Who Pays the Costs of Medical Errors?
December 2007---Patient safety advocates argue that the high costs of
hospital adverse events (injuries due to medical management) create a "business
case for patient safety." That is,
health care organizations that invest in technologies and systems improvements
to enhance patient safety will reap a financial return. There is little question that medical
injuries involve large costs, but do hospitals themselves actually pay these
costs? If they are able to shift them to others, such
as patients and health insurers, then their financial incentives for safety improvement
may be inadequate.
To investigate this, Harvard School of Public Health
researchers examined data on 465 medical injuries that occurred in 24 hospitals
in Utah and Colorado to determine where the associated
costs and expenses fell. One hundred
twenty-seven of these injuries were judged to be due to negligence. The researchers estimated how much each
injury would generate in health care costs, lost income, lost household
production, burial costs, and noneconomic loss ("pain and suffering"), and
modeled how much of these costs would be absorbed by the hospital versus
patients, health insurers insurers, and disability insurers. They also examined how much hospitals paid in
malpractice insurance premiums, which capture the hospital's projected risk of
incurring injury-related costs.
The study found that on average, for every patient treated,
the hospitals generated injury-related total costs of $2,013 and negligent-injury-related
costs of $1,246 (in 2005 dollars). However,
hospitals bore only 22% of these costs; the rest were shifted to other parties. On average, hospitals externalized
injury-related costs in the amount of $1,775 per admission ($1,066 per admission
for negligent injuries).
The authors concluded that "Injuries due to medical
management in the hospital are associated with substantial societal costs, yet
only a small proportion of these costs are borne by hospitals." The largest factor explaining hospitals'
ability to shift these costs to other parties is the low percentage of injuries
that result in malpractice claims and receive compensation through the tort
liability system. A secondary factor is
that most health insurers are willing to reimburse hospitals for the cost of
extra health care services that are necessitated by medical injuries.
These findings call
the "business case for safety" into question-hospitals absorb little of the
costs of injuries, yet adopting interventions to prevent injuries is costly, so
the financial incentives cut against such investments. The authors suggest a series of changes to
reimbursement rules and the tort liability system to address the problem and
bolster incentives for patient safety.
The study appears in the December 2007 issue of the Journal of
Empirical Legal Studies. Electronic
reprints are available from Dr. Mello. Read more here
Malpractice Premium Spike In Pennsylvania Did Not Decrease Physician Supply
Bethesda, MD (April 24, 2007) -- When surveyed, many physicians say that they will restrict their scope of practice or stop practicing medicine altogether in response to rising malpractice insurance premiums. However, when push comes to shove, physicians’ responses to the latest liability “crisis” have been much more modest. That’s the conclusion of a new look at Pennsylvania’s experience during its malpractice crisis, by the Harvard School of Public Health’s Michelle Mello and coauthors, published today as a Health Affairs Web Exclusive.
Using administrative records from a state-run insurance fund in which most Pennsylvania doctors must participate, Mello and colleagues looked at the behavior of physicians in "high-risk" specialties -- practice areas such as obstetrics/gynecology and cardiology for which malpractice premiums tend to be relatively high -- over the years from 1993 through 2002. They found that contrary to predictions based on the findings of earlier physician surveys, only a small percentage of these high-risk specialists reduced their scope of practice (for example, by eliminating high-risk procedures) in the crisis period, 1999-2002, when malpractice insurance premiums rose sharply.
On average during the crisis period, fewer than 3 percent of high-risk specialists shifted annually from performing major procedures to minor procedures only (0.7 percent) or no procedures (1.8 percent); 8.2 percent of specialists performing only minor procedures stopped doing any procedures, shifting entirely to evaluation and management. What's more, the proportion of high-risk specialists who restricted their practices during the crisis period was not statistically different from the proportion who did so during 1993-1998, before premiums spiked. "It doesn't appear that the restrictions we did observe after 1999 were a reaction to the change in the malpractice environment," said Mello, the C. Boyden Gray Professor of Health Policy and Law at the Harvard School of Public Health.
The number of high-risk specialists who stopped practicing in Pennsylvania entirely during the crisis period was more substantial: On average, 15.5 percent left each year during 1999-2002. However, this percentage was not statistically different from the proportion of high-risk specialists who left the state during the pre-crisis 1993-1998 period, nor was it statistically different from the proportion of physicians in a comparison group of "low-risk" specialties who left the state during the crisis period.
Moreover, taking into account new physicians coming into the state, the overall supply of specialists in high-risk fields did not decrease during the crisis period, except in obstetrics-gynecology. The ranks of Pennsylvania OB/GYNs did dip 8 percent from 1999 to 2002, but "this trend had begun before liability premiums soared, and it did not accelerate noticeably afterward. Further, the total number of physicians delivering babies, including family/general practitioners, did not fall significantly as a proportion of the population during the crisis," Mello and coauthors write.
