. (Incidentally, assigning damages purely on today's quantifiables has the problem of assigning zero damages to e.g. someone who's retired with no dependents, but lost his arm. Oops.)

There's no reason to cap damages for somebody with a provable need for lifetime care, say,

Yes, and no tort reform has proposed this. I would have addressed it in the last response, but the claim was out of ignorance, and on top of that, superceded by the rest of my post.

Why include the wasteful second step? Just get paid per table, a la worker's comp. Assign the liability to one side or the other and let it factor in to premiums. That system has problems--is the lost arm attributable to bad treatment, or to pre-existing diabetes? But there's no return whatsoever in having the fight if the payout is fixed and not contingent on the outcome. Lawyers are expensive.

The second step isn't wasteful, because:

a) The liable party, to the extent ascertainable, should pay the cost.
b) All sides want to know which side if any isn't maintaining proper safety protocols.

But since it's not life-or-death for any one side, and they can have contracts arranged in advance, they can switch to a more accurate, cheap liability-assignment system than today's juries.

Posted by Person | February 6, 2008 3:55 PM

To Person's list of the costs of defending against lawsuits, add:

- Getting a lawyer to respond when plaintiffs' lawyers file shotgun suits naming doctors that never even treated the plaintiff or were consulted about the case.

In the current American legal system, you can file against a doctor with a similar name to the one that treated the patient - and he's got to stand the cost of proving that he wasn't involved. You can file against every doctor in the hospital, and let them all pay the costs of sorting out who actually was involved. That's at least $5,000 for every doctor in the vicinity just because the patient was too confused to figure out who treated her, and her lawyer too lazy to find out.

We badly, badly need a loser pays rule.

Posted by markm | February 6, 2008 4:01 PM

markm,

Sanctions are at least in principle available in the suits you describe, because they aren't filed in good faith; maybe judges should be more aggressive about sanctions.

Person: so are you proposing a mixed system with $X for pain an suffering on top of your proven economic damages for a given injury? That's not "offensive," I don't think, it's practical and sensible. And punis get paid to the state or a malpractice compensation fund, not the plaintiff.

I still maintain the second step is wasteful; moral arguments about fault aside, if the malpractice carrier is the one paying the injured party the initial $X, they'll keep safety protocols high on their list of things to monitor. Or you can pay people out of a big statewide fund built out of doctor licensing fees--so that the people who regulate licensing can get a sense of whose practice needs a closer look (state bar associations do this for bad lawyers). Tag-on insurers can just factor the risk of bad safety rules into the premium.

Really, once you get lawyers involved in a dispute, you're pretty much guaranteed to be wasting money. I say that as a lawyer myself.

Posted by Rob Lyman | February 6, 2008 4:19 PM

Ah, finally some of the correct questions are asked.

1) Anonymous quotes a study from Johns Hopkins that reports the DIRECT costs of malpractice awards as a percentage of health care expenditures. He actually remembers a number that is higher than reported I believe. This is a canard. Even if we add the cost of malpractice insurance and the cost of out-or court settlements and the litigation costs the number is STILL a rounding error as a % of health care expenditures (see below).

2) In general the overwhelming % of fees collected by physicians of all types in the U.S. are fixed by contract. Malpractice insurance costs and cost increases cannot, by contract, be passed on to patients because fees are set by these contracts (this includes medicare and medicaid), another example of the absence of a free market in medicine in the U.S.

3) Unnecessary health care: this is treatment which is unlikely to have an impact on the health outcome. A test done to confirm a solid diagnosis (think MRI as a follow-up test to confirm that the CT did NOT find a tumor in a patient with a textbook history of a migraine) or a chest X-ray in a terminally ill patient in the last days of life. Interestingly, the overwhelming majority of these extra tests,etc. do not financially benefit the doctor who ordered them.

4) Which leads us to the true economic effect of the malpractice tort system, defensive medicine. Contrary to Cervantes and his bitter, broad-stroke ad hominem, it is the fear of being sued and the greater fear of losing that suit that prompts physicians of all stripes to layer on additional health care for the expressed, sole purpose of avoiding these two horrific situations. There is simply no amount of care that can be ordered if the next test or the next drug or the next procedure might be THE ONE that will prevent the suit or innoculate against a loss. The neurologist who orders the MRI does not see any increased revenue from this test; the internist who orders the colonoscopy after the sigmoidoscope showed hemorroids, just in case that blood was something else, doesn't get a fee for the colonoscopy. Wasteful and unnecessary? To be sure. A favor from the trial lawyers? Please.

