02 February 2012

Medical Malpractice on the Decline

Last Monday, as is so common, I got an email from one of the several medical organizations of which I am a member. This was a fundraising pitch, and I can't recall the details, but it contained the usual breathless rhetoric regarding how important their advocacy efforts are to fix the SGR, enact tort reform, save the practice of medicine, ensure domestic peace and tranquility, yadda yadda yadda...

Honestly, I don't even read these things any more before I hit delete, and I have actually developed a blind spot over the text where they hysterically predict catastrophe and doom. But this caught my eye — tort reform? Who's still talking about that as a priority? Mostly because it's a pipe dream that couldn't get through a republican congress with a republican president. In this day and age it's a dead letter. But also because I kind of thought the medical malpractice crisis was over.

I'm so old now that I've been through a full cycle of the boom-and-bust in med mal. When I came into practice, insurance rates were low, and then they spiked, nearly driving our practice out of business. It was horrible. Several local groups went under, and several others were hit with huge costs as their insurers left the market or went belly-up. Ugly times. But also, long ago, and the world looks very different now. Recently we've had no trouble getting multiple carriers to bid on our professional liability insurance, and at competitive rates. We are shifting towards a self-insurance model and currently enjoying the lowest insurance costs in well over a decade.

So I got wondering -- what is really going on in medical malpractice these days? Are real numbers available? The answer turned out to be fairly difficult to find. But a nerd with a computer and a couple of days off work can be a dangerous thing. So I did some legwork (with the help of Austin Frakt and Aaron Carroll of The Incidental Economist, among others) and I was able to come to some decent conclusions.

The data I used came from several sources:


I had a little trouble reconciling some of the variation in the data sources. For example, the median loss for a closed medical malpractice case in 2010 was $200,000 according to the PIAA, and $135,000 according to the NPDB. This refers to the amount paid to the claimant, whether by judgement or settlement, and excludes the cost of case management and defense. This variation was consistent across the board -- for all cost figures, the PIAA numbers were 15-30% higher. I am not sure why this would be. Not all carriers report to the PIAA; its dataset is much smaller, including only about 20% of all paid claims, so there may be a sampling bias at play. Payments made to claimants other than insurance payments would not be recorded in the PIAA data, and smaller insurers (or self-insured physicians) might be more tenacious in defending and thus the smaller payments might be excluded from that claimset. I would tend to view the NPDB numbers as more definitive. Still, the trends correlated well enough that I could draw some reasonable conclusions from the data. Additionally, the NPDB, which casts the wider net, gave better data on the total volume of cases, and the PIAA data had good numbers on the cost of defense.

The top line conclusion:

Medical malpractice costs are down quite a bit — about 35% from their 2001 peak:

Total Med Mal Cost

This includes all professional liability claims against all individual providers: physicians, dentists, nurse practitioners, nurse anesthetists, etc. The vast majority is physician cost. I factored in the costs of defense as well, since that generally contributes about 25% of the cost of the median case. Note that the scale of the graph is adjusted to highlight the trend. Again, I suspect the PIAA line significantly overstates the actual cost, but I included it to show its trendline against the NPDB trend. I also note that the 2001-2003 peak in medical malpractice insurance rates did correlate with a historic high in malpractice losses. (At the time there was much speculation that the insurance companies were exploiting their rate-setting power to recoup reserve losses from the stock market implosion.) The actual cost is probably slightly higher since claims management and defense costs for cases the physician won are not included.

The decline in costs is not driven by increased losses per claim, which have remained remarkably stable over time:

Loss Per Claim

Note that these costs are adjusted for inflation, and exclusive of defense costs. The median claim loss was in fact highly stable at the above-noted levels ($135,000), but the average cost was more reflective of real-world experience, I thought, since it shows the effect of the occasional very large verdicts/settlements. Which as it turns out, do not seem to be on the rise; quite the opposite.

However, the claim frequency is down dramatically. This seems to be the major driver of the decreased cost:

Number of claims

And even more when you control for population growth:
Claim Frequency
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So what we are seeing is a 40% reduction in the frequency of claims which result in payment to a patient. Not claims made, but closed claims with payments. Important distinction.

What's the driver of this trend? I have no idea. There could be fewer cases being filed, or physicians and insurers could be more aggressive in defending claims. Tort reforms were enacted in a couple of states, but I do not think that has contributed enough to change the national picture.

One suspicion I may have is that the lawyers who specialize in med mal cases may simply be more selective in the cases they are willing to take to trial. The costs of defending a malpractice claim has risen from $35,000 to about $50,000, and claims which go to trial cost about $150,000. If the plaintiff's costs are anywhere near that scale, it's a very expensive and risky proposition for a plaintiff's attorney to front that sort of money in the hope that they will win at trial. Since the very few cases which go to trial (about 8%) result in a defense verdict the vast majority of the time (~90%), it's quite possible that many lawyers are discouraged from gambling on a case which is anything other than a sure win. It's also possible that physicians (and their insurers) have become more savvy in settling losing claims quickly and at less cost.

