Table of Contents. Executive Summary. The Problem Preventable Medical Errors Dollars Better Spent on Patient Safety. o o

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2 Table f Cntents Executive Summary The Prblem Preventable Medical Errrs Dllars Better Spent n Patient Safety The Patients Medical Negligence Lawsuits Few and Far Between Accuntability Nt Jackpts The Insurance Industry Medical Negligence a Tiny Percentage f Health Care Csts Stable Claims but Rising Premiums Alternative Prpsals The Physicians Dctrs Are Nt Fleeing the Prfessin Physicians and Premiums Practice Expenses and Incme Defensive Medicine Why We Need the Civil Justice System Medical Negligence Refrm Civil Justice and Patient Safety Mre Trt Refrm Equals Wrse Health Care Weeding Out Dangerus Dctrs Cnclusin 2

3 Executive Summary The Health Care Debate Refrming the cuntry s health care system will be a majr agenda item fr the new Cngress and administratin. A large part f the debate will fcus n the cst f health care and the driving factrs behind it. In the past there has been much fcus n restricting patients rights t hld negligent medical prviders accuntable, but little fcus n reducing and eliminating preventable medical errrs. This is partly due t the explitatin f the medical negligence crisis by interest grups with agendas t push. A large bdy f research prmpted by the crisis nw indicates that many f the cmmn perceptins abut medical negligence are little mre than myths. This reprt analyzes the mst recent empirical wrk n medical negligence in an attempt t cme t a better understanding f the true challenges facing the cuntry. Preventable Medical Errrs The Sixth Biggest Killer in America Preventable medical errrs kill and seriusly injure hundreds f thusands f Americans every year. If the Centers fr Disease Cntrl were t include preventable medical errrs as a categry, it wuld be the sixth leading cause f death in America. Yet despite this, much f the medical negligence plicy debate has revlved arund indirect factrs, such as dctrs insurance premiums. Any discussin f medical negligence that des nt invlve preventable medical errrs ignres the fundamental prblem. Preventing medical errrs will dramatically lwer health care csts, reduce dctrs insurance premiums, and prtect the health and well-being f patients. An Epidemic f Negligence, Nt Negligence Lawsuits Despite the shcking number f medical errrs, few injured patients ever file a medical negligence lawsuit, and fewer still file frivlus claims. Research shws almst all medical negligence claims are meritrius. Claims where there was n errr are rarely paid and researchers have cncluded the reverse errrs which are never cmpensated is a far bigger prblem. The reality is, as University f Pennsylvania law prfessr Tm Baker puts it, We have an epidemic f medical malpractice, nt f malpractice lawsuits. Patients Want Accuntability, Nt Jackpts Far frm lking fr a jackpt, research shws that patients file claims because they are seeking accuntability. T ften patients injured by preventable medical errrs are left in the dark abut what happened t them: 70 percent f patients wh experience medical errrs are nt tld by their dctrs. Nearly ne half f the natin s dctrs admit t nt reprting incmpetence r medical errrs. On the ther hand, hspitals and health systems that have embraced full disclsure f medical errrs t patients have fund that the number f medical negligence claims and their related csts declines. Better Patient Safety Is the Key t Lwer Health Care Csts The rising cst f health care just intensifies the need t fcus n preventable medical errrs and their huge assciated csts. The savings frm preventing medical 3

