December 18, 2007

NCPA Report Suggests Reform to Benefit Doctors and Patients

DALLAS (December 18, 2007) - The nation's medical malpractice system should be replaced by a system that automatically compensates patients for unexpected injuries or deaths, regardless of who is at fault, according to a new report from the National Center for Policy Analysis (NCPA).  The NCPA report says the key to reform is to allow patients, doctors and hospital personnel to solve the problem by contract, completely opting out of the court system.

"Medical malpractice is a system of lawyers, by lawyers and for lawyers," said NCPA Policy Analyst Pam Villarreal, who co-authored the report.  "The needs of patients and the freedom of doctors to practice medicine often get lost in the mountain of litigation."

The malpractice system is supposed to compensate victims of negligent medical practice for their injuries and discourage future errors by medical providers.  It does both jobs poorly.  Consider that:

• Fewer than 2 percent of patients (or the families of patients) who are negligently injured ever file a malpractice lawsuit; and even fewer receive compensation.
• Moreover, of the lawsuits filed, fully one out of every three cases does not involve any medical error.
• Furthermore, malpractice victims receive less than half of every dollar (46 cents) recovered through settlements or jury verdicts go to the victims; the rest goes to pay their attorneys' fees, court administrative costs and defense costs.

The current system, according to the report, imposes large costs on doctors.  One in every four physicians is sued every year, and more than half are sued at least once during their career.  To protect against such lawsuits, doctors purchase malpractice insurance, which carry high premiums.  Most of these costs are passed on to all patients. The total cost of the medical tort system is estimated between $129 billion and $207 billion - or as much as $2,000 per year for every household in America.

The report suggests a reformed system should compensate every patient fully who is harmed by a medical error, minimize the cost of determining compensation and encourage health care providers and patients to act in ways that reduce the frequency of errors.  To do this the NCPA suggests replacing the tort-law malpractice system with a system in which liability would be determined by voluntary contract.  These contracts could include:

• Compensation without fault - set in advance the amount a provider is obligated to compensate the patient (or family of the patient) for in the case of unexpected death, and set compensation for unexpected disability based on the state Worker's Compensation system.
• Adjustment for risk - allow the compensation amount to be reduced for the riskier patient or high-risk procedures.
• Full disclosure - require providers to make certain quality information public, such as mortality rates for surgeries.
• Patient compliance - base qualification for full compensation on the patient's compliance with certain provider directives, including diet restrictions, full discloser of medications being taken.

"Instead of buying malpractice insurance, physicians would essentially be purchasing short-term life insurance on all patients, say, undergoing surgery," said Villarreal.  "Under this system, insurers would have a strong interest in monitoring how doctors practice medicine and would price their policies accordingly.  Bad doctors would largely be priced out of the market."