How do we justify a system that does NOT care for people who will suffer due to a bad outcome or a medical misadventure, or even medical malpractice simply because they didn't win in court? How can we support a system that is ALREADY capped in that any award is decreased by 30-40% in order to pay the plaintiff's lawyer? How can we justify a system that, by its punitive nature, prevents the open distribution of data so that prevention over large groups can be achieved?

Weed out incompetent doctors? Certainly. Continue to capitulate to the plaintiff's bar simply because of their political might? No need to study this one; we're living it.

Posted by bingo | February 6, 2008 4:24 PM

For those really looking to find out the real story instead of anecdotal complaints:

*Facts are that in 1999 the Institute of Medicine found up to 98,000 Americans die each year from preventable medical errors 1.e. malpractice. No studies done since have showed any reduction in those numbers.

*Fact is that a recent study showed most malpractice verdicts are justified but some doctors often get off when they should not.

*Fact is that only about 10% of all possible malpractice cases are ever bought.

*Fact is as stated by one comment above government studies show the cost of lawsuits to be less than 2% of costs to the system.

*No study has calculated the costs of malpractice to the economy in time lost, extra care and effects on families.

*Fact is that in most states 3% to 5% of doctors are responsible for 1/3 to 1/2 of the malpractice payouts.

*Fact is that most states do a poor job of policing bad practitioners and the medical societies do a worse job. Only recently have some states begun posting malpractice outcomes on line. Too often reporting and investigation are done secretly.

*Fact is that there are 27 problems that are labelled "never events" defined as things that never should happen in the health care setting. e.g. wrong site surgery, prescription errors, instruments left in patients, patiens lost or wandering off, etc. Only recently, Medicare and private insurers have stopped paying for these mistakes. Pennsylvania has also stopped doing so thru Medicaid.
Before this there was no financial incentive for hospitals to prevent bad events since they got paid for both the errors and fixing them.

If the health care industry put as much effort into preventing mistakes or policing itself as it does in trying to limit or discourage litigation musch of the mess would go away.
Remember what an ounce of prevention is worth.

*Fact is that hospital acquired infections are costing the system Billions. The main culprit-failure by practitioners to wash hands.

Some good sites to find a compilation of studies are at the Center for Justice and Democracy, or saynotocaps.org

Posted by David | February 6, 2008 4:27 PM

As a crude reality check that your claim nonetheless fails, trigger-happy C-sections wouldn't have waited until big jury awards, for hospitals to start doing them in an "attempt" to stave off birth defects.

OK. I'm not sure I understand this, but it does seem to be the concrete example of "defensive medicine" that I was asking for in my first post. The assertion seems to be that hospitals do too many C-sections because where a vaginal delivery results in a birth defect, unscrupulous lawyers assert cause and effect where there is none, and gullible juries go along because they think the lawyers are hot.

If this has been going on for some time, then surely there are studies that either show, or do not show, an increased risk of birth defects associated with vaginal delivery. If there is such a risk, then isn't it at least arguable that more C-sections are a good thing? If there is no such increased risk, then shouldn't Daubert work to prevent alleged experts from telling a jury there is?

A word about "pain and suffering." The assumption seems to be that if the injured person were not just a big baby, he or she would suck it up and get on with life. But we are talking, very often, about catastrophic, life-changing events. If you ask ordinary people, such as make up juries, "How much would I have to pay you to spend the rest of your life in a wheelchair," you get a very large number. Tort-reform advocates think this is the wrong question to ask. But there is room for debate on the point.

The argument for some kind of standardization seems fair enough. But in the long term, the amounts have to be consistent with ordinary people's sense of fairness to be sustainable. (Workers' Comp awards are quite low, and do not compensate for "pain & suffering" at all, as a tradeoff for removing the issue of fault altogether.)

Posted by roac | February 6, 2008 4:27 PM

For those really looking to find out the real story instead of anecdotal complaints:

*Facts are that in 1999 the Institute of Medicine found up to 98,000 Americans die each year from preventable medical errors 1.e. malpractice. No studies done since have showed any reduction in those numbers.

*Fact is that a recent study showed most malpractice verdicts are justified but some doctors often get off when they should not.

*Fact is that only about 10% of all possible malpractice cases are ever bought.

*Fact is as stated by one comment above government studies show the cost of lawsuits to be less than 2% of costs to the system.

*No study has calculated the costs of malpractice to the economy in time lost, extra care and effects on families.