4 errrs run int billins f dllars. The savings frm restricting patients access t justice, hwever, are negligible. Medical negligence csts amunt t less than tw percent f health care spending, and gvernment ecnmists estimate restricting all patients restitutin wuld nly lwer health care csts by 0.5 percent r less. Preventative refrms that fcus mre n the medical industry rather than the legal system are a key part f any effrt t making health care mre affrdable and accessible. Medical Negligence Refrm Just Fills Insurance Cmpany Cffers Limiting patients rights des nthing but fill the cffers f malpractice insurance cmpanies. A large bdy f research has shwn that claims have remained stable fr decades, while insurance cmpanies have drastically raised physician premiums t build huge surpluses. States which have enacted caps n damages have seen hspitals and malpractice insurance cmpanies make tens f millins but nt cut the prices they charge patients and health insurers. Meanwhile the cst f health care cntinues t rise at near-recrd levels. Dctrs Are Nt Fleeing The mst frequently eched myth cncerning medical negligence is the ntin that dctrs are fleeing states and retiring early, creating physician shrtages. Anecdtal accunts f dctrs fleeing states in respnse t increased insurance premiums have prved t be either unrepresentative islated events, r flat ut false. In fact, data frm the American Medical Assciatin (AMA) shw that physician numbers have been increasing acrss the bard fr many years. Nt nly are there recrd numbers f physicians in the U.S., the increase has als significantly utpaced ppulatin grwth. There are nw twice as many physicians per 100,000 ppulatin as there were when the AMA began tracking figures in the 1960s. The number f physicians per 100,000 ppulatin is significantly higher in states withut caps. This fact is supprted by a large bdy f research that has fund physician supply is nt cnnected t insurance premiums. Researchers at the Natinal Bureau f Ecnmic Research (NBER) cncluded, The arguments that state trt refrms will avert lcal physician shrtages r lead t greater efficiencies in care are nt supprted by ur findings. The Civil Justice System Makes Us Safer Every prfessin has its bad apples and physicians are n exceptin. Just six percent f dctrs are respnsible fr nearly 60 percent f all medical negligence, and the civil justice system is the nly effective means fr hlding them accuntable. Other disciplinary mechanisms are wefully inadequate. State medical bards, fr instance, are suppsed t discipline dctrs wh cnsistently vilate standards f care. Yet tw-thirds f dctrs wh make 10 r mre medical negligence payments are never disciplined at all. Hspitals are n the frnt lines f patient safety, yet nearly half f all U.S. hspitals have never reprted a disciplinary actin against ne f their dctrs since the Natinal Practitiner Databank was created in Alternative cmpensatin systems, such as health curts, prpse eliminating r greatly sidelining disciplinary systems altgether. 4

5 The civil justice system hlds dctrs, hspitals and insurance cmpanies accuntable. It is this accuntability that drives the develpment f patient safety systems that help prevent negligence befre it ccurs. Hspitals, health systems and even entire medical fields have refrmed dangerus practices because f the civil justice system. Withut the accuntability the civil justice system enfrces, patient safety will suffer and health care csts will g up fr everyne. 5

6 The Prblem Preventable Medical Errrs Preventable medical errrs kill and seriusly injure hundreds f thusands f Americans every year. Any discussin f medical negligence that des nt invlve preventable medical errrs ignres this fundamental prblem. And while sme interested parties wuld prefer t fcus n dctrs insurance premiums, health care csts, r alternative cmpensatin systems anything ther than the negligence itself reducing medical errrs is the best way t address all the related prblems. Preventing medical errrs will lwer health care csts, reduce dctrs insurance premiums, and prtect the health and well-being f patients. The Institute f Medicine s (IOM) seminal study f preventable medical errrs estimated as many as 98,000 peple die every year at a cst f $29 billin. 1 If the Centers fr Disease Cntrl were t include preventable medical errrs as a categry, these cnclusins wuld make it the sixth leading cause f death in America. 2 Further research has cnfirmed the extent f medical errrs. The Institute fr Healthcare Imprvement estimates there are 15 millin incidents f medical harm each year. 3 HealthGrades, the natin s leading healthcare rating rganizatin, fund that Medicare patients wh experienced a patient-safety incident had a ne-in-five chance f dying as a result. 4 Yet despite these numbers, the American public remains unaware f just hw pervasive the prblem is. Even thugh ne in three Americans say that they r a family member has experienced a medical errr, and ne in five say that a medical errr has caused Influenza/Pneumnia: Nephritis/Nephrsis: Septicemia: 63,001 43,901 34,136 either themselves r a family member serius health prblems r death, surveys shw that Americans vastly underestimate the extent f medical errrs. 5 Abut half f respndents believe the annual death ttal frm medical errrs t be 5,000 r less nearly 20 times lwer than the IOM s estimate. We have an epidemic f medical malpractice, nt f malpractice lawsuits. Tm Baker, Prfessr f Law University f Pennsylvania Peple have been led t believe that there are hundreds f thusands f medical negligence lawsuits every year and nly a handful f genuine medical errrs. In Leading Cause f Death in United States 1. Heart disease: 652, Cancer: 559, Strke : 143, Chrnic lwer respiratry diseases: 130, Accidents (unintentinal injuries): 117,809 Preventable Medical Errrs 98, Diabetes: 75, Alzheimer's disease: 71,599 6

