The personal and monetary costs of malpractice suits: A case study

Dr. Joan Savitzky's personal account of a malpractice suit and its ramifications, from the NY Times.

Well, there you have it.

The Democrats have 60 votes in the Senate, but after all the compromises, the proposed heath care legislation is just a massive pile of pork served up for various special interests, such as State governments, pharmaceutical companies, trial lawyers and insurance companies. The bill has no public insurance option, no tort reform, no cost controls on insurance companies and no purchasing of FDA approved drugs from Europe, Canada and Japan. It does have restrictions on a woman's right to choose, though. A majority of Americans oppose the legislation in its present form.

We can always hope that a new Congress will undo the damage done by this preposterous legislation.

NY State has one of the worst legal systems in the country (readMedia)

Thanks to readMedia for the piece on the Pacific Research Institute study which evaluated NY state's legal system. Not surprisingly, my own home state of New York was described by PRI as being one of the worst of the 50 US states.  The PRI study Executive Summary states:

"By standard measures, New York State has a failed tort liability system. Because of the enormous political influence of personal-injury lawyers in New York, the state now faces a perfect storm of high tort costs, high tort-litigation risks, clogged courthouses, and nearly no tort reforms to balance a lopsided civil justice system. New York State is consistently at the bottom of the barrel in various measures of state tort performance. It has the second-highest direct tort losses, the fourth-worst relative tort losses, the fourth-worst relative tort-litigation risks, the third-worst tort system overall, and the third-worst tort rules and reforms on the books. Its excessive costs and risks negatively impact individuals and businesses both in New York State and across the country. The climate of fear is forcing people and jobs from New York and particularly threatens the quality of health care."

Little Benefit Seen, So Far, in Electronic Patient Records (NY Times)

The NY Times has  summary of a study led by Dr. Ashish K. Jha, an assistant professor at the Harvard School of Public Health. The study basically concludes that electronic patient records have done little to nothing to either improve information transfer or save money.

Is this surprising? Well, not to me. My practice has been at the forefront of instituting electronic patient records. All that I have discovered (after a number of years experience with electronic record keeping) is that I spend several hours each evening entering all the data into the electronic database. The vast majority of this information cannot be entered into the system by paraprofessionals or technicians. The net result is that my workday now begins roughly between 7 and 7:30 AM (depending on whether I have surgery scheduled) and ends at 9 or 10 PM. My experience seems to be no different that that encountered by my colleagues in other medical specialties. And although I am not a computer "geek", I am still comfortable with the software (which is more or less well-designed). But heaven help my fellow physicians who are not "computer literate". The experience is enough to force one into early retirement.

Electronic record keeping is not a panacea. But the medical software segment of the economy is certainly a growth industry.

Who do you trust?

There used to be a TV game show, Who do you trust? and that is still a key question in the minds of Americans, when it comes to health care reform. Earlier this year, the Gallup organization posed the question in an opinion poll:

Although the numbers may be slightly different today, than when the survey was taken, it does show who should be crafting the health care reform legislation. It's clear that the public believes that providers, who are in the front lines in health care, have a better understanding of the issues and solutions, than do politicians, drug companies and insurance executives. The full results of the Gallup Poll can be found here.

Is Health Care really a growth industry?

The most recent data (2007) regarding US Industrial sectors is from Fortune Magazine. Although you can sort the list in various ways, the two most interesting sort orders are by a) profit and b) 5 year (2002-2007) growth in profit. Here's the ranking of various health care-related sectors, first, by profit:

1. Pharmaceuticals  15.8% (3rd overall)
2. Medical Products & Equipment  15.2% (4th)
3. Insurance, Life and Health (stock) 10.6% (9th)
4. Health Care: Insurance and Managed Care  6.2% (28th)
5. Health Care: Medical Facilities 3.3% (40th)
   
6. Health Care: Pharmacy and Other Services  2.6% (43rd)
7. Wholesalers: Health Care 1.1% (47th)
   

Note, limiting Insurance company profits to 3%, as I have suggested, would save some serious cash. But the more interesting list is by growth of profits over a 5 year time frame:

1. Insurance, Life and Health (stock)  +43.3% (5th)
2. Health Care: Insurance and Managed Care +33.9% (9th)
3. Medical Products & Equipment  +17.2% (18th)
4. Wholesalers: Health Care  +12.6% (22nd)
5. Pharmaceuticals  +0.8% (34th)
6. Health Care: Medical Facilities  -0.6% (35th)

From 2002 to 2007, profits from insurance company stocks increased over 43% and the profits made by health insurance companies increased almost 34%. Even though the 5 year growth in pharmaceutical company profits was modest, the actual profit level in 2007 was quite high. In any case, every dollar spent on health care is a dollar that can't be spent on consumer electronics, real estate, food and other sectors.

