Malpractice Reform: The Old Approaches Won't Break The Stalemate
Although the healthcare reform bill didn't address malpractice reform directly, the Obama Administration finally did include in the legislation some demonstration and research grants to begin exploring solutions to high costs the malpractice system imposes on doctors and hospitals. But the grants that the Agency for Healthcare Quality and Research (AHRQ) just announced concentrate on ideas that simply won't work in our litigious and lawyer-dominated society. It would be far better if the administration threw out the old playbook and started looking in new directions.
AHRQ is spending $19.7 million on seven demonstration projects and $3.5 million on 13 planning grants, for a grand total of $23.2 million. While the Pentagon probably spends more than that on toilet seats, what caught my eye in the list of demonstration projects is the way they focus mostly on just two areas: "early disclosure" of preventable errors to patients and "alternative dispute resolution," which seeks to avoid jury trials in order to keep malpractice suits in the hands of judges and encourage settlements. While some attention is paid to the prevention of medical errors, both here and in the planning grants, the research on this topic doesn't amount to much.
There is evidence that early disclosure -- especially in the context of a good physician-patient relationship -- can reduce some patients' propensity to sue. But a panel of 65 experts concluded a few years ago that, on balance, early disclosure of medical errors would increase the number of malpractice suits. That's in large part because most medical mistakes never lead to lawsuits, either because patients are unaware of them or because lawyers decline to take their cases.
Hospitals know that confessing their sins (or those of their physicians) can increase their legal exposure. In a hospital survey conducted one year after the Joint Commission (which accredits hospitals) required facilities to inform patients of "unexpected outcomes," the majority of respondents said they disclosed medical errors at least some of the time. But they said that they were less likely to reveal preventable errors than unavoidable ones. In other words, they weren't eager to give potential litigants a reason to sue them.
As for alternative dispute resolution, some judges have reduced litigation by taking this approach. In other advanced countries, malpractice suits cost about half of what they do here, because judges alone decide them and there are no contingency fees for lawyers. Some U.S. experts would like to see a system of "health courts" that would take these cases out of the hands of juries, who can be easily swayed by emotional appeals, and give them to specially trained judges.
Nevertheless, that's unlikely to happen in this country. Medical liability cases, which generate contingency fees of 30 to 40 percent of jury awards, account for a high percentage of attorneys' income from tort cases. Trial attorneys, of course, are reliable supporters of the Democratic Party, which explains why the fortunes of tort reform rise and fall with the alternations of Democrats and Republicans in office.
But, as the General Accountability Office has pointed out, tort reform wouldn't necessarily solve the problem. Although malpractice insurance premiums have risen more slowly in states with caps on jury awards than in some states that don't have them, other states have had slower increases even without these caps. And other factors, such as insurers' investment returns and what's known as the insurance underwriting cycle, also play a role in the cost of liability coverage.
If the government is going to spend money exploring a real solution, perhaps it should take a closer look, not only at error prevention, but at removing the physicians who typically cause the most harm to patients. Neither hospitals, medical boards, nor medical societies have been very proactive in this regard. But perhaps if hospitals had some legal protection, they'd be more willing to suspend or terminate these doctors' privileges or require them to enter remedial programs.
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