Reducing Medical Malpractice by Targeting Physicians Making Medical Malpractice Payments

• Published date: 01 March 2007
• Author: Steven Garber,John L. Adams
• DOI: http://doi.org/10.1111/j.1740-1461.2007.00087.x
• Date: 01 March 2007

Reducing Medical Malpractice by

Targeting Physicians Making Medical

Malpractice Payments

John L. Adams and Steven Garber*

Some states use physicians’ histories of medical malpractice payments to try

to reduce the incidence of medical malpractice (and for other reasons). At

least two types of policies fall into this category: using payments to decide

which physicians will be investigated, and possibly sanctioned, by the state

medical board; and making information about individual physicians’

payment histories available to the public. Previous literature suggests that

such policies will not be very effective because the link between medical

malpractice and medical malpractice payments appears weak. Unlike pre-

vious researchers, we examine this issue directly and quantitatively. To do

so, we develop a micro-simulation model of the random processes deter-

mining medical outcomes, claiming rates, and payment rates, using infor-

mation from several strands of literature to calibrate its parameters. To

examine sensitivity of our predictions to changes in assumptions, we also

consider 14 alternative models. For each of the 15 cases, we simulate data

for a population of 100,000 physicians and analyze the simulated data. We

find that neither type of policy will substantially reduce the population rate

of malpractice and that the policy of publicizing payment histories could, in

principle, backfire.

*Address correspondence to Steven Garber, RAND M4E, 1776 Main St., Santa Monica, CA

90407; email: garber@rand.org. Adams is a Senior Statistician and Garber is a Senior Economist,

both at the RAND Corporation.

An earlier version of this article was presented at the RAND Institute for Civil Justice (ICJ) &

Journal of Empirical Legal Studies conference on Empirical Medical Malpractice Research, held in

Santa Monica, on March 11, 2006. We thank John Romley, David Studdert, other conference

participants, and an anonymous referee for helpful comments. The research was supported by

core funds of the ICJ. Conclusions and opinions expressed are those of the authors and do not

necessarily reflect the views of RAND, the ICJ, or their sponsors.

Journal of Empirical Legal Studies

Volume 4, Issue 1, 185–222, March 2007

©2007, Copyright RAND Corporation

Journal compilation ©2007, Cornell Law School and Blackwell Publisher, Inc.

185

I. Introduction

Injuries caused by medical errors are a major concern in the United States

(Kohn et al. 2000). A longstanding public policy aimed at reducing medical

injuries is imposing civil liability for damages associated with personal inju-

ries caused by “medical malpractice” or “medical negligence.” According to

legal doctrine, negligence in providing medical care (diagnosis, treatment,

etc.) is required to hold providers liable, and negligence is defined as failing

to meet a legally defined “standard of care.”1According to theories of

deterrence, physicians are induced to be more careful in providing care, and

thereby reduce medical errors and medical injuries, by the threat of financial

penalties2(as well as by embarrassment, inconvenience, lost reputation, etc.)

for failing to meet the standard of care.3

Hoping to reduce medical errors and injuries, some observers advocate

policies that rely on outcomes of the medical malpractice system to identify

physicians who may have unusually high rates of error and injury. Such

policies include using medical malpractice payment histories to select phy-

sicians for investigation and possible sanctions by state medical boards,

publicizing individual physicians’ medical malpractice histories so that con-

sumers may take this information into account in choosing physicians, and

charging physicians with more past payments higher premiums for medical

malpractice insurance (i.e., individual-level “experience rating”).

Research suggests, however, that the medical malpractice system and

policies targeting physicians who have made unusually high numbers of

payments may be largely ineffective in reducing medical errors and injuries.

This is because the medical malpractice system does not accurately identify

1Studdert et al. (2004:283) write: “The standard traditionally used to evaluate...negligence is

medical custom—the quality of care that would be expected of a reasonable practitioner in

similar circumstances. Custom is determined primarily through the testimony of experts in the

same field as the defendant, although some encapsulations of expert opinion, such as practice

guidelines, may also be used.”

2Virtually all physicians carry medical malpractice insurance, and almost all compensation

payments are made by insurers. For expositional convenience, however, we will refer to pay-

ments made “by physicians.”

3Mello and Brennan (2002), however, review the evidence of deterrent effects of medical

malpractice and other forms of tort and conclude that such evidence is weak, perhaps because

of the considerable methodological challenges of documenting deterrence effects that might

exist.

186 Adams and Garber

and extract compensation (or “indemnity”) payments from physicians who

injure patients through negligent care.

In this article, we consider two types of public policies that rely on

physicians’ histories of medical malpractice payments in the hope of reduc-

ing the population rates of medical errors and injuries. These policies are

(1) requiring state medical boards to investigate physicians making at least a

specified number of malpractice payments during a specified time period

and intervening for those physicians found to have unusually high rates of

negligent errors; and (2) making public (e.g., on state government websites)

information about individual physicians’ histories of medical malpractice

payments, which could steer patients away from physicians who have made

(one or more) such payments.

To predict the effects of these policies, we specify a model of the

random processes that generate medical errors and outcomes and deter-

mine which patients (or their survivors) receive indemnity payments. We

calibrate model parameters using estimated quantities reported in the

literature. Most of the information we use to calibrate the model comes

from studies of medical care delivered in hospital settings. Thus, our

results are best interpreted as applying only in that context, which appears

to account for a large proportion of medical malpractice claims and

payments.4

The next section provides an overview of literature providing indirect

evidence on the extent to which the incidence of medical malpractice pay-

ments provides reliable guidance concerning the incidence of medical

malpractice (i.e., substandard care that causes injury). Section III presents

our base-case model. Section IV explores implications of this model

and—to investigate the sensitivity of our results to changes in

assumptions—14 alternative models. The predicted effects of the two poli-

cies are presented and discussed in Section V. Section VI offers concluding

comments.

4For example, Rolph et al. (1991:2096) report that 83 percent of the claims in their

database—which includes claims made between 1977 and 1989 against obstetrician/

gynecologists, general surgeons, anesthesiologists, and radiologists—involved medical care

delivered in acute care hospitals. It appears that no data exist that are informative about the

proportions of medical errors, medical injuries, or negligent medical injuries that occur in

hospitals.

We know of no way to gauge the extent to which our results are informative for care

delivered outside of hospitals.

Reducing Malpractice by Targeting Physicians Making Malpractice Payments 187