In March 2013, Bloomberg News reported an opinion from Peter Orszag on malpractice reform. Orszag is vice chairman of corporate and investment banking and chairman of the financial strategy and solutions group at Citigroup, Inc. He expressed that medical malpractice reform may help fix the long-term U.S. fiscal outlook.
For the decrease in health costs to continue, medical malpractice reform may be worth an attempt. U.S. healthcare costs stem from a system that has to take care of Medicare beneficiaries, recommendations that physicians make to pursue one treatment as opposed to another, the cost of medical school training, traditions among doctors’ peers, financial incentives, and the medical malpractice system.
Improving the criteria for what constitutes proper care could change physicians’ behavior and save money, suggests research by Michael Frakes of Cornell Law School.
Most proposals to amend medical malpractice law limit liability in situations where physicians are discovered to be at fault, but they do not address how liability is evaluated. The malpractice laws are usually based on “customary practice.” A doctor can be liable for malpractice if he or she does not follow customary practice. This pushes physicians to follow what their peers do.
Many states have changed the customary practice standard to base liability on national rather than local medical practices. Frakes says: “that standardization in malpractice laws may lead to greater standardization in practices.” This suggests the cost of medicine may decline without being less effective. The more costly procedures are often not the best.
Unlike other studies on malpractice laws, Frakes does not examine only how variations in health practices can be explained by variations in liability limits, but considers also how the standard of care is defined. Liability limit in a given state doesn’t have that much effect when doctors are influenced by customary practice.
Healthcare costs could decline if all states’ malpractice laws protected doctors who followed national standards of practice. The Center for American Progress has proposed providing a safe harbor, under the medical-malpractice laws, for doctors who follow evidence-based guidelines published by medical associations.
Just because one treatment or diagnostic process dominates in a specific situation doesn’t mean it is the most medically effective. The Frakes study suggests a safe-harbor approach to reforming the malpractice laws would impact doctors’ behavior.
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