Tort reform could lower costs, improve patient care

At the recent “America’s Health Care at Risk: Finding a Cure” conference, both Republicans and Democrats agreed that bipartisan cooperation and compromise are necessary to solve America’s healthcare problems.

In the past, Congress has not addressed the fundamental issues that make the current healthcare system unsustainable. With a clear Democratic majority in both houses, Congress will be challenged to develop a comprehensive solution to America’s healthcare problems. The unknown is whether Congress will tackle the issue head-on with a complete overhaul or just adopt a piecemeal approach.

The need for tort reform
The current medical liability system neither effectively compensates persons injured from medical negligence nor encourages the addressing of system errors to improve patient safety. The medical liability crisis has had many unintended consequences, most notably a decrease in access to care in a growing number of states and an increase in healthcare costs.

Access is affected as physicians move their practices to states with lower liability rates and change their practice patterns to reduce or eliminate high-risk services. When one considers that half of all neurosurgeons—as well as one third of all orthopaedic surgeons, one third of all emergency physicians, and one third of all trauma surgeons—are sued each year, is it any wonder that 70 percent of emergency departments are at risk because they lack available on-call specialist coverage?

The impact on the patient-physician relationship
Another unintended consequence of the medical liability crisis is a fundamental change in doctor-patient relationships, with attendant increasing healthcare costs secondary to defensive medicine practices. Many physicians are dissatisfied with the way they think they must practice medicine today. Many now adopt an attitude that “views every patient as a potential lawsuit.”

This same attitude is also prevalent among residents. In a recent study of residents across specialties, 81 percent of responding residents said that they view every patient as a potential lawsuit. These protective, fear-of-lawsuit attitudes result in physicians adopting behaviors that increase healthcare costs through the practice of defensive medicine.

The impact on cost
Defensive medicine is defined as providing medical services that are not expected to benefit the patient but that are undertaken to minimize the risk of a subsequent lawsuit. Diagnostic defensive medicine practices have a much greater impact on costs than do therapeutic defensive practices. The quality of the literature on the true costs of defensive medicine and its impact on healthcare costs is poor; few good studies exist, and cost estimates vary widely.

The study quoted most often is by Daniel P. Kessler and Mark B. McClellan. To really understand actual costs, Kessler and McClellan analyzed the effects of malpractice liability reforms using data on Medicare beneficiaries who were treated for serious heart disease. They found that liability reforms could reduce defensive medicine practices, leading to a 5 percent to 9 percent reduction in medical expenditures without any effect on mortality or medical complications.

If the Kessler and McClellan estimates were applied to total U.S. healthcare spending in 2005, the defensive medicine costs would total between $100 billion and $178 billion per year. Add to this the cost of defending malpractice cases, paying compensation, and covering additional administrative costs (a total of $29.4 billion). Thus, the average American family pays an additional $1,700 to $2,000 per year in healthcare costs simply to cover the costs of defensive medicine.

Excessive litigation and waste in the nation’s current tort system imposes an estimated yearly tort tax of $9,827 for a family of four and increases healthcare spending in the United States by $124 billion. How does this translate to individuals? The average obstetrician-gynecologist (OB-GYN) delivers 100 babies per year. If that OB-GYN must pay a medical liability premium of $200,000 each year (which is the rate in Florida), $2,000 of the delivery cost for each baby goes to pay the cost of the medical liability premium.

The impact on care
Although hard data are difficult to acquire, several studies on physician attitudes indicate that a fear of lawsuits tends to drive providers to adopt behaviors that lead to increased healthcare costs. One study, for example, showed that 93 percent of physician respondents reported engaging in some form of defensive medicine.

Assurance behavior, reported by 92 percent of physician respondents, involves ordering tests (particularly imaging tests), performing diagnostic procedures, and referring patients for consultation. Avoidance behavior, reported by 42 percent of physician respondents, includes restricting their practice, eliminating high-risk procedures and procedures prone to complications, and avoiding patients with complex problems or patients perceived as litigious. A recent unpublished study in Massachusetts showed that 83 percent of physician respondents ordered imaging and laboratory tests or made specialist referrals defensively.

Unfortunately, if these assurance behaviors continue over time, they become the standard of care. Patients also become educated through the Internet and media about this new standard and change their expectations of their care.

On the therapeutic side, defensive therapeutic measures such as Caesarean sections or invasive procedures such as breast lump biopsies are accompanied by significant risks to patients and increased healthcare expenditures, not to mention the issues of patient safety.

Physician practice patterns have clearly changed in response to the liability crisis. With no relief in sight, these defensive behaviors will become engrained in a new standard of care, and healthcare costs will continue to rise unnecessarily. Our only hope is that federal and state legislators will take this key issue into consideration when developing a comprehensive approach to America’s healthcare crisis.

Stuart L. Weinstein, MD, is a past president of the AAOS and current chair of the Orthopaedic Political Action Committee.