7 reality, the reverse is true. There are very few medical negligence lawsuits, and hundreds f thusands dying frm preventable medical errrs. As University f Pennsylvania law prfessr Tm Baker puts it, We have an epidemic f medical malpractice, nt f malpractice lawsuits. 6 Much f the discussin surrunding medical negligence revlves arund csts, whether it be the cst f physicians insurance r the cst t health care. While these are the subject f much debate and acrimny, the ptential savings frm the eliminatin f medical errrs are undeniable. Dllars better spent n patient safety Prblem Cst f Prblem Slutin Effect f Slutin Medical Errrs Medicatin Errrs Freign bjects retained during surgery Hspital- Acquired Infectins Pst-Surgical Infectins 98,000 Deaths $29 billin in csts 7,000 Deaths 1.5 millin preventable Adverse Drug Events (ADEs) $3.5 billin in csts 8 1,500 incidents f surgical tls left in patients each year $17.25 millin in excess csts between 2000 and millin hspital patients acquire infectins each year 14 90,000 peple die annually frm hspital-acquired infectins 15 Cst f $4.5 billin a year ,000 incidences f pst-perative infectins per year 19 Cst f $1.5 billin per year 20 Cmputerized Medical Recrds Systems Bar Cding Medicines and Equipment Cmputerized Physician Order Entry Systems (CPOE) Smart Pumps Radi Frequency Identificatin (RFID) Tags Hand Washing Prgrams Minimize Ventilatr- Assciated Pneumnia Reduce Bld Infectins frm Central IV Lines Use f Prphylactic Antibitics Use electric scissrs instead f shaving Rutine perating-rm checklist 21 Investment f $115 billin ver 15 years can prduce yearly savings f $81 billin frm efficiency and errr avidance 7 $7 billin 9 in savings per year Reductin f ADEs by 17% and serius medicatin errrs by 55% Savings f $5 t $10 millin (including implementatin) per hspital per year 235 ADEs avided per hspital each year 10 Cst avidance f $712,000 per hspital per year 11 Incidents f surgical tls left in patients are almst cmpletely eliminated $8.8 billin investment ver 4 years prvides hspitals savings f up t $11 billin a year frm enhanced inventry cntrl 13 Estimated savings f $57,600 a year fr a 300-bed hspital 17 Allegheny General Hspital (Pittsburgh) invested $35,000 in a prgram that reduced infectins by percent and returned $4.3 millin in savings 18 Pst-surgical infectins drp t 1 in 200 patients percent f surgical site infectins can be prevented by using prphylactic antibitics 23 Using electric clippers can save $3 billin 24 Checklist can save $15-25 billin in surgical cmplicatins csts 25 The Center fr Medicare & Medicaid Services (CMS) has, in recent years, recgnized the ptential fr financial savings by reducing medical errrs. CMS has stpped 7

8 paying fr hspital and practitiner errrs, and thus created a financial incentive fr hspitals t embrace patient safety. After evaluating a number f billable hspitalacquired cnditins, CMS and the CDC decided n eight expensive but reasnably preventable secndary cnditins that wuld nt be reimbursed by Medicare, and culd nt be billed t patients. 26 Previusly, Medicare rewarded hspital errrs with larger reimbursements, by paying them an extra amunt t treat varius preventable cmplicatins that develped as a result f hspital negligence. The new rules, which went int effect in 2008, are expected t save taxpayers at least $21 millin annually and will encurage hspitals t take steps t avid reasnably preventable hspital acquired cnditins. 27 Private insurers like Blue Crss/Blue Shield Assciatin and Aetna have als implemented similar plicies nt t reimburse medical prviders fr care related t prblems r cmplicatins that shuld nt ccur in the nrmal curse f hspitalizatin. 28 8

9 The Patients Medical Negligence Lawsuits Few and Far Between Althugh much attentin has been given t medical negligence liability crises, in reality, very few injured patients ever file a medical negligence lawsuit. In 2006, researchers at Harvard University annunced the results f a study shwing that mst negligence claims invlve medical errr and serius injury, and cncluded prtraits f a malpractice system that is stricken with frivlus litigatin are verblwn. 29 The researchers fund that few claims were withut merit, and thse that were generally did nt receive any mney. Mst negligence claims were meritrius, with 97 percent f claims invlving medical injury and 80 percent invlving physical injuries resulting in majr disability r death. Few claims where there was nt errr were ever paid. In fact, researchers fund the reverse--nn-payment f claims where errr was invlved was a bigger prblem. [T]he majr prblem ut there is medical errrs that are nt cmpensated, rather than frivlus claims that are cmpensated. William Sage, Vice Prvst fr Health Affairs University f Texas at Austin C-authr William Sage cmmented, These findings are abslutely n surprise t any f us in the plicy cmmunity. They are cnsistent with everything we suspected and learned frm research ver last 20 years, which is that the majr prblem ut there is medical errrs that are nt cmpensated, rather than frivlus claims that are cmpensated. 30 This cnclusin did nt surprise the patient safety mvement. Kaiser Family Fundatin President Drew Altman said, Maybe the questin instead f 'Why d we have s many lawsuits?' is 'Why d we have s few? 31 Accrding t the Natinal Center fr State Curts (NCSC) nly abut six percent f the civil caselad is cmprised f trt cases. Of that subsectin, just three percent 9

