Medical Malpractice and Quality of Care: With the increase in costs of malpractice insurance for doctors, how is our quality of care affected and what can be done about it?

Rising malpractice insurance affects everyone seeking medical care and should be a cause for serious concern. At first, the health care industry saw rising premiums as only a temporary backlash from a couple of lawsuits with multimillion dollar jury awards. Therefore, health care administrators, insurance companies, and public officials worried little about planning for the snow-balling crisis that exists today. People blame greedy lawyers and generous juries for the problem; however, I feel that more than one cause led to our current situation. Today, administrators and lawmakers debate the best solution to this dilemma. Many suggest that by merely capping monetary damages awarded, malpractice rates will stabilize. I disagree. I believe that monetary caps must occur to help with the costs, but I also feel that patient/public awareness is essential to the stabilization of insurance premiums. After the first multimillion dollar award in a medical malpractice lawsuit, physicians still felt safe because they believed juries would place little or no emphasis on non-economic damages – awards unrelated to medical costs, lost salary, etc. However, the lawsuits kept coming and the awards, especially for non-economic damages, kept escalating. According to the New York Times, “the average jury award rose to $3.49 million in 1999, up 79 percent since 1993” (HCLA 4). Insurers had to raise premiums over the following years to compensate for the increased liability of insuring high-risk fields. Although, premiums rise from the effects of inflation, the current rates are excessive and damaging. The vicious cycle of higher jury awards and more lawsuits has continued and the effects have been devastating with no immediate fix in the future. Jill’s situation shows the devastating effects of this cycle on patients. She is currently two months pregnant and has seen the same obstetrician/gynecologist (OB/GYN) for the past ten years. One morning, Jill received a letter from her OB/GYN explaining the closure of the hospital’s maternity ward due to lack of funds because insurance premiums doubled that year. She now must find a new OB/GYN, a daunting task by itself, but being pregnant made it even more stressful. Her search found the closest OB/GYN was more than 40 miles from her town. David encountered similar circumstances when he tore his anterior cruciate ligament in his last high school basketball game. A resident of Bucks County, PA, he had gone to a Frankford Hospital facility for previous injuries. Since he was comfortable with his orthopedic surgeon, David called to set up an appointment for a consultation. However, he learned that twelve of Frankford’s orthopedic surgeons, including his, had stopped performing surgeries after seeing their malpractice rates skyrocket. The aforementioned people are fiction; however, the scenarios are based on true events and could very well happen to someone you know. As of 2002, many patients in a rural Mississippi county experienced difficulties accessing specialized healthcare, including obstetrics and emergency care. In fact, pregnant women in this county had to travel about 65 miles to get to the nearest obstetrics ward (GAO 14). After experiencing doubled malpractice rates in 2001, twelve orthopedic surgeons in Frankford Hospital’s three Philadelphia area facilities stopped performing surgeries because they could no longer afford coverage (Cook 3). Both of these situations are the result of the current astronomical rates of malpractice insurance. Costly premiums severely affect every aspect of our healthcare system. The number one concern is the financial impact on healthcare providers, including hospitals, private practices, and insurance companies, because the shortage of available money hurts the advancement of medical institutions and the services rendered to the public (Kelly 2). “‘In 2001, physicians in eight states saw two or more medical liability insurers raise rates by 30% or more’…a dozen states saw rate increases of 25% or more” (HCLA 2). With such exorbitant hikes, twenty percent of hospitals had to cut back funding to several services and six percent had to discontinue some services, according to an American Hospital Association survey. Patients become the ultimate victim of the cuts in funding. They suffer cancelled appointments, delays in seeing specialists, and postponements of elective surgery due to the lack of available services, staff shortages, and technology that hospitals cannot keep updated because of the high costs. In the summer of 2002, escalating premium costs forced dozens of surgeons at the University of Nevada Medical Center in Las Vegas to resign leaving millions of people unable to use the high-quality trauma center for ten days (Cook 3). If this trend continues, fewer Americans will have access to healthcare and even less to updated and technologically advanced care. Another major concern for the healthcare industry is the number of insurance companies forced to close their businesses, which in turn causes greater skyrocketing costs. Insurers pay the damages awarded in malpractice cases when juries find their clients accountable. When slammed with expensive award payouts, insurance providers are forced to raise their rates because they have no other financial resources to rely upon. Sometimes, insurance companies shutdown because the amount of money they must pay exceeds their limits and, by them leaving, many hospitals and private practices must find new insurers. St. Paul Companies, the largest malpractice carrier in the US, as well as PHICO and Frontier Insurance Group have left the medical malpractice market (USDHHS 16). The few insurers that remain must raise rates according to the degree of liability and risk that exists for healthcare providers; in addition, they usually only write new risk policies for doctors in already insured practices/hospitals. With no readily available or realistically affordable insurance policies around, doctors choose to retire, close private offices, and move to hospitals, or leave the medical field entirely. I believe we have yet to see the full effects of this exodus to healthcare. Although hundreds of doctors have already closed shop and/or retired early, many more will resign – some forced – if premiums continue to rise. The lack of available doctors will seriously harm patient care in many areas, most notably in rural areas and in specialized fields like neurosurgery and oncology – statistically the specialties hardest hit by increasing premiums. With physician shortages, patients lose the ability to choose which doctor they will like to see and some may have to drive more than 50 miles, maybe even to another state, for a gynecological check-up or a consultation. The shortages will not bode well for improving the quality of care available to the public. Another damaging effect to quality of care is the loss of updated services in hospitals. Hospitals have already cut funding in some departments to cover rising malpractice insurance. The cuts in funding could require administrators to slow, and possibly halt, advancements in technology and services. The lack of money may even cause urgent and necessary services, such as emergency rooms and trauma centers, to close or be consolidated – leaving some rural areas in serious trouble. Rising malpractice insurance rates cause a variety of problems in the health care industry. What steps can be taken to reduce and/or stabilize malpractice insurance premiums? Many