Conclusion? Health care in the US is a growth industry. Although some pundits will point to the recent downturn in health care profit margins, this drop is primarily dues to the weak global economy.

Urban hospitals could lose out in health care reform effort (NY Times)

A provision in the proposed health care reform bill would likely result in urban hospitals having their Medicare reimbursement rates cut. As a result, rural hospitals could benefit. Read more about  this issue here in the NY Times.

The 85% solution

One good thing in the Democratic proposal is a limit on how much private insurers can spend on items, other than coverage costs (Albany Times Union):

[Private insurers] " ... would be required to spend 85 percent of their income from premiums on coverage, effectively limiting their ability to advertise or pay bonuses. Additionally, the industry would be stripped of immunity from antitrust regulations covering price fixing, bid rigging and market allocation. And in a late addition to the bill, 30-year-old restrictions on the Federal Trade Commission's ability to look into the insurance industry would be erased."

This is similar to idea in my proposal to limit profits and may have the same net effect. Let's watch and see if the insurance lobby can knock that provision out. I hope not.

Let's party like it's 1990 (pages)

The NY Times has the poop on the recently released Democratic health care reform proposal. If you could read a page every minute, it would take you 1 day, 9 hours and 10 minutes, just to read the document once. It's so massive, it may need a C-Section to be delivered.

Would Red States opt out of the public option? (NY Times)

Floyd Norris says no

But then again, conservative Governors have done crazier things in the past, in the name of political expediency. Think about who we're talking about here. Bobby Jindal (R-LA)? Haley Barbour (R-MS)? Rick Perry (R-TX)?

The good news is that Senator Harry Reid (D-NV) has got his mojo back and has put the public option back into the still "top secret" health care reform package. The bad news is that Senator Olympia Snow (R-ME) has opted out from voting for the proposal.

American Hospital Association offers malpractice reform idea

It's not much of an idea and in my opinion, by itself will save nothing and maybe even add additional costs. AHA is suggesting a pilot program of health care panels to mediate differences between supposedly injured patients and health care providers. These panels would oversee an Administrative Compensation System (ACS). Although the concept is good, it does not represent forceful action on the malpractice crisis, but it is rather just another "study". These mediation panels have proven to be unwieldy when previously tested by various states. The trial lawyers hate the AHA proposal and physician panels members have found the panels to be more of a debating club that rarely recognizes true medical malpractice. Honestly, in most US malpractice cases, health care providers generally prevail anyway. This panel system could make it even easier for patients to "win the lottery" and get their big settlement. The whole ACS is a pet project of Michelle Mello, a Professor of Law and Public Health at Harvard University. I suggest that the good Professor spend some time practicing medicine and then decide what would be a good solution to the malpractice problem.

Here's also an AP Wire story about the AHA proposal. In my opinion,the AHA proposal does not do enough to reduce costs caused by defensive medicine and is just being proposed to appease opponents of the present health care reform package. This Obamacare proposal does nothing about the malpractice issue and  in general, will do very little to contain costs. Health care should not be a growth industry.

What does Obama's doctor think about health care reform?

This isn't exactly a new item (from Forbes in June of this year), but it points out a couple of reasons why the Government often takes the wrong approach to solving problems. The article is about David Scheiner, an internist based in the Chicago, who took care of Obama from 1987 until he became President. Here's a good passage about Scheiner's view of why Obama has gotten most of the solutions to the health care problem wrong:

Looking at Obama's team of health advisers, Scheiner doesn't see anyone who's actually in the trenches. "I have a suspicion they pick people from the top echelon of medicine, people who write about it but haven't been struggling in it," he says. Scheiner is critical of Obama's pick for Health and Human Services secretary--Kansas Gov. Kathleen Sebelius, who used to work as the chief lobbyist for her state's trial lawyers association. "He doesn't see all the pain, it's so tragic out here," he says. "Obama's wonderful, but on this one I'm not sure if he's getting the right input."

As someone who is also "in the trenches", I can certainly relate to Dr. Scheiner's positions.

PriceWaterhouseCoopers Evaluation of Obamacare

Not pretty. The report, commissioned for the America's Health Insurance Plans (AHIP)  says the cost estimates associated with the proposed health care reform package, provided by the Congress, are vastly underestimated. The White House and the Congressional majority has attacked the AHIP report as flawed.  Get it here.

Physician makes more money on eBay than by practicing medicine.

CNN has a story today about Dr. Jennifer Lickteig, a family practitioner from Iowa, who makes more money selling clothing on eBay than she does from her practice income. A telltale quote from the article:

"Medicine still has its rewards for Lickteig. But like many doctors, she's frustrated that insurance companies and malpractice lawyers have so much influence on the practice of medicine."

As baby boomers retire en masse from practicing medicine and more and more primary care doctors follow suite, the remaining physician pool in the US will consist of high-paid specialists, poorly trained dregs and a few altruistic souls, who still believe that the point of the profession is to help humanity.

