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October 27, 2004

Medical Malpractice: Empirical Evidence

By Daniel P. Kessler

The attached essay reviews existing research on the US malpractice system. It has two objectives. The first objective is to summarize the consequences of the conventional tort-based approach to apportioning the costs of medical injuries. In brief:

-The number and dollar volume of malpractice claims has grown dramatically over the past 40 years.

-Injuries from medical care generally, and negligent medical care specifically, are surprisingly common.

-The direct costs of the malpractice system account for more than half of all malpractice compensation expenses.

-A small fraction of people injured by medical negligence receive compensation, and most people who receive compensation are not victims of
medical negligence.

-The indirect costs of the system, in terms of defensive medicine, are substantial. There is evidence of both "positive" and "negative" defensive medicine. Positive defensive medicine involves use of costly treatments that have minimal medical benefit to patients out of fear of liability. A typical example of positive defensive medicine is overuse of MRI or CT scans in patients that have headaches. Negative defensive medicine involves declining to supply care that has medical benefits. A typical example of negative defensive medicine is the refusal of some OB/GYNs to deliver babies, or to care for high-risk patients.

-Tort reforms that directly limit awards, like reasonable caps on noneconomic damages, reduce the malpractice pressure on doctors and hospitals, and in turn, reduce the prevalence and cost of defensive medicine—both positive and negative.

The second objective is to summarize what we know about alternative approaches to tort, and to propose areas for future research. Although a tort reforms are a good start, many researchers have pointed out that a tort-based system with reforms still has numerous shortcomings. In particular, I discuss the potential for a reformed system based on clinical practice guidelines; enterprise liability; binding alternative dispute resolution; and no-fault. Each of these alternatives offers advantages, but each also suffers from its own problems. For example, there is evidence that no-fault—the most radical of the alternatives—would lead to faster and more equitable compensation with lower transaction costs. But there is also evidence that no-fault could weaken incentives to take appropriate precaution, and evidence that no-fault is politically difficult to implement.

It is not possible to perfectly compensate victims of medical injury, induce physicians to take appropriate care, and control the costs of health care. Every system involves tradeoffs. Discussion, informed by research, is our best hope for reaching a social consensus on what to do.

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Medicine and Law



Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.