10 cmprise medical negligence cases. And even that tiny number has declined by eight percent ver the last 10 years. 32 Data frm ther surces such as the Natinal Practitiner Databank, t which all physicians medical malpractice payments must be reprted, cnfirms the same dwnward trend. 33 When the number f medical negligence payuts made every year is cmpared t the number f suspected deaths frm preventable medical errrs, it is easy t see why researchers have cncluded that there are t few malpractice claims, nt t many. 34 Accuntability Nt Jackpts Anther myth is that medical malpractice cases are multimillin dllar jackpts fr their lucky patients. The surce f such myths are private research firms like Jury Verdict Research (JVR). JVR s self-cnfessed, unsystematic data-cllectin methd relies n self-reprting attrneys and stringers, which skews the data twards mre high-prfile, expensive cases. 35 JVR als des nt accunt fr the fact that initial verdicts are usually much reduced by the time an insurance cmpany makes a payment t a patient, particularly if the judgment was high. Almst all (98 percent) verdicts larger than $2.5 millin are eventually reduced t less than half the riginal award (44 percent f award). 36 In reality, while the high cst f future medical care causes malpractice awards t be high, they are far frm the millin-dllar awards trt refrmers claim. Accrding t the Natinal Practitiner Databank, the median medical malpractice award was $175,000 in Data frm the Department f Justice s Bureau f Justice Statistics (BJS) paints a similar picture. BJS researchers examined medical malpractice insurance claims in select states and fund median awards ranging frm $107,000 in Missuri t $195,000 in Texas. 38 Only between 5.5 percent (Flrida) and 10.6 percent (Texas) f insurance payuts were fr $1 millin r mre. A cmprehensive analysis f insurance industry expenditures by Americans fr Insurance Refrm (AIR) similarly cncluded, inflatin-adjusted payuts per dctr nt nly failed t increase during the last several years, a time when dctrs premiums skyrcketed, but they have been stable r falling thrughut this entire decade. Payuts (in cnstant dllars) have been essentially remained flat r drpped since the mid-1980s. 39 Far frm lking fr a jackpt, research shws that patients file claims because they are seeking accuntability. T ften, patients injured by preventable medical errrs are left in the dark abut what happened t them, and litigatin is smetimes the nly way t uncver what transpired. A Kaiser Family Fundatin survey fund that 70 percent f patients wh experience medical errrs are nt tld by their dctrs. 40 A natinal survey frm Clumbia University s Institute n Medicine as a Prfessin (IMAP) similarly fund that nearly ne half f the natin s dctrs failed t reprt incmpetence r medical errrs

11 The vast majrity (92 percent) f the public believe that reprting serius medical errrs shuld be mandatry and public. 42 Hwever, state reprting prgrams are plagued by underreprting, 43 despite research frm the Natinal Academy fr State Health Plicy (NASHP) demnstrating that there is n relatinship between mandatry reprting and increases in malpractice claims. 44 The nly natinal database f malpractice claims, the Natinal Practitiners Databank (NPDB), is still clsed t the public and has been deliberately undermined by the American Medical Assciatin (AMA), which ges s far as t ffer its members a primer n "Hw t evade a reprt t the NPDB." 45 On the ther hand, hspitals that have embraced full disclsure f medical errrs have fund that the number f malpractice claims and their related expense declines. The Veterans Affairs (VA) hspital in Lexingtn, Kentucky, has been a leader in the field by ffering a strng disclsure prgram cupled with quick and fair ffers f cmpensatin when apprpriate. Average settlements at the institutin are nw arund $15,000 as ppsed t $98,000 at ther VA hspitals. 46 It is a recgnitin f the fact that patients are searching fr accuntability, nt jackpts. 11