There's a lot more to glean from the data, and when I get a chance I intend to break out the state-level distributions. I'm curious to see whether the "crisis" states are really in crisis, and how well state-level premiums really correlate with the case rates. But, in summary, it is accurate to say that malpractice cases and costs are significantly down across the nation. I would add, as a cautionary note, that the history of medical malpractice is quite cyclical and unpredictable, and it's highly likely that in the future we may —will — see another crisis when rates spike.

But for now, make hay while the sun shines!

I will post the raw data for those who are curious when I get a chance to clean it up a bit -- it's right now all helter-skelter in a huge, ugly spreadsheet.


18 comments:

  1. Could it be that doctors are using more expensive tests with expensive machines to reduce the likelihood of lawsuits? That is one of the claims of tort reform proponents. I'm not sure if it is true, but if it is then there is still a case for tort reform because this practice would simply shift the cost from doctors' malpractice insurance to patients' medical insurance (or the government or patients).

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  2. I think the author is correct in his thoughts about why the number of payments has been declining so significantly. I am a lawyer and represent people injured by medical negligence. I can tell you that medical malpractice cases are usually defended to the death by the medical malpractice insurance companies. As is discussed in this article, the doctors win about 90 percent of the cases that go to trial, oftentimes cases that have merit and should be won by the injured patient. I have seen many talented lawyers leave the practice of doing medical malpractice work because of having lost too many cases they should have won. I do not think this is going to change. In my state, the number of cases being filed drops every year. Why would a lawyer continue to represent injured patients knowing that the chances of being successful are so slim? In my state, the rate of payments to injured patients per population was 1:128,000. Jurors tend to give the benefit of the doubt to the doctors, not to the patients.

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  3. Well, this is eye-opening. All I usually hear is how medical malpractice is out of control.

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  4. Good news, but it seems like it went from Astronomical^3 down to Astronomical^2.

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  5. Love to see your breakdown per state - MS vs NY for example.

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  6. "But for now, make hay while the sun shines!"

    haha. This is a good news actually, that medical malpractice is declining. Hope that in the coming years, it will further decline, eh.

    Cheers,
    Peny@best scrubs

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  7. Still waiting on that comparison between NY & MS.

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  8. Interesting post! I just finished getting my RN to BSN and we talked a little about medical malpractice in some of my classes. It's good news that it's on the decline!

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  9. Ben Rush, MD2/19/2012 10:30 AM

    Still waiting for that NY vs MS comparison.

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  10. This sure busted some medical malpractice myths. It's nice to know that cases of medical malpractice have been declining all these years. After all, patients' lives are at stake in these cases, so the statistics better remain low.

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  11. Amazing news I cant believe this medical malpractice total cost decreasing with respect to time.I hope now we can produce more sincere doctors team.If you ever received any email related to fitness articles on nutrition diet and nutrition information so must share on your blog.

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  12. . "I am a lawyer and represent people injured by medical negligence. I can tell you that medical malpractice cases are usually defended to the death by the medical malpractice insurance companies. As is discussed in this article, the doctors win about 90 percent of the cases that go to trial, oftentimes cases that have merit and should be won by the injured patient. I have seen many talented lawyers leave the practice of doing medical malpractice work because of having lost too many cases they should have won."

    Dear Micheal:
    Please back up your statements with some statistics to back up what you say. Otherwise it's just your "opinion" and not backed up in any facts. As per a NEJM published study some years ago, over a third of judgments in favor of the plantiff did not even involve medical malpractice when reviewed by independant experts. This is good? The reality iof this system is it is bad for distinguishing real malpractice from bad outcomes. It is bad for patients and doctors. It is good however for successful lawyers with courtroom skill. This sadly has little to do with determining fault and payment. Any attempts in this country of involving independent medically trained judges and independent (ie medical courts) has been successfully squashed on civil rights grounds thanks to ATLA. I am sorry but this system doesn't work for anybody but you.

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  13. While national stats may be encouraging, NY State remains a statistical outlier.
    http://www.diederichhealthcare.com/medical-malpractice-insurance/2012-medical-malpractice-payout-analysis/

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  14. Not surprised because there are more laws making it harder to sue. It has dropped in Pennsylvania due to new reforms, and it is awful because insurance companies and negligent doctors are getting away with it. I had been having pain in my ovarian section for years and my doctor kept blowing it off like it was no big deal. Eventually, I went for a second opinion and it turned out to be a tumor growing in that area. If it was caught sooner I do not think I would have had as many complications that I have now. I am grateful things didn't get worse and I am also grateful for my Philadelphia medical malpractice lawyer who helped me get through it financially and personally.

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  15. In the cases of medical error, the majority of incidents are related to mistakes made during operating procedures. Mistakes can range from failing to correct the problem the patient went in for to operating on the wrong body part altogether. It is important in the case of an operation gone wrong to establish whether the problem is down to a common surgical risk or to medical negligence of any of the healthcare providers involved in the surgery.

    Related:
    Compensation for Medical Negligence

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  16. This can be either good or bad depending on what factor influences this downfall the most. But I really hope that the factor of the doctors and nurses becoming more and more diligent is one big factor to this.

    Thao Cantu

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  17. Thanks for blogging. I enjoyed our interactions on BSNYC. Best of luck. I can use some of that as well.

    http://www.levinson-axelrod.org

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