In addition to obstetrics/gynecology and cardiology, the high-risk specialties examined by Mello and colleagues included anesthesia, emergency medicine, general internal medicine, neurosurgery, orthopedics, radiology, surgery, and urology. The comparison group of low-risk specialties included allergy, dermatology, geriatrics, infectious disease, neurology, pediatrics, and psychiatry.
Why Findings From Studies Of Administrative Databases Differ So Much From Findings Of Physician Surveys
"Our analysis found more modest effects of the liability crisis on physician supply than have been suggested by physician survey studies, including our own," Mello and coauthors write. In a 2003 survey of 824 Pennsylvania physicians in high-risk specialties, by the same group of researchers, "one-third or more reported their intention to retire or relocate their practices out of state within the next two years, and nearly half reported having reduced or eliminated high-risk aspects of their practices."
Mello and coauthors identify several reasons why findings from physician surveys might overstate the effect of malpractice premium hikes on physician practice restrictions. Surveys might exhibit response bias, they note, with physicians most affected by rising premiums being the most likely to respond. In addition, "examining physician practice changes only during periods of liability crisis, as surveys typically do, provides no basis for comparison to baseline rates of such changes." For example, the 8 percent crisis-period decrease in the number of Pennsylvania OB/GYNs looks significant in isolation but turns out to be part of a pre-existing trend.
Mello and coauthors also point out that "surveys have asked whether physicians reduced or eliminated certain procedures, whereas we measured only procedures eliminated." Finally, physician self-reports may inaccurately predict what doctors end up doing. "One study found that only 35 percent of surveyed physicians who reported an intention to cease clinical practice within three years actually did so," Mello and coauthors note. Physicians may change their minds, or they may find that it's harder than they thought to make changes to their practice.
"Physicians in Pennsylvania clearly experienced considerable distress during the malpractice crisis," Mello said. "But when we look statewide, it appears that most were able to hold their ranks, preventing the ‘physician exodus' that many feared -- or at least forestalling it until the next malpractice crisis comes along."
You can read the article by Mello and coauthors, which was funded by the Pew Charitable Trusts, at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.3.w425
Taking the Wraps Off Drug Safety Data from Clinical Trials
Press release, March 6, 2007: For years, pharmaceutical companies have sought to restrict public access to drug safety data collected in clinical trials on the basis that it is proprietary information, arguing that competitors could use that information in the development of their own products. However, a number of recent cases of drugs found to have dangerous side effects after coming to market, such as the anti-inflammatory drug rofecoxib (Vioxx), have raised concerns about safety data being treated as confidential. A new analysis by researchers at the Harvard School of Public Health (HSPH) and Brigham and Women's Hospital (BWH) of laws and regulations governing public disclosure of clinical trial data submitted to the Food and Drug Administration (FDA) suggests changes should be made to the way the FDA implements its policy regarding the confidentiality of those data. Allowing greater access to safety data would enable researchers to independently evaluate risks, resulting in more timely risk detection. The review and commentary appears in the March/April 2007 issue of
Health Affairs. read more
Study Casts Doubt on Claims That the Medical Malpractice System Is Plagued By Frivolous Lawsuits
Press release, May 2006: The debate over medical malpractice litigation, which raged during the last presidential campaign, continues as a hot-button political and health care issue in the U.S. One popular justification for tort reform is the claim that “frivolous” medical malpractice lawsuits—those lacking evidence of substandard care, treatment-related injury, or both—enrich plaintiffs’ attorneys and drive up health care costs. A new study by researchers from the Harvard School of Public Health (HSPH) and Brigham and Women’s Hospital challenges the view that frivolous litigation is rampant and expensive. The researchers analyzed past malpractice claims to judge the volume of meritless lawsuits and determine their outcomes. Their findings suggest that portraits of a malpractice system riddled with frivolous lawsuits are overblown. Although nearly one third of claims lacked clear-cut evidence of medical error, most of these suits did not receive compensation. In fact, the number of meritorious claims that did not get paid was actually larger than the group of meritless claims that were paid. The findings appear in the May 11, 2006 issue of
The New England Journal of Medicine.
read more read the paper
Understanding Malpractice "Crises" and the Impacts of Tort Reforms
In a study released May 10, 2006 by the Robert Wood Johnson Foundation’s Synthesis Project, Michelle Mello examined the effects of the recent increases in malpractice insurance premiums on the delivery of health care services and the impacts of state tort reforms. Reviewing existing studies, the report concluded that the deteriorating liability environment has had only a modest effect on the supply of physician services. “The best evidence shows, at most, a small overall decrease in the number of physicians practicing in high-liability states compared to lower-risk states, though some rural areas have been more affected,” Mello said. Aside from caps on noneconomic damages, most tort reforms adopted by states in response to malpractice crises have not been effective in boosting physician supply or reducing insurance or litigation costs. Damages caps “help constrain growth in litigation costs and insurance premiums over time, but disproportionately burden the most severely injured patients.” The study is available at
http://www.rwjf.org/publications/synthesis/reports_and_briefs/issue10.html