feel that the problems lie solely with the lawyers. Others believe that the government should do more to help doctors, and still others blame patients for being greedy. To fully assess this question, we need to look at the responsibilities of lawyers, the government, the healthcare industry, and patients. Many have blamed litigators for the malpractice insurance crisis. Greedy, money hungry tort lawyers have sought awards in the millions, even a couple of awards in the hundred dollar million range, in several states. Information gathered by the Florida Department of Insurance Closed Claims Database reveals that non-economic damages made up approximately 77 percent of the total damages awarded (USDHHS 12). Based on this information, lawmakers are seeking to cap non-economic awards to no more than $250,000 (USDHHS 19). Capping the amount assigned to non-economic damages would help to keep costs down in malpractice lawsuits. Non-economic damages compensate for intangible and unquantifiable losses such as patient suffering, hedonic damages, and loss of consortium. Since suffering and pain are unquantifiable, juries can award extravagant amounts of money if they feel a plaintiff unnecessarily and severely suffered. By limiting the amount that may be awarded, jury awards will decline leading to a reduction in costs for insurance companies. The reduction will hypothetically bring relief to healthcare providers assuming that insurers will view the lower risk favorably and reduce their rates. Another remedy on the litigation front would necessitate reducing the number of medical malpractice cases filed. Added to damages awarded, expenses on claims have risen. In the Medical Malpractice Claims Study conducted by the Illinois Department of Insurance, the average expense per defendant in a medical litigation case in Illinois increased 30.3 percent between 1999 and 2001 (USDHHS 10). According to the Physician Insurers Association of America (PIAA), approximately $4.7 billion was spent on claims that had no damages awarded between 1985 and 1998 (HCLA 3). PIAA also found that, during the same time period, over $3 billion was spent to cover meritless claims. In 2000, PIAA said that “almost 70 percent of malpractice claims resulted in no payment to the plaintiff and it cost on average $23,211 to defend each of these claims” (HCLA 3). By reducing the number of malpractice claims, the costs paid by insurers can significantly decrease. However, this task rests on the shoulders of both lawyers and patients. In my opinion, lawyers need to admit to their clients when the case has no merit and patients should employ their common sense about the practicality of their case. While the malpractice insurance crisis affects healthcare providers the most, they, by themselves, can do little about it. As a group, physicians and administrators can propose solutions, but often the solutions require the government to fulfill some requirement. Because some hospitals already receive funding from the government, officials have proposed allocating more federal funds to hospitals to compensate for the costs eaten up by insurance premiums. This is not a good idea. First, this plan would not solve the problem, but merely put a band-aid over a festering wound. Secondly, the federal budget faces its own crisis and giving more money to hospitals would lead to more economic woes. However, the government should take steps to introduce new laws – like caps on non-economic damages awarded – and look at other governments and healthcare systems that have avoided escalating insurance rates. In the United States, the majority of states have been adversely affected by the malpractice crisis; however, California remains among the minority. In the 1970s, California experienced a malpractice crisis similar to today’s dilemma. In response, state legislators crafted the Medical Injury Compensation Reform Act (MICRA) which “cuts back on high-dollar malpractice awards by putting a $250,000 cap on non-economic, or ‘pain and suffering’ award and limiting attorneys’ contingency fees…puts time limits on filing claims and requires that patients be compensated for medical bills, lost wages, future earnings and rehabilitation” (HCLA 5). To this day, MICRA has withstood many legal challenges and health care professionals in California have some of the lowest malpractice premiums in the United States. Therefore, they can focus on providing high-quality care rather than worrying about protecting themselves against costly legal action. If the federal government passed legislation similar to California’s MICRA, then physicians across the nation could worry less about litigation and focus more energy on their patients. However, decreasing malpractice premiums may not be the immediate result because insurance companies have to view the damage caps favorably to reduce risk. MICRA also succeeded because the public knew of the problem. Health care professionals know about the current malpractice crisis; however, I am concerned that the public remains unaware of the problem at hand. While researching for this paper, I talked to my colleagues at school and at work and found that few of them understand the seriousness of rising premiums. In fact, the far reaching effects of the problem surprised a couple of them. Although I did not conduct an official survey, I feel that the public must be educated on this issue for us to really find a solution to stabilizing insurance rates. Patients are the customers in the healthcare industry and therefore, they wield a far greater power on the decisions of administrators and doctors than I believe they realize. The public needs to be educated about the impact they have on the malpractice crisis. They have an effect not only on how a doctor will treat them, but also on the lawsuits – how many are filed and who is sued. When malpractice lawsuits first surfaced, doctors began to practice “defensive medicine” – treatments used by doctors to avoid malpractice litigation, i.e. ordering unnecessary tests and housing patients in hospitals for longer than necessary (USDHHS 2). However, this tactic did not work and only made the patient incur excess expenses. One study estimates this practice adds $20-$40 billion a year to the cost of federal healthcare programs such as Medicare and Medicaid. Also, excessive and unnecessary treatments add risks for the patients; for example, over prescribed medication causing build-up of resistance to medication. Doctor-patient relations have suffered as well in that doctors view patients as potential lawsuits. If a conscience effort is made to throw out frivolous lawsuits and to name only the doctors that dealt with the patient filing the suit, thousands to hundreds of thousands of dollars can be saved from the costs of defending doctors. Alternative dispute resolution programs can help patients determine the merit of their cases before they enter the court system. By assisting patients in the decision to file suit, costs incurred by malpractice insurers through the litigation system can be avoided. If insurers sustain fewer costs and view the reduction favorably, then malpractice premium rates may stabilize. Health care administrators and physicians need stable malpractice insurance rates to help provide the best quality of care to their customers. Recognizing and knowing the cause of the insurance crisis is essential so that we can look towards the future and find ways to fix the predicament. I feel that, together, damage award caps, dispute resolution programs, and patient awareness are positive steps towards malpractice premium reforms and, in turn, better quality of care.

