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Defensive medicine – a non-factor in health care costs

Medical malpractice is one of the cost drivers about which there is much disagreement, some contend it is a major contributor to overall system costs, while others view med mal as a relatively minor factor.
A new study [abstract only] reported in this morning’s Health Affairs makes a compelling case for the latter view, and adds valuable insight into what is a politically-charged issue, one rife with misinformation and sloppy math.
The study found “Overall annual medical liability system costs, including defensive medicine, are estimated to be $55.6 billion in 2008 dollars, or 2.4 percent of total health care spending.” [emphasis added]
Recall total system costs are in excess of $2.2 trillion. While $55 billion is a lot of money, compared to total system costs of $2.3 trillion, it, well, isn’t much.
In fact, costs would be much higher if the real toll of medical malpractice – lousy care, incompetent providers, poorly managed facilities, was adequately accounted for. Solid research indicates the vast majority of medical malpractice problems are never litigated. One study indicated that the cost of ‘adverse events approached 5% of total health care costs; over a hundred billion dollars in today’s world.
The med mal reform issue has been raised by opponents of health reform, who contend the failure to include med mal reform in the Accountable Care Act was a missed opportunity to significantly reduce costs Of note, the study estimated the most significant cost associated with medical malpractice was defensive medicine, which accounted for $45.6 billion of the total, most of which was spent on hospital services.
In an email conversation, I asked the study’s principal author, Michelle M. Mello, PhD, to clarify the study’s findings re the impact of med mal on defensive medicine – the theory that physicians change the way they practice to protect themselves against medical malpractice by prescribing more tests and studies.
Here’s Dr Mello’s response.
“There are two ways to measure defensive medicine. One is to ask physicians, using surveys, how often they order extra tests, procedures, and referrals primarily because of liability pressure. We didn’t use this method because it has two major shortcomings: (1) physicians may consciously or unconsciously overreport defensive practices because they want to help build the case for taking action to solve what they perceive as a problem with the liability environment; and (2) they may not be able to separate out different motivations they have for ordering services. In many cases, they may feel that ordering an extra test is a good idea both because it’s in the patient’s best interest and because it helps them reduce their liability risk.
The other method — the one we used — is to compare rates of health services that we think are indicative of defensive medicine in areas of high and low liability risk. If rates are higher in high-liability areas, and we can rule out other explanations for the differences, we can conclude that there is an association between liability and physician practices. The main challenge associated with this method is adequately controlling for other factors that could explain the differences. Researchers have extensively documented that physicians in different geographic areas have different practice styles, and it is believed that this is due to many factors, of which liability concern may be one.
We based our defensive medicine estimates for hospital services on previous analyses by Dan Kessler & Mark McClellan. Having reviewed the literature extensively as it has evolved over the past decade, our firm belief is that the Kessler & McClellan analyses provide the best available figures. Their statistical design enabled the researchers to control for other sources of variation in physician practices.
The main weakness of the Kessler & McClellan analysis, as we discuss in the paper, is that it was based on a narrow range of health services (cardiac care services) provided to a specific type of patient (Medicare beneficiaries). Is it appropriate to generalize from these data to all services provided to all patients? We have some concern about that, and consequently characterize the quality of the evidence supporting our defensive medicine estimate as low. Other kinds of health services may be less subject to physician discretion over treatment intensity than the cardiac services that Kessler & McClellan studied, so it’s possible that extrapolating to all services yields an estimate of defensive medicine costs that is too high. Nevertheless, we believe Kessler & McClellan’s analysis of the strongest one available.”
The paper provides additional background on the methodology used, and the challenges with that methodology. While it isn’t perfect, one has to compare it to the methods used by others who contend the tort system is a major driver of health care costs. Those ‘methods’ are rather less rigorous.
What does this mean for you?
One has to view the cost of medical malpractice in context – and the fact is there’s far too much lousy medicine, and far too little accountability.

4 thoughts on “Defensive medicine – a non-factor in health care costs”

  1. Deborah – I suggest you read the study itself to obtain your answer.
    Beyond that, you may be missing the point. All expenses associated with medical malpractice are accounted for in the study; a careful read provides a detailed understanding of the methodology and limitations thereof.

  2. Back in 1969, I came down with appendicitis on Christmas Day. Basically, the ER doctor decided on the diagnosis, because when he poked on the right side of my abdomen, I wince in pain. The fact that at 5pm, I hadn’t eaten since dinner the night before caused him to rule out any sort of food poisening.
    By 8pm, I was in the OR. It would have been earlier, but my pediatrician had a dickens of a time getting a hold of a surgeon on Christmas night.
    Fast forward to 2007. My wife woke up with pain in the same spot. We arrived at the ER at 10am, and they did a battery of blood tests and other diagnostic procedures. The CT scan was inconclusive, because her appendix was “hiding.”
    Finally, at 4pm, the ER physician decided to send her up to pre-op to have her preped for an appendectomy, which is what he said was the most likely diagnosis when she first went into the ER 6 hours earlier.
    You don’t need a medical degree from Harvard and board certification in gastro-intestinal medicine to know when someone has appedicitis.
    Yet, I truly believe because of the threat of med mal that doctors will go overboard on the tests, just to cover themselves.

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Joe Paduda is the principal of Health Strategy Associates



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