Published 12/1/2010
Carolyn M. Hettrich, MD, MPH; Richard C. Mather III, MD; Manish K. Sethi, MD; Ryan M. Nunley, MD; Amir A. Jahangir, MD; the Washington Health Policy Fellows

The costs of defensive medicine

Did healthcare reform miss an opportunity to cut costs, improve access, and increase patient safety?

A major area of concern for orthopaedic surgeons that was not addressed in the Patient Protection and Affordable Care Act was substantive medical liability reform. Although direct expenditures on medical liability account for only a small fraction of healthcare spending, much more is spent on the direct and indirect costs of defensive medicine.

Defensive medicine occurs when physicians alter clinical decision making because of the threat of medical liability. This change in behavior can be ‘positive,’ leading to an increase in referrals, follow-up visits, diagnostic testing, more drugs than medically indicated, and increased invasive testing that presents additional risks to the patient (such as biopsies). Defensive medicine can also be ‘negative,’ occurring when physicians avoid treating certain patients or restrict their practices to avoid procedures or interventions that are perceived as being high risk.

A common, costly practice
In recent studies, more than 90 percent of physicians reported practicing positive defensive medicine in the past 12 months; unnecessary imaging tests accounted for 43 percent of these actions. More than 92 percent of surgeons reported ordering unnecessary tests to protect themselves.

Another study found a direct relationship between higher malpractice awards and malpractice premiums and Medicare spending, especially with imaging services. The increased spending, however, had no measurable effects on mortality.

In a recent Gallup survey, physicians attributed 34 percent of overall healthcare costs to defensive medicine and 21 percent of their practice to be defensive in nature. Specifically, they estimated that 35 percent of diagnostic tests, 29 percent of lab tests, 19 percent of hospitalizations, 14 percent of prescriptions, and 8 percent of surgeries were performed to avoid lawsuits.

Liability reform has been estimated to result in anywhere from a 5 percent to a 34 percent reduction in medical expenditures by reducing defensive medicine practices, with estimates of savings from $54 billion to $650 billion.

The impact on access
Beyond the financial costs, the lack of physician liability reform and the practice of defensive medicine restrict patient access to care from physicians who limit their practices as well as from a decreasing supply of physicians. In one study, 42 percent of responding physicians had restricted their practices to avoid risky procedures, patients with complex conditions, or those perceived to be litigious.

States that implement direct reform with caps on noneconomic damages have benefitted from an increase in physician supply of 3 percent to 12 percent. In Texas, for example, rates for malpractice insurance have dropped every year since the passage of liability reform, and the number of obstetricians has increased by 192, compared to a net loss of 14 in the 3 years prior to reform.

Texas has also seen an increase in the number of orthopaedic surgeons (up by 162 surgeons). This increase is due to more physicians being willing to start practices in these states, as well as fewer physicians retiring early due to excessive malpractice insurance costs.

Defensive medicine and patient safety
Not only does the practice of defensive medicine contribute to higher healthcare expenses and restricted patient access to care, it also has an impact on patient safety. Increased diagnostic testing exposes patients to unnecessary radiation, risks from additional procedures, as well as increased time away from work.

According to one 2007 study, approximately 0.4 percent of all cancers in the United States are attributable to radiation from computed tomography (CT) studies, based on data from 1991 through 1996. By extrapolating this data and applying it to current CT use, the authors estimated that 1.5 percent to 2.0 percent of cancers could be attributed to radiation from CT scans.

The authors stated that “a problem arises when CT scans are requested in the practice of defensive medicine” and cited a poll of pediatric radiologists that suggested that one third of CT studies could be replaced by alternative approaches or not performed at all. This year, another author hypothesized that the risk of cancer from a single CT scan could be as high as 1 in 80. No studies have addressed the cost to society from the time missed from work by patients undergoing these additional tests or follow-up appointments.

The practice of defensive medicine imposes a high cost to society both directly and indirectly with excess exposure to radiation (and subsequent cancer treatment), increased time away from work, and limited patient access to care. Legislation needs to be developed that addresses the problems in the current liability system to decrease both positive and negative defensive medicine. This will not only decrease healthcare spending, it will encourage and enable physicians to take better care of patients.

Next steps?
Medical liability reform is a key issue for both the American Association of Orthopaedic Surgeons (AAOS) and the Orthopaedic Political Action Committee (Orthopaedic PAC). It is one of the topics that orthopaedic surgeons will address with legislators during the National Orthopaedic Leadership Conference, which will be held April 6–8, 2011, in Washington, D.C. More information about liability reform can be found at
www.aaos.org/dc or www.protectpatientsnow.org

Did You Know…..

  • 90 percent of physicians reported practicing positive defensive medicine in the past 12 months
  • 92.5 percent of surgeons indicate they have ordered imaging tests to protect themselves from lawsuits
  • In a recent Gallup survey, physicians attributed 34 percent of overall healthcare costs to defensive medicine
  • Liability reform has been estimated to result in a 5 percent to 34 percent reduction in medical expenditures via a reduction in defensive medicine
  • 42 percent of physicians reported that they had restricted their practice to avoid risky procedures, patients with complex conditions, or patients perceived to be litigious

Editor’s note: This is the seventh in a series of articles on redefining health care in America prepared by the AAOS Washington Health Policy Fellows. The series takes a closer look at various aspects of the healthcare reform legislation passed into law earlier this year.