12 The Insurance Industry Malpractice a Tiny Percentage f Health Care Csts One f the principal myths surrunding medical malpractice is its effect n verall health care csts. Medical malpractice is actually a tiny percentage f health care csts, in part because medical malpractice claims are far less frequent than many peple believe. [E]ven a reductin f 25 percent t 30 percent in malpractice csts wuld lwer health care csts by nly abut 0.4 percent t 0.5 percent. Cngressinal Budget Office Accrding t the Cngressinal Budget Office, malpractice csts amunt t less than 2 percent f verall health care spending. Thus, even a reductin f 25 percent t 30 percent in malpractice csts wuld lwer health care csts by nly abut 0.4 percent t 0.5 percent, and the likely effect n health insurance premiums wuld be cmparably small. 47 Stable Claims but Rising Premiums Empirical research has fund that there is little crrelatin between malpractice payuts and malpractice premiums. A study by researchers at the University f Texas, Clumbia University and the University f Illinis based n clsed claims cmpiled by the Texas Department f Insurance cncluded that the rapid changes in insurance premiums that sparked the crisis appear t reflect insurance market dynamics, largely discnnected frm claim utcmes. 48 [I]ncreases in malpractice payments made n behalf f physicians d nt seem t be the driving frce behind increases in premiums. Natinal Bureau f Ecnmic Research Researchers frm the Natinal Bureau f Ecnmic Research came t the same cnclusin, stating, increases in malpractice payments made n behalf f physicians d nt seem t be the driving frce behind increases in premiums. 49 The AIR analysis likewise fund n relatinship between insurer payuts and premiums. AIR cncluded, Nt nly was there n explsin in lawsuits, jury awards r any trt system csts t justify the astrnmical premium increases that dctrs have been 12

13 charged in recent years. These rate increases were rather driven by the ecnmic cycle f the insurance industry, driven by declining interest rates and investments. 50 Instead, market dynamics, such as the fluctuatin f investment incme accrding t interest rate swings, were the sle cause f increased premiums. The cnclusin f much f the empirical research is that even if trt refrm saves insurance cmpanies mney, thse savings are nt passed n in the frm f lwer physician premiums r health care csts. A study f the leading medical malpractice insurance cmpanies financial statements by frmer Missuri Insurance Cmmissiner Jay Angff fund that these insurers artificially raised dctrs premiums and misled the public abut the nature f medical negligence claims. 51 Accrding t the study, the amunt the leading malpractice insurers prjected they wuld pay ut in claims in the future declined; the amunt they actually paid ut in claims declined; and their surplus the extra cushin they have accumulated ver and abve the amunt they have set aside t pay claims in the future increased t an all-time high five times the state minimum surplus fr insurer stability. Analysis f Tp 15 Medical Malpractice Insurers N Basis fr High Insurance Rates, Jay Angff, May 2007 A Dallas Mrning News investigatin f Texas 2003 medical negligence cap fund similar results. While hspitals and medical malpractice insurance cmpanies made millins ver the next few years, n hspital r dctr cut the prices they charged patients r health insurers. The cst f health care in Texas cntinued t rise at nearrecrd levels. 52 Alternative Prpsals In recent years, many interest grups have prpsed alternatives t the civil justice system. While nne f these alternatives prmise t deliver benefits that are nt already achieved thrugh the civil justice system, they d share ne cmmn theme: aviding the accuntability f the civil justice system. Health Curts A Return t Managed Care The cncept f health curts is ne such alternative cmpensatin system being pushed by crprate defense lawyer Philip Hward and his grup Cmmn Gd. Thugh health curts advcates tut that the system wuld cmpensate many mre patients than the civil justice system, the mdel health curt requires injured patients first g thrugh the insurance cmpanies (see flw chart). This is little mre than a return t managed care. A system that relies n the gd faith f insurance cmpanies, particularly when ding anything but denying the claim is detrimental t their financial health, is dmed t result in the type f widespread fraudulent denials that haunted managed care. 13

14 Health Curts Deny Injured Patients By remving medical negligence lawsuits frm the civil justice system, health curts deny injured patients their cnstitutinal right t a jury trial. Instead f being heard by an unbiased judge r jury, each case wuld be heard by a health curt judge, wh wuld be selected by pliticians. This plitical element pens up the pssibility that parties with a vested interest in the utcme f cases, such as insurance cmpanies and the medical cmmunity, wuld have a way t influence selectins and bias the system. Additinally, there is n guarantee that the judges wuld be required t have any legal backgrund. Medical Negligence Is Nt One-Size-Fits-All Health curts wuld treat all injuries the same regardless f the circumstances r facts in each case. Decisins abut liability and cmpensatin wuld be set by a pre-determined schedule f restitutin. Thus, a pianist wh lses a finger wuld receive the same amunt f cmpensatin as a librarian, despite the vastly different prfessinal and financial lsses they wuld face. Health Curts Wuld Be Outrageusly Expensive Health curts wuld be an expensive new bureaucracy. In additin t the start-up csts f implementing a health curts system, states wuld als have t finance the administrative expenses assciated with its peratin. These administrative expenses wuld be enrmus. States are currently struggling t cver existing expenses and keep curts funded. Adding an unnecessary and cstly system that denies patients rights shuld nt be the pririty f any gvernment. Health curts are mdeled after the wrkers cmpensatin system, which gives sme indicatin f the massive administrative expense that wuld be invlved. The administrative cst f running wrkers cmpensatin cmes t 38 percent f all mney in the system, r $33 billin. That administrative expense is significantly mre than any estimate f the ttal cst f medical negligence, including payuts, expenses and administratin. And there is every indicatin that a health curts system wuld be substantially mre expensive than even wrkers cmpensatin because f the higher numbers f injured victims invlved and the far higher incidence f serius injury. Health Curts and Patient Safety Health curts wuld d little t imprve physician dialgue abut medical errrs because this system des nthing t alleviate the stigma assciated with making the errrs. Thugh cmpensatin decisins under health curts wuld be based n an avidability standard f care rather than the traditinal negligence standard f care, it is nt clear whether health care prfessinals wuld view injuring patients by cmmitting avidable errrs as any less stigmatizing than injuring patients thrugh negligence. 53 The health curts mdel als requires eliminating r sidelining all physician discipline mechanisms in the hpe f encuraging mre candr. Hwever, Michelle M. Mell, David M. Studdert, Allen B. Kachalia, and Tryen A. Brennan, "'Health Curts' and Accuntability fr Patient Safety," Milbank Quarterly, Vlume 84, Number 3,