*Fact is that in most states 3% to 5% of doctors are responsible for 1/3 to 1/2 of the malpractice payouts.

*Fact is that most states do a poor job of policing bad practitioners and the medical societies do a worse job. Only recently have some states begun posting malpractice outcomes on line. Too often reporting and investigation are done secretly.

*Fact is that there are 27 problems that are labelled "never events" defined as things that never should happen in the health care setting. e.g. wrong site surgery, prescription errors, instruments left in patients, patiens lost or wandering off, etc. Only recently, Medicare and private insurers have stopped paying for these mistakes. Pennsylvania has also stopped doing so thru Medicaid.
Before this there was no financial incentive for hospitals to prevent bad events since they got paid for both the errors and fixing them.

If the health care industry put as much effort into preventing mistakes or policing itself as it does in trying to limit or discourage litigation musch of the mess would go away.
Remember what an ounce of prevention is worth.

*Fact is that hospital acquired infections are costing the system Billions. The main culprit-failure by practitioners to wash hands.

Some good sites to find a compilation of studies are at the Center for Justice and Democracy, or saynotocaps.org

Posted by David | February 6, 2008 4:27 PM

Another thing I'd love to see is how legal costs compare versus say, Canada. Proponents of socialized medicine point to Canada's system as a good option, so I'd love to see how these costs compare.

I was born and raised in Canada (now living in California), and if there's one thing that is bizarre to Canadians is the litigiousness of the US. There's got to be a difference, and I would think significant. Unfortunately, I doubt that these studies have been done.

Posted by jongo | February 6, 2008 4:39 PM

OK, bingo, who sounds knowledgeable, has provided persuasive examples of "unnecessary tests":

A test done to confirm a solid diagnosis (think MRI as a follow-up test to confirm that the CT did NOT find a tumor in a patient with a textbook history of a migraine) . . .the internist who orders the colonoscopy after the sigmoidoscope showed hemorroids, just in case that blood was something else . . .

My question, which was my original question: Does the MRI never find a tumor that the CAT scan missed? Does the colonoscopy never find a tumor? If the answer is yes (never a positive result), then what risk is there to the doctor in not doing those tests? If the answer is no (sometimes the tests benefit the patient), then how do we calculate the tradeoff between the cost and the benefit? (I have no agenda here. I really want to know.)

Posted by roac | February 6, 2008 4:42 PM

roac: If there is no such increased risk, then shouldn't Daubert work to prevent alleged experts from telling a jury there is?

Nope.

A word about "pain and suffering." The assumption seems to be that if the injured person were not just a big baby, he or she would suck it up and get on with life

Wow, you really skipped past my argument there, didn't you? No one here has advanced that argument. You seem to be reverting to your tribal, "ooh, disagrees, must be bad guy, must fit bad guy caricature that I put together because I couldn't be bothered to find out why people really disagree with me".

The point is not, and never has been, that people should "suck up" these losses. The point is, we shouldn't be re-inventing the wheel each time someone gets hurt in treatment some way, so that some people can get big "lottery" jury awards, while others don't even see trial, because the other side is pulling out all the stops to avoid having to pay out a lottery award. There should be some standard table defining how much each injury is worth, and if you think it underrates the importance of not suffering that way, you can buy insurance against it, or (through your existing insurer) negotiate such concessions with the doctor.

Example:

Loss of leg: $800,000.
Loss of dominant arm: $900,000.
Death: $1.8 million.
Etc.

The argument for some kind of standardization seems fair enough.

Wait, I thought I was a terrorist who thought victims should "suck it up"? I'm confused now.

The reason I called my solution "offensive" (take note, Rob_Lyman), is that it requires -- yep -- placing a value on, among other things, human life. That's the problem. People have such an emotional reaction to it that they won't consider such a streamlining. Plus, it would take away the INALIENABLE right to have a compassionate jury pat your ego by consider the *unique* circumstances of your case, such as how cute your baby looked, or how well you can cry on the witness stand.

But in the long term, the amounts have to be consistent with ordinary people's sense of fairness to be sustainable.

Yes, and the long-term sense-of-fairness meeting will arise through experimentation, insurer-doctor negotiation, and individual tag-on insurance. That's why it's not so critical to get accurate leg-prices when implementing this, just *that* you assign a price, which by itself allows malpractice insurers to eliminate a lot of uncertainty (and therefore unnecessary risk premium), and better isolate factors that can reduce the risk of wronful injury.

