What’s Driving the Costs of Malpractice Claims?

What are the costs of the malpractice claims?

According to the study published in Health Affairs, “National Costs of the Medical Liability System”, concluded that the costs are $55.6 billion a year, which is 2.4% of annual healthcare spending.

This $55.6 billion is divided as follows:

  • $45.6 billion in defensive medicine costs
  • $5.7 billion in malpractice claims payments
  • more than $4 billion in administrative and other expenses.

As the above slide from the researchers powerpoint indicate, the majority of the total cost comes from defensive medicine cost of $45.6 billion — when doctors prescribe unnecessary tests or treatments to avoid lawsuits.

These figures can be used to argue for various points to view.

In its press release on the study, Harvard School of Public Health wrote this:

According to Mello and her co-authors [the authors of the study], other reforms, such as changing the fee-for-service reimbursement system that gives providers incentives to overuse services, probably hold more promise for reducing health care costs. Proponents of liability reform argue that it will address two drivers of health care costs: providers offsetting rising malpractice insurance premiums by charging higher prices and “defensive medicine,” in which liability concerns lead doctors to order more tests, procedures, and other services than are medically necessary.

However, in all of these arguments, there is one thing missing — patients, the fact that harm has come to patients, lawyers and legal costs have had to be incurred, and patients and their families have had to be compensated for the harm done to the patients.

According to a recent study, researchers concluded: “the annual cost of measurable medical errors that harm patients was $17.1 billion”.

The costs of defending against those claims is $55.6 billion.

So, in malpractice, where should cost reduction start?

Perhaps it seems too simplistic an argument, but consider it — reducing the amount of preventable medical errors will reduce the costs of malpractice claims.

What do you think?

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