Fear of Lawsuits Drives up the Cost of US Healthcare (NPR)

NPR has this piece on long term studies in Maine that show that in geographic regions where health care was more readily available, patients took advantage of more procedures. The studies show that physician and patient behavior both contributed to this excess of health care services and costs, but that the main reason that doctors gave for "excess care" was defensive medicine, caused by the fear of frivolous lawsuits.

Without legitimate tort reform, US health care reform is just a political slogan.

Million Med March

Physicians across the country met with elected officials this week in Washington, DC, in what is being called, "The Million Med March." The "March" was conceived as a vehicle to pressure Congress to retool the health care reform effort. The emphasis is on tort reform, which is one of the main failings of both the House and Senate bills. Here's the rationale behind the "March",  as described by a fellow OB-GYN, Dr. Richard Chudacoff. 

Senate Finance Committee rejects public options (NY Times)

Now there's a shock:

http://www.nytimes.com/2009/09/30/health/policy/30health.html?hp

The exchange between Iowa's Charles Grassley and Senator Chuck Schumer (NY) borders on the comical:



Schumer: “I just want to know what you think of Medicare, which is a much more government-run program.”

Grassley: “I think that Medicare is part of the social fabric of America just like Social Security is. To say that I support it is not to say that it’s the best system that it could be.” 

Schumer: “But it is a government-run plan.”

Grassley: “It’s not easy to undo a Medicare plan without also hurting a lot of private initiatives that are coupled with it.” 

Schumer: “You are supportive of Medicare. I just don’t understand the difference. That’s a government-run plan and the main knock you have made on Senator Rockefeller’s amendment, and I am sure on mine, is that it’s government-run.”

Well, it would be comical if they were discussing a topic that was unimportant to the future of the country. Unfortunately, this is not the case. Now the only hope for the "public option" is with the full Senate. if that fails, the House bill presently includes the public option. If that and the Senate bills both pass, a House-Senate Conference Committee will then have to reconcile differences in language.

Katie Couric expounds on unnecessary MRIs and CT Scans

The CBS Evening News tonight had a piece on how many high tech diagnostic procedures are performed in the US annually (~$100B) and how, about a third of them were completely unnecessary. The one good point in the segment was that some physicians are lazily relying on these technological short cuts, rather than practicing good diagnostic medicine. The latter of which, of course, takes longer and provides less income. And the CBS News piece did state that patients were clamoring for these high tech solutions and it was hard for doctors to resist their patients' requests.

But the segment totally ignored the main reason for the increase in CAT Scans and MRIs: malpractice suits. If a patients comes in and complains of persistent headaches, unfortunately, these days the first thing that the physician thinks of is, "If I don't order every test under the sun and it it turns out that the patient has a brain tumor, the patient and/or the patient's family will sue the pants off me." In states like NY, which are saturated to the gills with trial lawyers (including its completely incompetent, lawyer-laden Legislature), there are presently no liability limits for pain and suffering . But that's old news and the Obama "plan" that's on the table, will do nothing about reducing medical malpractice costs. The US Senate "plan" does however, begin ratcheting down the number high tech diagnostic procedures that patients can have, unless they want to pay the costs for "unnecessary" MRIs and CAT Scans out of pocket. The next time a patient twists his or her knee when skiing and they can't have an MRI, they will know what it feels like to live under the Canadian health care system.

But there was a certain degree of irony, because of the commercials that followed the segment. They were all for pharmaceuticals. But then, the CBS Evening News mostly has commercials for non-generic prescription drugs. Why these drug companies spend billions of dollars on these commercials is beyond me, since most health insurance plans require physicians to prescribe generic equivalents. Further, these pharmaceutical TV commercial campaigns add substantially to US health care costs. But we all know that US health care is a growth industry. It shouldn't be, but it is.

Want to save $18 billion in US health care costs?

The solution is to reduce salt in our diets. Excess salt consumption is a major factor in hypertensive disease. Hypertension and associated diseases also are a major factor in reducing the quality of life in the elderly.

What do physicians think about health care reform?

The NEJM did a poll, summarized here. A sizable majority of doctors who were polled, favor a public-private mix of health insurance. But why is that a shock? Medicare is a public system. So's Medicaid, the armed forces health care and the VA. And many states now offer low cost health insurance for people who are not poor enough for Medicaid, but not well off enough  such that they can afford  a single policy version of private insurance. Take for example Healthy NY and allied programs. The Examiner has a nice summary of Healthy NY with links.

Is A.M.A. Support for Health Reform a Bad Sign? (NY Times)

John Tierney, the libertarian that writes the science columns for the NY Times apparently now is worried about the AMA and why they support health care reform.