Posted by Person | February 6, 2008 4:59 PM

My question, which was my original question: Does the MRI never find a tumor that the CAT scan missed? Does the colonoscopy never find a tumor? If the answer is yes (never a positive result), then what risk is there to the doctor in not doing those tests? If the answer is no (sometimes the tests benefit the patient), then how do we calculate the tradeoff between the cost and the benefit? (I have no agenda here. I really want to know.)

These tradeoffs are well known in the medical community, and lots of the journal articles on new drugs and procedures have such cost data in them.

Say the MRI costs $1000 and it finds a bad, fatal tumor 1 time in 100. Say a life is worth $1 million. It "costs" $100,000 to save $1 million, so the test is worthwhile. Change the odds to 1 in 10,000. It now costs $10 million to save $1 million. So, the test is not worthwhile.

But a plaintiff's attorney will say: "Why didn't you order the test? It would have saved his life! Isn't that worth $1000?". And may well win, or at least have cost the doctor quite a bit of time and aggravation. Not to mention the cost of defending the case by the malpractice insurer. (My dad spent 3 years in hell defending a malpactice claim that the jury dismissed in 10 minutes. The judge had tried to dismiss it early on for lack of evidence from credible experts, but was overruled by an appeals court. I'm convinced the stress took a few years off of his life.)

The most sensible suggestion is to go to a "worker's comp" type system. Hilary Clinton has proposed such a system, IIRC, based on one used in Europe.

Posted by ech | February 6, 2008 5:24 PM

My question, which was my original question: Does the MRI never find a tumor that the CAT scan missed? Does the colonoscopy never find a tumor? If the answer is yes (never a positive result), then what risk is there to the doctor in not doing those tests? If the answer is no (sometimes the tests benefit the patient), then how do we calculate the tradeoff between the cost and the benefit? (I have no agenda here. I really want to know.)

These tradeoffs are well known in the medical community, and lots of the journal articles on new drugs and procedures have such cost data in them.

Say the MRI costs $1000 and it finds a bad, fatal tumor 1 time in 100. Say a life is worth $1 million. It "costs" $100,000 to save $1 million, so the test is worthwhile. Change the odds to 1 in 10,000. It now costs $10 million to save $1 million. So, the test is not worthwhile.

But a plaintiff's attorney will say: "Why didn't you order the test? It would have saved his life! Isn't that worth $1000?". And may well win, or at least have cost the doctor quite a bit of time and aggravation. Not to mention the cost of defending the case by the malpractice insurer. (My dad spent 3 years in hell defending a malpactice claim that the jury dismissed in 10 minutes. The judge had tried to dismiss it early on for lack of evidence from credible experts, but was overruled by an appeals court. I'm convinced the stress took a few years off of his life.)

The most sensible suggestion is to go to a "worker's comp" type system. Hilary Clinton has proposed such a system, IIRC, based on one used in Europe.

Posted by ech | February 6, 2008 5:29 PM

thank you all for your insightful comments to my question.

it seems that the answer is, no one knows the real effect tort has had on the bottom line of health care in this country.

but i do know what it has done to physicians and nurses...

i agree that there needs to be accountability, and any patient should be able to find their physician lible if they did something wrong. However, what happens is that the patients try to blame their doctors, nurses, and hospitals when they have a bad outcome. we are not miracle workers and not every patient is going to have a normal course. to the lawyer that asks how much would it take to live in a wheelchair the rest of your life, i respond, where would you be if you never got treated at all?

that's the slippery slope of medicine. we try not to do harm, but sometimes to cure someone we have to harm them first. pills, surgery, or chemo - everything has an adverse effect. society needs to expect that those adverse events are going to happen.

it's true that there needs to be more research and development to identify errors before they happen. if fedex can ship millions of packages with low rates of errors hospitals, physicians should be able to provide better care. as information technology gets better and more widespread, we should be able to decrease these events.

the threat of litigation creates a cover your ass mentality and makes your health care provider look at you not as a patient but as a potential enemy. it forces ER physicians to perform every test in the book regardless of likelihood of a positive result. i don't know what the cost benefit analysis of doing that is, but it is not good medicine.

i hope that whatever healthcare reform that comes down the pipeline addresses these issues because while it is not the main reason health care costs are higher in this country, i do not believe that it leads to better care.

