More Defensive Medicine

In two earlier posts, "Approaches to Reducing Healthcare Costs" and a response to comments on that post, I ruminated on the issue of defensive medicine and how this ubiquitous practice contributes to the inflating healthcare costs in the United States. I wanted to share an editorial by Philip K. Howard published in the Washington Post a few days ago concerning this issue. Mr. Howard is an attorney and chairman of Common Good, a non-profit legal reform group.

In his piece, Howard calls for an end to the "erratic, expensive and time-consuming jury-by-jury malpractice system." His solution would be to replace traditional malpractice litigation with cases handled by a specialized court handling healthcare matters exclusively. You could compare these courts to the U.S. bankruptcy courts or perhaps to the adjudicative bodies of government agencies.

I do not dispute that a change of that nature in malpractice justice would save doctors, facilities, and medical professionals some money and, theoretically, reduce costs for medical patients and insurance policy holders. But let's think at a very basic level what the implementation of a health speciality court would do. The health courts would no doubt conduct only bench trials, putting malpractice decisions in the hands of professionals (either health professionals or legal professionals well versed in medical issues) rather than juries. Obviously, to save costs, Howard's idea must be that the health courts would find more often for defendants rather than plaintiff-patients. This presents the potential for a lose-lose situation for wronged patients. Either they can continue to pay inflating insurance premiums and rising healthcare costs, or they can sacrifice a chance to seek redress with a jury of their peers as fact-finder.

The question to address next would be whether the potential savings in healthcare costs to all patients and policy holders would justify the relinquishment of jury medical malpractice trials. I do not have an answer to that question. However, I do have reservations about the effects that a professionally sympathetic adjudicative body would have on patient care, even if it might bring down costs somewhat.

RESPONSE TO COMMENTS on Approaches to Cutting Healthcare Costs

First of all, thanks to Kevin for you comments. I'll always toss around the word "discuss" even when I'm just talking to myself. I do, however, truly believe that a more astute, thorough discussion of the issues raised on this blog will result from several minds coming together to think and talk about them.

If you did not see them, here is a link to Kevin's comments regarding "Approaches to Cutting Healthcare Costs."

A few thoughts as an introduction. Our civil justice system's aim to compensate injured parties for encroachments on individual rights and any harm sustained as a result. In medical malpractice cases, these consequential damages can be significant, particularly in cases involving a wrongful death, loss of ability to work, etc. However, when we hear about extreme awards to plaintiffs, often those involve some measure of punitive damages, meant not to compensate the plaintiff but rather to punish the defendant for his actions. Thus, by seeking these damages that are outside of what the plaintiff requires to be made whole, patients and their attorneys have added an extra layer of potential cost for medical professionals, facilities, and insurance companies. Those are my two points: (1) The potential costs of defending and/or losing litigation are factors that must be built into medical fees and insurance premiums, and (2) patients have had and continue to have a role in increasing costs they must bear. (For some data, see the article Medical Malpractice Awards at Record Lows. Even though the article states that malpractice related expenses are declining, malpractice insurance premiums in 2006 still represented about 12 billion dollars of healthcare costs and actual malpractice payments were another 3.9 billion.)

Kevin observes that insurance policy holders bear these increased costs twice - once in insurance premiums and again in medical fees actually incurred. I think this occurs sometimes, but not always. If we place policy holders on a spectrum based on their level of insurance coverage, we would have on one end policies with more coverage; insurance picks up almost all expenses beyond co-pays and deductibles. On the other end of the spectrum are policies with less coverage, and holders may be left with additional responsibilities once that coverage is exhausted. Generally speaking, on the "more coverage" end of the spectrum, policy holders absorb rising costs in insurance premiums, and on the "less coverage" side, policy holders probably absorb more of the rising costs in fees not covered by their insurance plan. Obviously there are a host of stops between "more coverage" and "less coverage" where patients do bear costs both in their insurance premiums and in any fees not covered by their insurance.

At different points in his first paragraph, Kevin asks (1) how the legal system could be changed for the benefit of healthcare costs and (2) how insurance companies could be better regulated to keep costs down and coverage up in spite of potentially excessive costs like litigation. I like that we are addressing these two side-by-side. As to # 1, I do not see the legal system changing dramatically. While there's no bright-line limit on punitive damages, the Supreme Court indicated in State Farm v. Campbell that anything more than a single digit ratio of punitive:consequential damages would probably violate a defendant's due process. A cap on punitive damages, probably in relation to the consequential damage award, is about as much regulation as I believe the legal system will see. Plus, I am leery of limiting a patient's right to seek redress for his injuries, particularly in light of data suggesting fewer injured patients are receiving malpractice awards or settlements. See Medical Malpractice Awards at Record Lows. However, a decline in awards or settlements could speak to the quality of claims being brought by patients, not necessarily a turning of the tide against patients in litigation.

