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By prompting doctors to practice "defensive" medicine, the medical malpractice liability system can reduce medical productivity. Fearing legal liability, doctors order more tests and treatments. This approach results in greater expenditures without important consequences for patient outcomes, according to Daniel P. Kessler, J.D., Ph.D., and Mark B. McClellan, M.D., Ph.D., of Stanford University.
In a study supported in part by the Agency for Healthcare Research and Quality (HS08804), they used physician-level data on the frequency of malpractice claims and claim-level data on claim costs and outcomes to identify four dimensions of malpractice pressure. These included the frequency of malpractice claims, the likelihood of prolonged duration of claims resolution, administrative and legal expenses incurred in defending against a claim, and the amount of any settlement or award to the plaintiff. The investigators then estimated the impact of State liability law reforms on the effects of malpractice pressure on three major categories of medical treatment decisions for elderly heart disease patients and the consequences of these practice changes for total hospital expenditures and patient outcomes.
The researchers estimated, for example, that for elderly heart disease patients, an untried reform that reduced the legal defense burden on physicians and hospitals by one-fourth could be expected to reduce medical treatment intensity by about 6.2 percent without increasing the incidence of adverse health outcomes. In the same population, a policy that expedited claim resolution by 6 months across-the-board could be expected to reduce hospital treatment costs by 2.8 percent without greater adverse patient outcomes.
Their estimates also suggested a savings of $4.76 in hospital expenditures on elderly patients with cardiac illness for each $1 reduction in the litigation costs incurred by the malpractice insurer in connection with claim defense per physician per year.
More details are in "How liability law affects medical productivity," by Drs. Kessler and McClellan, in the Journal of Health Economics 21, pp. 931-955, 2002.
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