By Seth Seabury
Physicians with higher spending in a given year were substantially less likely to be sued for malpractice the following year.
Co-author: Anupam B. Jena
Between 60 and 90 percent of U.S. physicians report practicing defensive medicine, defined as the practice of ordering of tests, procedures, and other medical care solely to reduce the threat of malpractice liability. This additional care has been estimated to cost the U.S. as much as $50 billion annually, and this likely underestimates the scope of the problem.
Health care reform efforts aimed at improving the efficiency of health care delivery have failed to recognize the powerful motivation that liability fears have on physician practice patterns. This is despite the fact the vast majority of physicians still believe that spending more health care dollars can help reduce their risk of malpractice liability.
The reason that the malpractice system is often overlooked in the healthcare debate probably stems from the belief by many that liability has more to do with deficiencies in physician-patient communication than it does with the overall level of spending chosen by a physician. Being sued, some believe, isn’t about whether a physician orders many or few tests, but about their bedside manner and how well they communicate with patients when errors inevitably occur. While interpersonal factors surely influence liability risk, the fact that the vast majority of U.S. physicians practice defensive medicine also suggests that spending has a role to play in reducing liability risk, or at least that physicians believe that it does.
In a study published November 4, 2015, in the British Medical Journal, our colleagues and we assembled a unique database of physician spending patterns and malpractice history among nearly all physicians practicing in Florida hospitals from 2000-2009. We profiled physicians in each of seven medical specialties in terms of the average hospitalization costs of their patients, accounting for differences across physicians in the types of patients treated, which may influence a given physician’s average spending. Within each specialty, we found that physicians with higher spending in a given year—in other words, the physicians who ordered more tests or procedures for the “typical” patients—were substantially less likely to be sued for a malpractice incident occurring the following year. Moreover, we compared each physician’s year over year spending to show that in years in which a given physician’s spending was higher, he or she was less likely to be subsequently sued compared to years in which that physician’s spending was lower. Finally, among obstetricians, for whom C-sections are often thought to be defensively motivated, we found that doctors with higher C-section rates were also sued less often.
Although not conclusive, this study provides the first evidence suggesting that physicians with defensive practice styles resulting in higher costs are sued less often. It may be because greater spending reduces the likelihood of adverse outcomes; or greater spending may signal to patients, judges, and juries that despite an error, the doctor was exhaustive in his or her workup and treatment. In either case, the incentive for physicians to reduce health care spending is dramatically muted by the possibility that their liability risk may rise if they do so. High-risk physicians face nearly 100% risk of facing a malpractice suit, and low risk physicians face 70% risk, which makes it difficult to conceive why doctors would voluntarily reduce health care spending under the looming specter of malpractice.
The argument against including malpractice reform in efforts to reform healthcare and lower spending is typically that the malpractice system is too inconsequential to be the cause of high spending. Regardless of whether or not this is true, we believe that our results demonstrate that the relationship between spending and liability risk absolutely means that the malpractice system as it currently works is a serious impediment to meaningful healthcare reform.
The ability of new payment and delivery system models to increase the efficiency of health care delivery and reduce spending will clearly depend on their perceived impact by physicians. Any cost savings these models will generate from eliminating what are considered wasteful or low-value tests or procedures is likely to be limited if physicians perceive that by lowering spending they are exposing themselves to greater malpractice liability risk.
Ongoing efforts to reform the malpractice system – such as safe harbors, disclosure-and-offer programs, and no-apology laws – naturally complement other health care reform efforts. However, until these malpractice reforms break the link between physician spending and the likelihood of being sued, they are unlikely to substantially improve the potency of health care reform efforts aimed to reducing physician spending.
Anupam B. Jena, MD, PhD is an associate professor of health care policy at Harvard Medical School and a physician at Massachusetts General Hospital. Seth Seabury, PhD is an associate professor at the Schaeffer Center for Health Policy and Economics at the University of Southern California. Both Jena and Seabury are faculty research fellows at the National Bureau of Economic Research.