Health News Digest
Cut costs

January 20, 2014

A Great Way To Lower Health Care Costs…Ignored

By  Michael D. Shaw

Suppose I told you that the financial impact of one facet of medical practice—comprising more than seven percent of total health care expenditures—could be drastically lowered, even completely eliminated? You would be interested, and so would the government, right? Wrong.

The cost of defensive medicine, those tests and procedures ordered solely to protect hospitals and physicians from medical malpractice (Med-Mal) litigation, are estimated to cost as much as $200 billion each year. That’s more than seven percent of all the money spent on health care annually.

A number of Republicans tried—to no avail—to include some aspect of tort reform in the Affordable Care Act (Obamacare). So did Bart Gordon (D-TN), a Blue Dog Democrat, and he also failed. In the summer of 2009, Howard Dean, a physician, onetime presidential candidate, and former chair of the Democratic National Committee, was asked why there is nothing in the health care proposals about this issue. Dean’s reply: “The reason that tort reform is not in the bill is because the people who wrote it did not want to take on the trial lawyers…And that is the plain and simple truth.”

Of course, the plaintiff’s lawyers portray themselves as the champions and only protectors of the victims of malpractice. However, as most people who have gone through any type of litigation, or have read Plato’s Republic will attest, justice is quite an elusive concept.

In May, 2006, an article appeared in the New England Journal of Medicine entitled “Claims, Errors, and Compensation Payments in Medical Malpractice Litigation.” Written by eight medicolegal scholars affiliated with Harvard, the work investigated the merits and outcomes of malpractice litigation using structured retrospective reviews of 1452 closed claims. The reviews included independent assessments of whether the claim involved injury due to medical error.

The stated aim of the study was to measure the prevalence, costs, outcomes, and distinguishing characteristics of claims that did not involve identifiable error.

The authors concluded: Claims that lack evidence of error are not uncommon, but most are denied compensation. The vast majority of expenditures go toward litigation over errors and payment of them. The overhead costs of malpractice litigation are exorbitant. Among other findings, 54 cents of the malpractice dollar goes to lawyers and administrative costs.

Others have noted that because the legal process is so expensive, most injured patients without large claims can’t even get a lawyer. According to Michelle Mello, professor of law and public health, and one of the authors of the 2006 study, “It would be hard to design a more inefficient compensation system, or one which skewed incentives more away from candor and good practices.”

Mello has been in the forefront of health courts—specialized courts for handling medical malpractice claims. In another article from 2006, she and her colleagues outlined the five core features.

1.     Injury compensation decisions are made outside the regular court system by specially trained judges.

2.     Compensation decisions are based on a standard of care that is broader than the negligence standard (but does not approach strict liability). “Avoidability” or “preventability” of the injury is the touchstone. To obtain compensation, claimants must show that the injury would not have occurred if best practices had been followed or an optimal system of care had been in place, but they need not show that care fell below the standard expected of a reasonable practitioner.

3.     Compensation criteria are based on evidence; that is, they are grounded in experts’ interpretations of the leading scientific literature. To the maximum extent feasible, compensation decisions are guided by ex ante [based on assumption and prediction and being essentially subjective and estimative] determinations about the preventability of common medical adverse events.

4.     This knowledge, coupled with precedent, is converted to decision aids that allow fast-track compensation decisions for certain types of injury.

5.     Ex ante guidelines also inform decisions about how much for economic and non-economic damages should be paid.


The introduction of health courts has widespread support, except among plaintiff’s lawyers, and some legal academics. The lawyers mock the notion of specialized courts, even though they have existed for centuries. For example, there are tax courts, drug courts, and patent courts—special courts that do not have juries. As to the academics, in the articles I consulted, they acknowledge that reform is needed, but also betray a far too idealistic attachment to the merits of the jury system.

Lest we forget, Med-Mal represents one of the most—if not the most—lucrative aspect of the plaintiff’s bar. Many are aware that the fortune of politician John Edwards was founded on 16 multi-million dollar judgments against hospitals for babies born with cerebral palsy. Not as well publicized are the medical findings that complications during childbirth account for only 5 to 10 percent of all cerebral palsy cases, and even then are not all preventable.

Who can forget the gigantic settlement involving silicone breast implants, based totally on junk science, underscored by the FDA’s re-approval of them a few years later?

Defensive medicine, typified by overkill documentation and ordering of unnecessary diagnostics such that perhaps 40 percent of all radiology is unnecessary, is still the 500 pound gorilla in the room. So far, no one with authority is willing to deal with it.