Posted by surgdoc | February 6, 2008 5:30 PM

David fires off a number of "statistics" that each contain a kernel of truth. However, the ones with which I am familiar are not the correct, or are not the most correct statistics to utilize in this discussion:

"Only 10% of all possible malpractice cases are ever brought." Perhaps, but surely you must know that this is an impossible number to measure with any degree of certainty. Why not 20% or 2%? This number is meaningless when one is talking about tort reform. The cost to the system lies in the cost of avoiding the 80-85% of cases that are filed without merit, each of which requires financial expenditure to resolve, and all of which drives the phenomenon of defensive medicine.

"...the cost of lawsuits...less than 2% of costs to the system." Agreed, as above. But the effect of defensive medicine on the magnitude of health care expenditures has been estimated to be between 15-25% of all medical expenditures. 15-25 cents of every health care dollar spent to prevent the filing or loss of a lawsuit. 15-25% of $2 Trillion. Do the math.

"If the health care industry put as much effort into preventing mistakes..." Ah, NOW we're getting somewhere. Our tort system is based on the rather puritanical concept that we can PUNISH malpractice out of the system, that physicians will be so frightened by the specter of a malpractice case that malpractice, indeed ALL medical misadventure will go away. Not. What we must consider is adapting something like the system in the Netherlands where there is no tort, per se, where ALL errors, misadventures, and bad outcomes are routinely reported and recorded and anlyzed. From this patterns evolve and central authorities are able to perform a root cause analysis in order to prevent similar mishaps from occurring downstream. It is the absence of the perjorative, the removal of the capricious risk of punishment to the physician and instutions providing care that allows this free flow in information. The notion that we can simply legislate such a system of error notification without removing the risk of a lawsuit is naive at best, disingenuous more likely.

roac: "NEVER" never occurs. An example (all percentages are for illustration but are correct in scale): a patient presents to his internist with a history classic for a migraine headache, which the internist diagnoses (99% chance that diagnosis is correct). However, given the small chance that he is wrong he orders a CT scan ($750) and sends the patient to a neurologist for a consult ($250). The neurologist agrees that it is a migraine (99.9%) and the CT is normal (99.99%). The neurologist discusses this with the patient and the internist, pointing out that "we can only be certain if we do an MRI ($1250)", which is also normal (99.999%). Is some of this "care" unnecessary? Where is the line drawn? Note that the internist who started this cascade of testing will not receive one penny of the addtional $2250 spent on this patient. Note, also, that there is STILL a .001% chance that this patient has something else.

And just why did the internist begin this cascade? Imagine, as he would, sitting in court and hearing someone ask: "so tell us, Dr., just why didn't you order a CT scan on this patient?"

And THAT, boys and girls, is the economic reason why we need malpractice tort reform.

Posted by bingo | February 6, 2008 5:43 PM

Okay roac, I'll take a stab at explaining it.

Medical tests have false positives and false negatives. Tests do not always give you accurate information. For rate conditions even a low false positive rate can give you more false positives than real positives. This is esp. true if you just start testing all sorts of people rather than just people who you have a very good reason to think have the condition you are testing for.

Tests not only cost money and(some of them are expensive), and take time (including the time of expensive highly trained professionals), and tie up testing equipment that could be used for others for whom the test is more appropriate, they can also can cause damage (its hard to nail down the exact damage from the radiation from an X-Ray but certainly you wouldn't want one every day and even much less frequent X-Rays probably have some negatives). Also false positives can cause you to get treatment that might be harmful and/or they might cause you not to get the treatment you need.

Then there is the fact that the results of some tests just don't matter in terms of medical treatment. Getting a positive result doesn't always mean the standard medical response is to do anything before you have actual symptoms.

Testing makes sense when for a reasonable cost it gives you useful information that can be pertinent to actual treatment.

But sometimes the cost is not so reasonable, the information is useless (as in the cases where there are many more false positives than true positives), or the information it gives you has no effect on treatment or any other important decision. Those tests are useless tests.

Posted by Tim Fowler | February 6, 2008 8:16 PM

sgr, Bingo, and Tim Fowler have largely convinced me that unnecessary tests are a real problem. Thank you for your time.

I do not think any of you is a terrorist.

Posted by roac | February 6, 2008 8:25 PM

bingo re: 2) In general the overwhelming % of fees collected by physicians of all types in the U.S. are fixed by contract. Malpractice insurance costs and cost increases cannot, by contract, be passed on to patients because fees are set by these contracts (this includes medicare and medicaid), another example of the absence of a free market in medicine in the U.S.