15 there is nthing t suggest that this will result in mre candr, and everything t suggest it will merely give a free pass t the six percent f dctrs wh cause nearly 60 percent f all medical negligence. Srry Wrks Sme advcates are nw pushing a prgram that wuld encurage dctrs and their insurers t penly disclse medical errrs, ffer aplgies, and prvide cmpensatin t injured patients. Several hspitals natinwide are currently implementing medical errr aplgy prgrams. Each hspital s prgram is different, but the standard cncept f each prgram is the same. If a medical errr ccurs, prgrams either require r encurage hspital staff t persnally disclse the medical errr t the patient and aplgize. The hspital then ffers the patient cmpensatin fr their injuries. If the patient accepts the aplgy and the cmpensatin ffered, the patient is barred frm filing a lawsuit against the dctr r the hspital t recver fr the injuries they suffered as a result f the medical errr. The gal f the Srry Wrks prgram is t minimize errrs, reduce hspital csts, and minimize the threat f litigatin. The Srry Wrks Calitin, the advcacy grup advancing the aplgy prgram, acknwledges that anger nt greed is what drives mst custmers t file medical malpractice lawsuits. Indeed, research has shwn that mst injured patients just want t knw what went wrng in the curse f their treatment and the nly way they can d this is thrugh the discvery prcess f litigatin. The Srry Wrks prgram is based n a plicy created and implemented by the Veterans Hspital Administratin. In the 1980s, patient safety at VA hspitals was dismal enugh t draw scathing rebukes frm bth Cngress and the GAO. VA hspitals had been lng ntrius fr serius lapses in medical safety. 54 It tk years f actin by Cngress and the Department Veterans Affairs t frce mre disclsure f errrs. One VA hspital tk a unique apprach t errr reprting by creating its wn aplgy prgram. The Kentucky Veterans Administratin Hspital in Lexingtn, Kentucky, launched its aplgy system in 1987 and shwed significant results in a relatively shrt perid f time. By 2000, that hspital had settled 170 malpractice claims and gne t trial just three times. During this perid, the hspital s average payut, acrss all claims, was $15,000: less than 20 percent f the VA system's average f $98, Aplgy prgrams are nw in place in certain hspitals arund the cuntry. But befre they are put int widespread use, sme specific standards must be adpted t prtect the rights f injured patients and the families f thse killed by preventable medical errrs. Hspital staff must participate in and adhere t aplgy prgrams Aplgy prgrams must require mandatry participatin by hspital staff. While the University f Michigan Hspitals and Health Centers, Jhns Hpkins Hspital, and each Veterans Administratin Hspital natinwide requires staff t fllw their respective aplgy plicies, sme prgrams currently in use merely encurage 15

