Malpractice Reform to Reduce Healthcare Costs

Michelle Mello and Troyen Brennan have an article in this week's New England Journal of Medicine outlining ways to enact health care tort reform. The premise, they argue, is that doctors too frequently practice defensive medicine because of fears of getting sued, resulting in excessive tests that they know are unlikely to be revealing and may even lead to harm. By changing the way courts punish liable doctors, the argument goes, substantial savings will accrue. Their rough calculation is that if even 1% of costs are reduced by changing physician practice, $22 billion will be trimmed from the health budget - not a trivial amount. From my personal experience, up to 5% of what doctors do is driven by fears of litigation. I can't tell you how many head CTs for chronic headaches I've ordered even though not a single one has ever been positive, nor is there any evidence to order such a test. It's the very small chance of a negative outcome weighted against the very large payouts that patients receive that drives decision making, pushing doctors to deviate from evidence-based decision making.

The obvious choice, to cap non-economic ("pain and suffering") damage awards, would apparently be very difficult to pass with a Democrat dominated legislature. Instead, the authors propose three more palatable compromise solutions:

• "Pre-emptive strike" - A.k.a disclosure-and-offer allows medical liability insurers to disclose mistakes and offer an up-front payment without taking the case to trial. This method does not prevent the patient from going to court, but preliminary data suggests that the vast majority accept the mediation and do not pursue the lengthy and costly court proceeding. Whether this approach actually reduces costs is still being researched.
• "Neutral panel" - One of the major drivers of high payouts is when a particularly gruesome or egregious violation generates huge damages from a sympathetic group of jurors. Another option is to create a special court with neutral doctors and medically trained judges who have a better sense of what was done right and wrong without the visceral driving force that some of these trials have.
• "Safe Harbor" - Doctors are often sued for following evidence-based practices but the patient had a bad outcome anyway. If a panel of neutral experts decides that the treatment was within an acceptable standard of care, the physician becomes immune from personal litigation.

Of these, I personally favor numbers two and three, and I can actually see both of them working together to reduce defensive medicine. In any case, I agree with the authors that some form of tort reform should be bundled with general health care reform as a means to reduce costs and promote value-based treatment.