Defensive Medicine May Cost Consumers Money and Good Treatment

Doctors make mistakes.  There are misdiagnoses and inappropriate treatments in 15% of patient illnesses, which results in almost 100,000 deaths each year.  With yearly health care costs nearing $2.5 trillion, the 15% error rate suggests up to $375 billion may be spent in inappropriate treatments.       

Doctors don’t understand medicine perfectly and they cannot predict all the physiological interactions.  Sometimes patients have unexpected poor outcomes and sometimes doctors err.  Regardless of the path to injury, doctors are acutely aware of punitive lawsuits and insurance costs ($3,000 to $201,000 per year).  The AMA says 93% of physicians practice defensive medicine to lower the chance of being sued.  Doctors avoid “risky” treatments such as trauma surgery or traditional childbirth, thus withholding appropriate medical treatment.  They avoid patients who are likely to be litigious.  They conduct extra, unneeded tests and seek unneeded second opinions to build a thicker defense in case they are sued.  They also hospitalize patients to reduce liability risk.  

Defensive medicine costs were estimated at $70 billion per year in 2000 and $191 billion to $239 billion in 2008, but the direct cost of liability insurance and jury awards is in the tens of billions of dollars.  Patients and taxpayers ultimately pay for both defensive medicine and liability costs.  Contrary to popular ignorance, the costs don’t disappear into the insurance cloud. 

Despite sanctimonious claims that they care for injured parties, medical malpractice lawyers in Florida typically refuse contingency representation for the 80% of injured patients whose case is expected to be worth less than $600,000.  In 2008, the average malpractice award was $4.7 million.  Only the soon-to-be-wealthy patients need apply for a lawyer’s help.  In the juicy cases considered worthy of litigation, 33% of awards go to lawyers and more go to “other costs,“ including the pay-for-play experts hired to win tort cases.  About half goes to injured patients.

The malpractice representation system is a high cost, rationed justice.  It magnifies the costs of inherently imprecise medical care, dissuades doctors from pursuing the best treatments and imposes costs on innocent bystanders.  It is designed without the patient or taxpayer in mind.  

So what’s to be done?  We can start with a clear target.  Our first aim in righting patient injury must be to heal the injury as much as medically possible.  The second aim is to reduce total costs of this healing to all patients, taxpayers, and physicians.  The third aim is to reduce the incidence of misdiagnosis and inappropriate treatment.  The fourth aim should be to provide tort-insulation for physicians who prescribe inherently risky treatments (e.g. natural childbirth or trauma surgery) if they adequately inform their patient or surrogate of the risks.  

These goals are being achieved by use of a Patient Compensation System (PCS) in Sweden.  The physician is insulated from pain and suffering claims, but not from medical damages.  There, the emphasis is on helping the injured patient, not on treasure for attorneys and their pay-for-play “expert witnesses.”  PCS avoids a medically inept jury responding to a lawyer’s sob story and entreaties to “send a message” via a huge award.  A PCS similar to that in Sweden is being proposed in Florida as a “no fault” system similar to Workman’s Compensation.  It would remove the incentive for defensive medicine, potentially saving $16 billion per year in Florida alone.  PCS may not be the best system, but we currently have the worst and we deserve better.

Alan Daley is a retired businessman living in Florida and following public policy issues from a consumer’s perspective.

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