Saturday, March 05, 2005

Costs of malpractice

Megan McArdle writes:
People who oppose reforming the medical malpractice laws often like to point out that most medmal cases are resolved in favour of the defendant. "See!" they cry triumphantly. "No crisis!"

But this is hardly a good sign. If the overwhelming majority are resolved in favour of the defendant, that means that a lot of weak cases are being brough to trial. Such cases are no less expensive to defend than cases in which the doctor is at fault. This represents an enormous cost to the system.

Assuming that attorneys are rational actors, and that on net the expected value of all verdicts in malpractice cases in a given year should not be less than zero (or a lot of medmal attorneys would go out of business), then this means that medmal attorneys are in effect playing the lottery: buying a lot of "tickets" that are unlikely to hit, in the hopes of a big payout.

Reducing the payoff of the cases that "hit", particularly the lucrative punitive and pain&suffering damages, should cause the number of weak cases to fall, until the expected value of all payouts is once again something just high enough above zero to produce a living wage in contingency fees. Ideally, we would like to see payouts occur in 50% of the cases, since this would mean that the cases going to court are the ones where there is a likelihood of guilt, but the circumstances are sufficiently murky to make settlement unobvious.

(This presumes, of course, that whether a case pays off is directly related to doctor culpability, rather than essentially random. But if the latter is true, then we need medmal reform more than ever).

Medmal cases have, of course, other costs than just dollars wasted on attorney's fees in frivolous cases. You have doctors wasting time in court, rather than using their expensively acquired, and socially valuable skills. You have "defensive medicine" -- unnecessary tests and consults just for CYA purposes. In a medical system that is already strained, how can one justify imposing these costs when a majority of the cases lack merit?

I agree that there are definitely economic costs to be considered as a result of malpractice, but what about the costs that can't be measured with a financial calculator?

A physician suffers an immediate and substantial blow to her confidence when sued for malpractice. Even if you are sure you didn't do anything wrong, it can take years before you don't question every decision you make in light of the accusation against you. I remember a study from years ago that showed that it takes two years for an ER doc to return to pre-lawsuit levels of operating confidence.

Imagine starting every shift with thoughts of the suit, questioning every disposition through the lens of the suit. How many extra tests will you order and admissions you recommend because of that lack of confidence, in addition to the extra defensiveness?

What about the damage to reputation, even when acquitted?

Another cost to the physician that is rarely discussed is the personal cost. A physician sued for malpractice is consumed by the suit, both professionally and personally. How many divorces result from malpractice lawsuits? How many physicians enter therapy after a lawsuit? How many suicides?