For me, that leaves either the insurance companies or the medical industry itself as sectors in which government regulation could help to lower healthcare costs. Frankly, I am not sure what cost-control measures would work, outside of government financial subsidy on one end or the other. Could the government attempt to make fees for medical procedures somewhat uniform, thereby essentially capping the medical fees? Could the government somehow cap insurance company profits or revenues or generate a uniform system of calculating insurance premiums? While they are not unregulated, both the healthcare industry and the insurance industry function essentially as private, for-profit ventures. And while some industries, like airlines, are paring back services so they can lower prices during the tough economic times, the medical profession particularly still fosters competition geared toward improving and expanding services. For example, pregnant couples like labor and delivery units with remodeled rooms, wi-fi, whirlpool tubs - all the bells and whistles. The point I want to make is that we are talking about cutting costs in an industry where bigger, better, and nicer generally thrives. Because of its nature alone, cost-cutting will not be an easy task.

As to Kevin's related question about pharmaceutical companies and insurance, I am sure insurance companies offering prescription drug plans must absorb the costs of pharmaceutical litigation somewhere along the line. If the "retail price" of drugs reflects all of its maker's costs - including potential litigation - and policy holders pay a low co-pay, then any fluctuation would fall to the insurance company, I suppose.

I guess the take away message from this longer-than-necessary post is that, flawed as it may be, I do not see much potential for change in or regulation of the legal field as it relates to healthcare costs. Some limitation on punitive damages could help, and evidence seems to suggest that medical malpractice related costs are currently on the decline. However, the medical malpractice lawsuit will never go away; it serves two immediately apparent and necessary functions - (1) a protection for patients who receive substandard care and (2) a quality-control measure for medical personnel. The system is what it is, and no matter what healthcare reform comes down the pike, costs related to the legal system will be an inescapable part of that discussion.

Approaches to Cutting Healthcare Costs

I came across this letter to the editor published by Rep. Dave Camp (R - Mich.) in the Washington Post the other day. In it, Rep. Camp identifies three strategies for lowering healthcare costs for the average American. Two of his three suggestions I cannot really dispute; they are, more or less, common sense solutions. The Congressman calls for reform of insurance regulations. I cannot agree more, particularly if no drastic healthcare overhaul comes in the near future. If insurance companies are to continue to have a dictating role in healthcare, the regulations need to reflect and appropriately address that role. Rep. Camp also highlights the need to "eliminate the waste, fraud and abuse in Medicare and Medicaid," a noble goal, if not a bit aspirational.

The Congressman's third cost-cutting measure is the one I would like to spend a few moments with, and I have two general points I would like to make about his perspective. The Congressman advocates eliminating "defensive medicine," which he defines as "doctors order[ing] costly and often unnecessary tests just to avoid being sued." My first point is somewhat tangential, so I will dispose of it as quickly as possible. I hope that preventative care is not unnecessarily victimized as part of Rep. Camp's onslaught against defensive medicine. While preventative care can increase avoidable healthcare costs for healthy patients, early detection of serious conditions can reduce costs of treatment. Also, exchanging preventative care for primarily reactionary care raises issues about the quality of healthcare being given and received. This segues to my second point about defensive medicine.

Rep. Camp contends that medical professionals at times order tests just as means of protecting themselves against lawsuit. While I will not dispute the truth of his contention, blaming the healthcare industry for these actions ignores a key foundational issue, namely, that doctors would not have to worry about lawsuits but for the litigiousness of patients. As a former private practice attorney, Rep. Camp should be well aware of this principle. An attorney owes his client an ethical duty to fully explore all relevant and valid aspects of a legal claim or matter. Otherwise, the attorney is liable to the client for his failure to do so, should that failure harm the client in some way. I would guess that the Congressman would not support legislative limits on the thoroughness of legal representation. I see little distinction in principle between that scenario and medical care.

The question, then, is how defensive medicine would be eliminated. Would it be through limiting a patient's right to seek retribution for medical malpractice? Many patients over time have certainly abused that right, but is eliminating or severely limiting that protection really the solution to our dilemma of healthcare costs? While professional organization and licensing boards uphold the quality of care, I would speculate that the absence of this patient protection would have at least some degrading effect on the quality of healthcare generally received. At this point, I refuse to believe that a system which can provide both affordability and quality of healthcare is impossible.

Defensive medicine further raises the issue of universally defining adequate, excessive, and substandard care. Certainly existing professional standards could and should set the benchmarks; however, variations exist across specialties and geographic location. Should doctors be legally forced to find that ideal medium between too little and too much? Other factors encourage them to find that place - ethics and efficiency being two that immediately come to mind. Should legal ramifications force a physician to question a test that might or might not ultimately prove to be"unnecessary"? Could that physician find himself in a catch-22, where ordering the test might be considered defensive medicine while failing to order the test would be negligent?

Obviously, I do not have answers for these questions. I do applaud Rep. Camp and his colleagues for actively seeking means to provide accessible, affordable healthcare in this country. I do get the sense, though, that the Congressman's letter unfairly blames medical professionals for the practice of defensive medicine. Furthermore, the possible ramifications of the steps that would limit or eliminate defensive medicine must be considered - for the patient, for the physician, and for the general quality of healthcare. While I admittedly have provided little help in coming to a solution, I feel I have raised questions that ought to be considered as our lawmakers continue to debate the issue of healthcare reform.