16 hspital staff t disclse medical errrs and aplgize. Fr example, the dctrs emplyed by the Cathlic Healthcare West hspital system d nt have t adhere t its aplgy plicy because they are cnsidered independent cntractrs. Lack f unifrm plicies will nly create cnfusin and greater dissatisfactin with the system amng injured patients and staff. Aplgy prgrams must prvide fair cmpensatin fr injured patients Prpnents f aplgy prgrams reprt that implementing an aplgy prgram will result in a reductin f the number f claims and the cst f payuts. The families f the thusands f patients killed by medical errrs each year deserve cmpensatin. The patients injured by medical errrs each year deserve fair cmpensatin fr their injuries. An attrney can help fairly assess the cst f the medical injury and future health care csts, which are ften a huge prtin f the cmpensatin. The attrney als prvides needed transparency t the system. Prtect aplgies but nt ther evidence Aplgy prgrams can be successful in reducing medical negligence lawsuits, hwever, there will undubtedly be instances where injured patients will want t, r have t, g t curt in rder t hld hspital staff accuntable fr medical errrs. T encurage peple t persnally aplgize fr their mistakes, aplgies shuld nt be admissible in curt t prve fault. On the ther hand, if the rules f evidence permit, medical recrds detailing medical negligence r eye-witness accunts f events surrunding medical errrs must cntinue t be admissible in curt. Aplgy prgrams must nt eliminate victims ability t hld wrngders accuntable. Medical Screening Panels Recently, legislatrs have been discussing prpsals that wuld require injured patients t have their cases evaluated fr merit by a medical screening panel befre a lawsuit can be filed. Any discussin abut medical screening panels needs t include prvisins t prtect patients rights. One such prvisin must be t keep the screening panels fair and balanced. Sme prpsals state that the cmpsitin f the panel must cntain nt less than ne qualified medical expert, nt less than ne legal expert, and nt less than ne cmmunity representative. This wrding leaves pen the pssibility that the balance f the panel culd tip in ne party s favr. Nr d the prpsals clarify wh is respnsible fr selecting panel members and what qualificatins these members must have. Screening panel legislatin must als acknwledge the statute f limitatins restrictins n bringing medical negligence claims and guarantee that the clck des nt start ticking until after the screening panel has reviewed the claim. Failure t delay the start f the statute f limitatins while a screening panel evaluates a claim culd leave an injured patient wh has cnscientiusly cmplied with every step f the prcess withut recurse. 16

17 Screening panels als need t emply a mre relaxed standard regarding evidence since there is usually n discvery, and thus patients may nt have access t medical recrds r witnesses. Practice Guidelines Physicians are expected t adhere t certain standards f treatment in their medical practices. These clinical practice guidelines f apprpriate treatment are develped by health care experts and are typically understd t set the minimum standard f care. In recent years, trt refrmers have attempted t intrduce these clinical practice guidelines as the legal standard f care in medical negligence cases. Hwever, cmpliance with these guidelines shuld nt prvide physicians immunity frm negligence claims. Such guidelines set a safety minimum and shuld nt be used as an excuse t avid respnsibility fr negligent medical care. 17

18 The Physicians Dctrs Are Nt Fleeing the Prfessin The mst frequently eched myth cncerning medical negligence is the ntin that dctrs are fleeing states and retiring early, creating physician shrtages. Anecdtal accunts f dctrs fleeing states in respnse t increased insurance premiums have prved t be either unrepresentative islated events, r flat ut false. A Gvernment Accuntability Office (GAO) investigatin fund that many f the reprted prvider actins taken in respnse t malpractice pressures were nt substantiated r did nt widely affect access t health care sme reprts f physicians relcating t ther states, retiring, r clsing practices were nt accurate r invlved relatively few physicians. 56 In fact, data frm the AMA shws that physician numbers have been increasing acrss the bard fr many years. The number f dctrs is increasing. The ttal number f physicians in the U.S. rse t yet anther recrd high in 2007, the mst recent year fr which data is available. There were 941,304 physicians in the U.S. in 2007, nearly 20,000 mre than the year befre. The number f dctrs is increasing faster than ppulatin grwth. The increase in physicians utpaced the increase in ppulatin nce again. The number f physicians per 100,000 ppulatin is at an all-time high f 307. The increase f physician numbers cmpared t ppulatin grwth has climbed steadily fr decades. There are nw twice as many physicians per 100,000 ppulatin as there were when the AMA began tracking figures in the 1960s. The number f physicians is increasing acrss the states. Despite the cries f physicians fleeing multiple states, the number f physicians increased in every state in In additin, the increase in physicians either matched r utpaced ppulatin grwth in every state ver the last five years. The rati f dctrs t ppulatin is higher in states WITHOUT caps. The number f physicians per 100,000 ppulatin is 13 percent higher in states WITHOUT caps (319 v. 283). Physicians and Premiums Empirical research n the subject has fund that physician supply is nt cnnected t insurance premiums. Researchers at the Natinal Bureau f Ecnmic Research (NBER) fr instance fund that increases in medical negligence csts did nt have an effect n the size f physician wrkfrces, and cncluded, The arguments that state trt refrms will avert lcal physician shrtages r lead t greater efficiencies in care 18

