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Best Practices for Health Care (and Tort) Reform

Joseph Bernstein, MD, MS and Duncan MacCourt, MD, JD
Medical Progress Today
August 14, 2009

Although the need for repair has been enduring, the chorus calling for medical malpractice reform appears to sing loudly only once every ten years. Today, the volume of this chorus is rising, ahead of schedule, as President Obama has identified the restructuring of health care as his leading domestic priority. With that, malpractice is back in play.

Some cynics might tell you that true reform is not coming; that only some cosmetic changes will be proposed, incentives offered to doctors in exchange for their support for the president's plan. Others will say, in a similar vein, that the prominence of trial lawyer support for the Democratic party will preclude meaningful reform. We can only hope that's not so. Minor tinkering and token reform would be short sighted, as fixing the malpractice system can serve the larger goal of fixing our health care system. For one thing, a better approach to malpractice can prevent medical mistakes. Under the current arrangement, the adversarial nature of litigation inhibits a public analysis of error—why admit to your opponent that you were wrong? An open discussion could help doctors avoid the pointless repetition of the same old blunders.

Fixing the inefficiencies with malpractice should also save money. The Congressional Budget Office [CBO] estimates that fewer than 40 cents of every dollar spent by hospitals and physician on liability insurance goes to true victims of malpractice. The majority goes to lawyers on both sides and to overhead costs. Malpractice reform can also lessen the frequency of so-called defensive medicine. When doctors are "constantly looking over their shoulders for fear of lawsuits", as the president recently told the AMA, they may order tests and procedures to limit their own risk, and not necessarily to help their patients.

On the other hand, reducing the inefficiencies of the malpractice system and decreasing the prevalence of defensive medicine might be less quick and effective than we'd like. For one thing, the costs of the entire malpractice system (i.e., the payments to litigants as well as the cost of defending the suits) is only a very small fraction of the health care economy—less than 2%, says the CBO. Thus, even if all of malpractice overhead costs were eliminated, total health care spending will be cut by no more than 1%. (That's about three months worth of medical inflation, if you are scoring at home, and nobody is pointing to April, 2009 as "the good old days" of medical spending.) Likewise, malpractice reform is also not going to yield great savings in the near term regarding the reduction of defensive medicine. Defensive practice can only melt over a period of years, as doctors come to trust the new laws and new modes of practice are mastered.

There is, however, one conduit through which medical malpractice reform can help control costs quickly and effectively: by encouraging compliance with best practices of medicine. In particular, we propose that if adherence to best practice standards offers a safe harbor from malpractice liability—i.e., that if doctors follow the standard, they cannot be found liable for negligence—there would be greater compliance with these standards, and in turn great savings in health care spending overall will result. Here's why. The real villain in health care spending is the arbitrary variation in practice. Some doctors, for no apparent reason, practice with unjustified intensity and run up the bill. For example, Medicare spending in Miami per person is about twice the per capita spending in San Francisco, yet medical outcomes are no better. It's reasonable to wonder why. After all, doctors in Miami have the same training as their colleagues in San Francisco, and they operate under the same financial incentives. The reason care ordered by physicians in Miami costs so much more is that they have a different style of practice, one not based on medical evidence, and more influenced by habit, local norms and caprice. If we could get doctors in Miami and other high cost areas to emulate those in San Francisco and similar cities, we can save substantial sums without harming patients.

We believe that the carrot to induce such behavioral change is tort protection. Yet because malpractice law is not federal, but unique to every state, it would be hard if not impossible to employ a federal statute stating "if a doctor follows the best practices standard, he or she cannot be found liable for negligence". Accordingly, we have proposed (in a forthcoming article in the American Journal of Law and Medicine, describing work funded in part by the Manhattan Institute) the establishment of private, contractually-based "Societies for Quality Medicine" in each state. These societies will be voluntary groups of physicians who contract with their patients to practice under the highest standards and disclose and remediate errors when they occur. In return, patients would agree to alternative (less costly, more efficient and fairer) forums for resolution of malpractice claims.

These Societies for Quality Medicine might not only suggest best practices that limit error, but could also promulgate standards of care than lead to a more cost effective practice of medicine. The standards of these societies, it is hoped, will induce the doctors of Miami and other high cost areas to order fewer procedures, medications, tests, hospitalizations and consultations, to name a few, leading to lower levels of spending but not lower quality.

We proposed the establishment of Societies for Quality Medicine as a means of addressing the malpractice crisis, before the chorus driven by escalating premiums inevitably was to sing again. But it is more than that. Societies for Quality Medicine can be a means for limiting the capricious variation in medical care that leads to wasteful spending. To be sure, ours is not the only approach to fixing the problems with malpractice, but we urge Congress, as it contemplates the inclusion of tort reform in its upcoming health care legislation, to shun cosmetic changes and concentrate on methods that will improve care and reduce costs. The opportunity is too great to be squandered.

Joseph Bernstein is an orthopaedic surgeon at the University of Pennsylvania. Duncan MacCourt is an assistant professor of psychiatry at the University of Massachusetts and the associate director of forensic psychiatry at Worcester State Hospital. They are the authors of Medical Error Reduction And Tort Reform Through Private, Contractually-Based Quality Medicine Societies, forthcoming in the American Journal of Law & Medicine (Volume 35, Issue 4).
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