The cost perhaps can not directly and immediately be passed on but that doesn't mean it doesn't exist. To a large extent it was "pre-passed on" because the contract would include an estimate of the likely costs. To the extent that malpractice costs grow beyond previous expectations that contributes to an escalation of the prices in future contracts. The the extent the contracts are rigid and long term, it contributes to pressures to recover the cost in other ways, manipulating billing being one of them. To the extent that the costs can not be recovered it represents reduced compensation for doctors and if that reduction is severe enough you have less doctors practicing, which tends to drive up costs and cause other problems.

Or to make a long story short, just because the contract says the costs can't be passed on doesn't mean they go away or even that they are necessarily imposed on the doctor or hospital rather than the patient, insurance company or government.

Posted by Tim Fowler | February 6, 2008 8:27 PM

Just some more anecdotal evidence that liability concerns can have non-obvious detrimental effects:

I'm currently doing research into using logistics approaches to reduce medical errors. (i.e. using technology such as RFID/Barcodes to reduce medication errors, electronic medical records, better inventory tracking to make sure the right stuff is used prior to expiration, etc.)

While doing a site visit I got into a discussion about how they attempt to track possible problems with supplies, implants, etc. Was there any database of adverse outcomes tied to products? In short, no, of course not. Can you imagine the liability? Plaintiffs' lawyers would be watching such a database all the time.

The only way they find out if a product has problems is through governmental bulletins or manufacturer recalls. Nobody is going to share any information unless absolutely required by law, at this point. This is a pretty stark contrast to the Denmark system referenced above. There is a huge wealth of information out there that could be used to discover adverse drug interactions, risk factors not discovered during clinical trials, etc., but we'll never see it.

Posted by JDE | February 6, 2008 10:15 PM

How I Am Learning to Throw M0n*y Away With Both Hands and a Big Shovel

a large percentage of the money we spend in medicine is to rule out conditions that are either rare in and of themselves or, if common, not very likely given the clinical picture of the patient. We spend the money anyway because there is very little incentive for most physicians to control costs.

.

Just one successful lawsuit against a physican for a missed diagnosis can damage his ability to maintain his credentials, cost him the average income of any two or three Americans in increased liabiity insurance, jeopardize his financial assets, and even end his career.

.

I am embarrased to say that, just to be legally safe and in proportion to the number of times any particular attending of ours has been named in a frivolous lawsuit, we often obtain a five-hundred-dollar CT of the brain even in face of a normal neurological exam and a chief complaint (”I bumped my head”) that didn’t even exist forty years ago when we had less technology but maybe more common sense..

Posted by TJIT | February 6, 2008 10:23 PM

Malpractice and John Ritter

Given that Ritter had a very rare disease, which presented mimicking another emergent diagnosis, it's very hard as a doctor to view the cardiologist as negligent. Most ER docs hear this story and say, "Thank God that wasn't me, because I would have done the exact same thing." Which is really the opposite of negligence, isn't it?

Which begs the question -- if there was not negligence, then why have nine other entities settled for a total cumulative settlement of $14 million?

Because juries are not qualified to make the determination as to whether there was negligence. They are laypersons with limited knowledge of medicine, diagnosis, or statistics. They are swayed by the pathos: the suffering of the widow and small children, the sadness of the loss of a beloved star, and the righteous anger of the family who believe the doctors killed their loved one:

They will listen to grey-bearded professors contradict one another, flip a coin as to who was more credible, and issue a verdict. And the plaintiffs are swinging a big stick -- a $67 million one. If you lose, you lose very big. Safer to settle for policy limits and walk away, rather than take that downside risk.

And the lay population wonders why doctors are cynical and mistrusting of the medical malpractice system.

Posted by TJIT | February 6, 2008 10:44 PM

I wish to echo TJIT's post as a physician who has ordered countless such unnecessary CTs, all because of a single lawsuit against the ER in the county hospital that I worked in (before I even started working there, a patient had died of an undiagnosed subdural hemorrhage and needless to say, the hospital settled quickly despite the lack of medical evidence of any malpractice)...

Posted by v | February 6, 2008 11:00 PM

Because juries are not qualified to make the determination as to whether there was negligence. They are laypersons with limited knowledge of medicine, diagnosis, or statistics.

'Kay.

That's sort of beside the point, though--by that standard, juries (and for that matter, our legislative assemblies) aren't qualified to make decisions about anything. Do you think we ought to cap prison sentences because jurors are laypersons with limited knowledge of murder?