19 are nt supprted by ur findings. 57 A study f Pennsylvania physicians by Mell and clleagues fund that the number f physicians leaving their practices were similar bth befre and during the malpractice crisis. 58 That finding came in cntrast t the authrs wn survey f physicians. While 43 percent f high-risk specialists tld the authrs that they wuld restrict r eliminate services, nly three percent actually did. Similarly, a cmprehensive study f the number f OB/GYNs in the United States ver a 10-year perid cnducted by researchers frm Harvard, Gerge Masn, and the University f Melburne, Australia, fund that there was n cnnectin between supply f OB/GYNs and premiums r trt refrms. The authrs cncluded, Our results suggest that mst OB/GYNs d nt respnd t liability risk by relcating ut f state r discntinuing their practice, and that trt refrms such as caps n nnecnmic damages d nt help states attract and retain high-risk specialists. 59 Data derived frm Medical Liability Mnitr s annual rate survey shws that premiums in states with caps actually grew mre ver the perid f the medical negligence crisis than states withut caps. 60 States withut caps experienced a 77 percent increase in premiums, but states with caps experienced a 90 percent increase. States that enacted caps during this perid saw even bigger premium increases f 129 percent. The average premium in states with caps was tw percent higher than in states withut caps. Physician Practice Expenses and Incme One reasn the empirical research has fund n cnnectin between physician supply and insurance premiums is that malpractice insurance premiums are nt nearly as excessive as ften prtrayed. In fact, accrding t the AMA s wn data, medical malpractice premiums increased nly slightly in the 30 years between 1970 and In the latter half f the perid, premiums actually declined. 61 In Massachusetts fr instance, a state with ne f the highest median medical negligence settlement payments and labeled a crisis state by the AMA, physicians actually paid less in inflatin-adjusted premiums at the height f the crisis than they had 15 years earlier

20 Why then the call f a medical negligence crisis? The answer, at least in part, is that ther expenses besides premiums increased while practice revenue declined. Upn analyzing the issue, researchers at Sufflk University fund medical negligence expenses were 11 percent f ttal practice expenses in 1986 as cmpared t 7 percent in Meanwhile, practice revenue als declined. Frm 1996 t 2000, physicians average incme drpped nearly 10 percent ($254,229 in 1996 t $229,500 in 2000). The researchers cncluded, It was revenue decline and increases in nnpremium expenses, nt premium increases, that accunt fr the verwhelming share f falling incme. 63 Hwever, they went n t pint ut that even during this crisis, average physician incme was still in the 95 th -99 th percentile f all Americans. 64 Defensive Medicine Defensive medicine is the idea that dctrs rder unnecessary tests and medical prcedures as a means t avid medical negligence lawsuits. While prpnents f trt refrm argue that defensive medicine drives up the cst f health care, gvernment researchers questin whether defensive medicine truly exists. The Cngressinal Budget Office called the evidence f defensive medicine nt cnclusive, and summarized, On the basis f existing studies and its wn research, CBO believes that savings frm reducing defensive medicine wuld be very small. 65 Researchers at Dartmuth Cllege eched these cnclusins, saying, The fact that we see very little evidence f widespread physician exdus r dramatic increases in the use f defensive medicine in respnse t increases in state malpractice premiums places the mre dire predictins f malpractice alarmists in dubt. 66 The Gvernment Accuntability Office (GAO) has issued similar statements questining the ccurrence f defensive medicine, saying, the verall prevalence and csts f [defensive medicine] have nt been reliably measured, and study results cannt be generalized t estimate the extent and cst f defensive medicine practices acrss the health care system. 67 The GAO reprted that even fficials frm AMA [American Medical Assciatin] and several medical, hspital, and nursing hme assciatins tld us that defensive medicine exists t sme degree, but that it is difficult t measure. 68 T the extent that defensive medicine des exist, research has fund that the mtivatin behind it is nt liability but rather a desire t simply help a patient r, in sme cases, bst physician incme. One gvernment agency fund that dctrs chse nt t rder any tests r diagnstic prcedures 95 percent f the time. Dctrs wh rdered tests almst always did s because f medical indicatins, and nly ne half f ne percent f all cases invlved dctrs wh rdered tests due slely t medical negligence cncerns. 69 Dctrs may actually practice defensively because it generates mre incme, accrding t the GAO. They identified revenue-enhancing mtives as ne f the real reasns behind the utilizatin f extra diagnstic tests and prcedures. 70 In Flrida, health authrities determined diagnstic-imaging centers and clinical labs were rdering additinal tests because the majrity were physician-wned and the 20