Caps on damages won't reduce defensive medicine

ADVERTISEMENT
One reason, according to Gallup, is that one in four healthcare dollars in America is spent on defensive medicine. Defensive medicine occurs when doctors order more tests and procedures -- such as CT scans, blood work and biopsies -- than are medically necessary to keep from being sued.
This costs consumers as much as $650 billion annually.

The medical community has long supported tort reform as one solution to the healthcare spending crisis. One prong of tort reform includes a cap on malpractice damages for patients who sue for pain and suffering. The thinking goes that caps on pain and suffering will decrease healthcare costs.
While it can be debated whether caps lower malpractice premiums for doctors, it does little to change physicians’ behavior when it comes to defensive medicine. In states highly praised for enacting comprehensive civil justice reform, doctors report little difference between the amounts of defensive medicine they practice compared to doctors elsewhere, according to a 2011 nationwide physicians’ survey conducted by Jackson Healthcare.

For example:

•    In Texas, 79 percent of physicians said they practice defensive medicine compared to 81 percent in all states. This despite comprehensive legal reform adopted in 2003 that included much-acclaimed limits on non-economic damages, something known as “pain and suffering.”
•    In California, 77 percent of doctors said they practice defensive medicine compared to 81 percent in all states. Yet more than 30 years ago, California lawmakers adopted the prototype for civil justice reform that included caps on non-economic damages or “pain and suffering.” 

The recent Jackson survey of physicians found that only 27 percent of doctors nationwide said that traditional tort reform measures would cause doctors to decrease or discontinue the practice of defensive medicine.

Obviously doctors still believe they can be hauled into court with or without traditional tort reform measures. Doctors abhor any type of litigation. If the risk of litigation still exists, they believe it’s safer to order more tests and procedures than are medically necessary.

The single best way we can quickly bring down the cost curve in healthcare is to take bolder steps to completely replace our broken medical liability system.

I propose we consider a system similar to one that has worked in Sweden for decades. There, doctors do not feel compelled to order unneeded tests and procedures. Further, patients who are harmed are fairly compensated.

We need a non-adversarial system that quickly and fairly processes claims. Patients for Fair Compensation is currently proposing such a plan to lawmakers in several states.

Under a Patients’ Compensation System, a patient who had been medically harmed could file a claim for review by a panel of experts. If that panel deemed “avoidable” harm occurred, the claim would be forwarded to a compensation board to award payment.

This no-fault system would create a predictable model where patients would know their cases would be heard. Doctors would know they wouldn’t be hauled into court. The system would provide more injured patients compensation. They would receive predictable settlements in much faster time.
Patients would endure fewer needless tests and procedures. Healthcare costs would drop as physicians’ livelihoods would no longer be on the line with every patient.

BioScience Valuation, a German healthcare economics firm, estimates a PCS would save at least $2.6 trillion over 10 years. Taxpayers would save $700 billion on Medicare and a similar amount on Medicaid. That’s an enormous reduction in healthcare spending – a sum that politicians will not find with any of the current or proposed solutions for health reform.

Economists, policy wonks, even Wall Street analysts all agree that healthcare and medical entitlements are the Achilles heel of our nation’s economy. They will cause long-term economic stagnation if we don’t get healthcare spending under control. One significant step toward achieving that goal is to slow or eliminate a primary driver – defensive medicine – by completely replacing our broken medical tort system with one that favors patients and reduces costs.
A Patients Compensation System does just that.

Segal, a neurosurgeon, is CEO of Medical Justice and a board member of Patients for Fair Compensation, a non-profit that is asking lawmakers in several states to adopt a Patients’ Compensation System.