Posted by Matt | February 7, 2008 12:00 AM

Matt: That doesn't follow at all. Criminal juries are asked this question:

"Does the presented evidence suffice to show that this person committed this act, and if so, did this act meet these criteria?"

Civil juries are asked this question:

"Does this theory of medical causation have enough evidence to show it happened in this case, and if so, how much is this currently-unpriced damage to the victim worth, in dollars?"

It's no contradiction to believe laypeople are qualified to answer the first but not the second.

Posted by Person | February 7, 2008 11:31 AM

Malpractice premiums for the industry, not just doctors, runs ~0.5% of medical GDP. It's an easily quantifiable term. It does represent all costs - failed lawsuits, settlements and judgements. That side of the costs is obviously insignificant.

There was a claim above that unnecessary defensive medicine, that solely devoted to avoiding lawsuits, is 15-25% of medical GDP. I find that disparity inexplicable. Why spend so much,30-50 times as much as insurance premiums? It would be more efficient to just accept more lawsuits, and pay higher malpractice fees. I think even the bottom of that range is too high. It is not an easily quantifiable term, and suspect it comes from repeated quotation by interested parties.

As a sanity check on that 15-25% number, I wanted to see how much is spent on testing in total. That seems to be the consensus as to where the unnecessary spending is. I couldn't find a good number though. Anyone have a good number for testing costs?

Posted by Njorl | February 7, 2008 12:29 PM

Why spend so much,30-50 times as much as insurance premiums?

Because while malpractice insurance covers the financial risk of a single incident, it doesn't cover the risk of increased premiums or the ruinous effect on one's career that a major lawsuit can have. And also because the party spending the extra money for tests (the insurance carrier or patient) is different from the party spending the extra money for the malpractice insurance.

Which, is not, by the way, to say that the figures given are accurate, just that "accepting more lawsuits" in exchange for fewer tests means individual doctors taking big personal risks to save HMOs money. What a shock that they don't do it.

Posted by Rob Lyman | February 7, 2008 12:54 PM

Njorl: While you're doing those reality checks, why don't you ask yourself why some specialties and regions have been nearly abandoned by doctors on the grounds that they couldn't afford to operate there?

How would a 0.5% cost make them do that? Hm...

Posted by Person | February 7, 2008 1:01 PM

Njorl: "It would be more efficient to just accept more lawsuits, and pay higher malpractice fees."

Oh yes, yes it would, indeed. Except that:
1) Increased malpractice premiums come on top of fixed office overhead, cannot be passed on to the customer, and therefore directly reduce the physicians already pressured income and

2) Time out of the office to defend a lawsuit will reduce the top-line revenue of the medical practice, also directly reducing income and

3) Multiple lawsuits filed with the same low % liklihood of having merit will eventually produce a reputation in the community that will make it impossible to practice and

4) You've never been on the receiving end of a civil tort, have you? Imagine that for months on end you are forced to defend your very reason for getting up each day and going to work. You are told in public that you are not only deficient but bad. The overwhelming majority of the time the suit is without merit, and yet there you are, every day forced to prove that you are not a bad doctor, with people watching on the front page of your local paper, watching on the local news. You see, the entities on BOTH sides of a malpractice tort are actually people.

Nope, you've never been sued like that.

Posted by bingo | February 7, 2008 1:07 PM

The best numbers I found for testing costs were $100-170 billion for imaging and ~$40 billion for clinical lab testing. That $40 billion number was probably for the whole industry, but might have been referring only to independent labs, which do about 1/3 of the business. That means combined, at the low end, $140 billion, at the high end $290 billion. This is out of $1.7 trillion health-care GDP.

That's 8-17% of health care costs for MOST testing (a small amount doesn't fall into these catagories). If unnecessary testing is the biggest part of unnecessary defensive medicine costs, there is no way those costs rise to 15-25% of health care expenditures.

My guess is that someone knowledgeable said that 15-25% of testing was of an unnecessary, defensive, nature. Then the range was repeated and misapplied.

Posted by Njorl | February 7, 2008 1:58 PM

Njorl: While you're doing those reality checks, why don't you ask yourself why some specialties and regions have been nearly abandoned by doctors on the grounds that they couldn't afford to operate there?
How would a 0.5% cost make them do that? Hm...
Posted by Person

I have. It turns out that they weren't.

Four years ago, when these stories were being hyped, I did what most reporters didn't. When all of the cardiologists had abandoned Pennsylvania, I looked them up in the phone book. There were plenty. Later, when I went back to Philly for a vist, I called the first one on the list to ask if they were accepting new patients. They were.

