The need for Tort Reform is often associated with increasing healthcare costs and premiums. Is it possible to eliminate the affects of “defensive medicine” with tort reform legislation?

For the past 30 years we have heard the cry for Tort Reform. Is it true that providers practice “defensive medicine” out of fear of malpractice lawsuits and does it impact the cost and manner in which providers render care. Tort reform and malpractice awards in California have been somewhat contained because of Tort Reform legislation in 1987, often referred to as the “napkin bill” which refers to the initial process in which two CA legislators drew it up. But, has it helped hold down healthcare costs and premiums?

Don’t worry, this Post is not about that CA legislation or even potential legislative language that might be included in the new American Healthcare Act. Personally, I think it is possible to add straight forward language to the AHCA that would limit malpractice lawsuits but it might not control healthcare costs and thus might not help lower premiums.

Why would I suggest that we can create language in legislation to limit malpractice lawsuits without affecting healthcare costs? Because I am, as we all need to be, a student of human nature which helps us predict the effect of legislation intended to change behavior. Sounds silly but it’s a fact and let’s review why.

By human nature I am referring to the habits one establishes either knowingly or not in our every day life to gain or avoid a certain outcome. Providers fall into a unique category and regardless whether their actions are life-saving or preventive in nature a doctor’s practice will develop habits that may not be easily changed. In a doctor’s world a patient might be in pain plus someone else is usually paying the bill.

That isn’t to say that legislation can’t stop certain human activity completely simply by creating consequences to a certain action. For example, the risk of paying a $175 ticket and increased auto insurance rates for driving while talking on one’s mobile phone seems to have made an impact on that behavior.

However, we must also realize that a doctor’s request for more tests are often more than defensive. They may truly be diagnostic in nature to assist in treatment decisions which add a dimension not common in the habits for most of us in society. For years insurers, self-funded employers and other experts have complained that doctors run-up costs by over prescribing diagnostic tests and procedures, such as MRIs for example, simply to avoid malpractice lawsuits. This is why & where the term “defensive medicine” was  first muttered.

Doctors do have two additional variables affecting their decisions. One variable is the patient who may be expecting or even demanding a battery of tests that the attending doctor does not think are necessary. It’s  common for doctors to treat patients who are truly suffering and may have been for months or years. In those instance, how does a doctor say no to a patient’s demand or even pleading request for more diagnostic procedures. The patient wants the doctor to prescribe immediate pain-relieving treatment. Most of us will never be in that dilemma requiring us to decide the appropriate level of diagnostic cost necessary to determine the correct path of treatment.

The second variable is that in most cases a third party is paying for the doctor’s bill. Sometimes extra tests might seem worthwhile to a doctor if it makes the patient feel better emotionally. Who among us can honestly say we would not prescribe more evaluation even if the cost of that extra evaluation would not lead directly to a better decision. Saying “No” to a patient is not always easy and remember somebody else is usually paying the bill.

Imagine for a moment that you are a doctor who has been forced to practice defensive medicine for 20+ years. You’ve had your Malpractice Insurer scare you with tails of tort awards. You’ve attended countless industry seminars at which the fear of malpractice lawsuits is emblazoned on your brain. Or maybe you work for a large corporate practice that wants to avoid malpractice suits but also enjoys the extra revenues earned by extra diagnostic testing. Imagine any of those situations; then you go back to your practice Monday morning to see patients. How would you overcome the habit of practicing  “defensive medicine”?

But here’s a twist to this story about Tort Reform. I actually believe that after doctors have had time to practice their chosen “healing” profession, in a non-threatening legal environment, that the level of care as well as the cost and outcome of care would be better than it is now. I also think that, in time, patients would start to be more satisfied with the level of care they receive and may even learn to be more interactive with the doctor than they are currently.

I am sure this sounds odd coming from an admitted cynic of human nature. But, while human beings may be flawed in many ways I believe human nature, at least concerning our own healthcare, could begin to do the right thing.

We’ve discussed before that healthcare costs are the summation of the unit cost of care multiplied by the number of units of care consumed. When we talk about Tort Reform and the power of human nature it is easy to see that controlling the resulting value  of that equation is not an easy calculation.

It sounds naïve to state publicly that a solution to healthcare reform which combines patients and doctors and payers then adds big pharmaceutical & medical device companies, plus attorneys and legislators would be an easy system to reform?
However, I think it is possible as you have read in previous posts.

The hard part will probably be convincing legislators that they should want to make a difference and improve our healthcare delivery system rather than just making a difference for their own career or party. Sorry for that one last bit of cynicism.

We still need to discuss what Tort Reform language can be fashioned into the AHCA. We’ll tackle that over the next couple weeks.

Let me know what you think.
And remember, we’re all in this together!

Mark Reynolds, RHU


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3 Responses to “The need for Tort Reform is often associated with increasing healthcare costs and premiums. Is it possible to eliminate the affects of “defensive medicine” with tort reform legislation?”

  1. chrstian63 Says:

    Sorry to disagree with you on this one, Mark but the last time I asked, an OB-GYN paid about $250 grand per year in Malpractice insurance. I ballparked that that was $60 per visit. Of course that is part of what the doctor must bill. What if, because of tort reform, this same doctor only paid $12 grand? Well, then the doctors cost for insurance would be $3.
    I love your posts! Keep them coming.

  2. Mark Reynolds, RHU Says:

    You pose one of the keys to the dilemma which is: will doctors practice differently if there is national tort reformed. In Ca the tort reform from 1987 limits awards to $250k but premiums and claims cost for medical plans have risen dramatically. I can’t find any real evidence to show that doctor’s behaviors have changed in any way. They want to change i honestly believ but have they. No question that in Ca doctors pay less premium than they were and the malpractice insurers are probably doing better. I’m going to interview a cardiac surgeon and ob-gyn next week to get some real life stories which I may use. However, by the looks of things in Wash spker Ryan may not get the AHCA bill passed. Can you believe they left the Cadillac tax and EE & ER mandates in place? I wish they would let you and me and a dozen other insurance people we know design the reform. it would take two hours for us to fix it so it works for everyone. Thanks for your feedback. It helps.

    • chrstian63 Says:

      Yeah, the press is writing it up like Trump’s failed on his first legislative effort. I am confident that a “deal guy” like Trump chuckles at how little the press understands about negotiating. I am confident he will get this through. I’m not sure what it will look like, but…
      I guess I read past the part of your article where you identified that we have had some tort reform in CA (Napkin Bill). So surprised that I googled and found a site that explained MICRA and the subsequent Napkin Bill. I think there is now a cap that is indexed for cost of living. What was kind of scary was that Missouri, Florida, Georgia and Illinois have overturned caps. Yikes!
      I feel blessed to have travelled some internationally and I have used their systems a little. My take-away is that their systems are very different (cheaper). But how much money are you going to get if a doctor in Canada, Mexico, England or Thailand screws up? I’ll research that a little and let you know but I have a feeling the answer is going to be -0-. I’ll let you know.

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