References

Cook, Diane. Beware the Hidden Consequences of the Malpractice Crisis. Managed Care Magazine. December 2002.

Haislmaier, Edmund. The Medical Liability Crisis Affects Us All. National Policy Analysis. Report #454. March 2003.

Health Care Liability Alliance (HCLA). How Patients and Doctors are Suffering While Lawyers Profit From Litigation. October 2002. Retrieved March 25, 2004. http://www.famdoc.com/html/suffering.htm

Kelly, Kerry McKean. Healthcare Access Could Become Casualty of Medical Malpractice Crisis. Healthcare: New Jersey. Vol. 11, No. 3. March 2002.

Sipkoff, Martin. “Malpractice Fears Affecting Quality.” January 2003. Retrieved March 25, 2004. http://www.quphysician.com/cgi-bin/article.cgi?article_id=1351

Stein, Rob. (2003, January 5). Increase in Physicians’ Insurance Hurts Care. Washington Post, p. A01.

Studdert, David M. LL.B., M.P.H., Michelle M. Mello, J.D., Ph.D., and Troyen A. Brennan, M.D., J.D., M.P.H.. (2004, January 15). Medical Malpractice. New England Journal of Medicine. Issue 350-3. pp. 283-292.

U.S. Department of Health and Human Services (USDHHS). Addressing the New Health Care Crisis: Reforming the medical Litigation System to Improve the Quality of Health Care. March 3, 2003.

United States General Accounting Office (GAO). Medical Malpractice: Implications of Rising Premiums on Access to Health Care. Report GAO-03-836. August 2003.