You're swallowing self-interested propaganda. Be critical.

Posted by Njorl | February 7, 2008 2:05 PM

Whoa whoa whoa, Njorl, you're saying that after the doctors were alleged to have left an area, you looked at the current phone book, and concluded that, since the latest edition hadn't removed them yet, they must not be leaving in droves?

Do you know how long it would be from when someone leaves the area, to when they no longer show up in the phone book?

Did they tell you how long it would be until you got to see a doctor?

Did you ever have your long-time OBGYN tell you that he wouldn't be able to deliver your baby because of liability reasons?

Did you document the change in "nearest specialist of type X" over the US?

Yes, someone is buying self-interested propoganda. It isn't me. I'm not even a doctor, just someone who understands how incentives work. FWIW, I do think doctors are overpaid and overprotected (in terms of licensure, etc.). Wait, now how does that make sense? I thought the world was black and white. I thought if you said anything whatsoever that suggested any kind of policy that in any way worked in any doctor's favor, that must mean you're a complete shill for doctors?

Right? Isn't that how you think?

Posted by Person | February 7, 2008 2:21 PM

So, Person, what did you do to verify the claims that doctors were leaving in droves? Anything?

Posted by Njorl | February 7, 2008 3:44 PM

Another good resource for this kind of issue is
www.sickoflawsuits.org

10% of every dollar spent on healthcare is attributed to the costs of liability and defensive medicine. This is according to an article titled, "The Factors Fueling Rising Healthcare Costs 2006", by PriceWaterhouseCoopers, January 2006.

Posted by Tom Scott | February 7, 2008 5:49 PM

Another good resource for this kind of issue is
www.sickoflawsuits.org

10% of every dollar spent on healthcare is attributed to the costs of liability and defensive medicine. This is according to an article titled, "The Factors Fueling Rising Healthcare Costs 2006", by PriceWaterhouseCoopers, January 2006.

Posted by Tom Scott | February 7, 2008 5:49 PM

Njorl,

Lowering malpractice lawsuit risk brings physicians into a state. It would make sense that increasing lawsuit risk would result in physicians leaving a state.

More Doctors in Texas After Malpractice Caps

Four years after Texas voters approved a constitutional amendment limiting awards in medical malpractice lawsuits, doctors are responding as supporters predicted, arriving from all parts of the country to swell the ranks of specialists at Texas hospitals and bring professional health care to some long-underserved rural areas.

The influx, raising the state’s abysmally low ranking in physicians per capita, has flooded the medical board’s offices in Austin with applications for licenses, close to 2,500 at last count.

Posted by TJIT | February 7, 2008 8:27 PM

The problem with liability caps is that they are an awful blunt instrument.

They can prevent people who were harmed from getting adequate compensation for damages they suffered.

A better solution would be some form of loser pays. That would allow damaged people to have a better chance of getting adequate compensation while preventing frivolous suits.

But until then liability caps are one of the most effective tools to keep fear of lawsuits from driving physicians from practice areas.

Posted by TJIT | February 7, 2008 8:39 PM

"Lowering malpractice lawsuit risk brings physicians into a state. It would make sense that increasing lawsuit risk would result in physicians leaving a state."

True, but the extent of the effect is in doubt. What I am arguing is that the crises that were in the news a few years back were PR fabrications. The effect isn't that strong.

You could just as easily argue that bad doctors would flock to the states with the most stringent award caps, and that might happen in a few cases, but I'm sure that effect is also very small.

Posted by Njorl | February 8, 2008 9:09 AM

Njorl,

The link I provided showed their was a strong response to limited malpractice risk.

Do you have a link to substantiate your assertion that the effect is not that strong?

Posted by TJIT | February 8, 2008 9:54 PM

It's not only doctors who are concerned. My late partner was a neonatal intensive care nurse. (That's babies who are born prematurely, multiple-birth (twins, triplets) babies, and babies born with defects, to name a few categories.) In our state, New Jersey, the neonatal staff -- nurses as well as doctors, plus others -- is liable to be sued for *21* years after the birth. Try working in an intensive care situation where every set of parents, and/or (at some point) the child, is able to sue you for what happened up to two decades ago. And you wonder why doctors want to give every test in existence?

Posted by neunerdude | February 10, 2008 1:57 PM

I'm with bingo and Person, but also--abolish punitive damages. Shouldn't these be the exclusive province of the criminal justice system?

Posted by Kirk Parker | February 11, 2008 4:17 AM