I'd quote something that Tierney stated in the article, but all he does is quote other sources that cite that 1) there is a "medical cartel" that limits the number of new physicians that graduate medical schools in the US each year and 2) that US doctors make too much money and this is a much more of a burden on the health care system than more commonly cited causes, like malpractice insurance, insurance company overhead and pharmaceutical costs.

Tierney's viewpoint on health care and the AMA, is consistent with his misinformed views on climate change and other scientific issues, about which he is supposed to be knowledgeable. At least he's consistently wrong. You have to give him credit for that.

Uncontrolled growth of the US health care sector is a good thing?

1993 Nobel Prize Winner in Economics, Robert Fogel, writing in the Journal of the American Enterprise Institute says it is not necessary to control US health care costs. According to Fogel:

"There is no need to suppress the demand for healthcare. Expenditures on healthcare are driven by demand, which is spurred by income and by advances in biotechnology that make health interventions increasingly effective."

Fogel goes on to say that increasing US health care costs are a part of a very long-term trend and are not necessarily a bad thing:

"The main factor is that the long-term income elasticity of the demand for healthcare is 1.6—for every 1 percent increase in a family’s income, the family wants to increase its expenditures on healthcare by 1.6 percent. This is not a new trend. Between 1875 and 1995, the share of family income spent on food, clothing, and shelter declined from 87 percent to just 30 percent, despite the fact that we eat more food, own more clothes, and have better and larger homes today than we had in 1875. All of this has been made possible by the growth in the productivity of traditional commodities. In the last quarter of the 19th century, it took 1,700 hours of labor to purchase the annual food supply for a family. Today it requires just 260 hours, and it is likely that by 2040, a family’s food supply will be purchased with about 160 hours of labor."

Michael Pollan on Health Care Costs

You are what you eat:

Big Food vs. Big Insurance (NY Times)

Literally, overeating and obesity contribute greatly to US health care costs, as does smoking, alcohol, illegal drug use and other risky behaviors. Want to pay less for health care? As Austin Powers said, "Now, behave!"

Obama and Malpractice Reform

As much as I feel that Fox News is not that fair and balanced, I do agree with the main points in today's article.

And then you also have Jim Angle's "angle" on Obama's "profit motive" comments.

I'm afraid that Obama's speech has not really advanced the cause of sensible health care reform even a few centimeters.

Op-Ed Piece Troy Record, Troy, NY

Thank you to the Troy Record for publishing a version of my idea for US health care reform, which you can read in the column on the right.

David Leonhardt's Article in Today's NY Times

Here's a good overview of what's wrong with the present health care financing system in the US.

Remember When Health Insurance Was a Great Idea? By Gustav Schonfeld, MD

A great article with historical perspective that's worth reading (Thanks to Paul Karoll for the tip.)

My Idea for Health Care Reform

Naomi’s Idea

Okay, so I’m just an almost worn-out obstetrician-gynecologist, who, like Notre Dame’s Rudy, is “five foot nothing, a hundred and nothing” and I probably don’t have the qualifications to be giving advice on reforming the US health care system. I practice in the small, upstate NY community of Troy, NY, best known for being the home of both Uncle Sam Wilson and the detachable collar. Along with 5 other OB-Gyn’s (four women and two men, two of whom are African American) and two nurse-midwives, we care for a wide range of patients, from the indigent on Medicaid or less, to the elderly served by Medicare, to NY State employees, who are blessed with outstanding private health insurance. We have delivered thousands of babies, at two local, outstanding but struggling “St. Elsewares” and have tried our best to stay ahead of the ever-increasing patient load, demanding new technologies, declining reimbursements and the ever-lurking trial lawyers.

But despite being very busy, I have tried to keep up on the debate about health care reform. The main concern has obviously been to contain costs, so that consumers will have more money to spend on other goods and services. The major argument regarding reform is whether some modest variant of the present health insurance system should be instituted or rather whether a single-payer system should be imposed by the federal government. In January, 2009, the New Yorker Magazine had an excellent review, Getting There from Here, How should Obama reform health care? by Atul Gawande. The article should be required reading for anyone in Congress, who wants a straightforward briefing on this issue.

In May of this year, Senator Charles Schumer, offered a “middle ground”. He cited four principles that should be used in health care reform:

• The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.

• The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.

• The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.

• To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.

It’s good that Senator Schumer has laid down some ground rules, but unfortunately, the inherent nature of our diverse society has made the debate about the alternatives quite protracted.

But let’s put Senator Schumer’s principles aside for a second. On June 6, 2009, the NY Times presented an analysis by Kevin Sack entitled, State Coverage Model No Help for Uneasy Insurance Industry. This article detailed how various state governments have reformed their health care policies and focused on how state governments had provided health care for their employees and pensioners. The article concludes that none of these state health care systems has really made any serious reduction in costs. Political and social progress, these days, generally starts out at the state level and eventually spreads to other states, before finally requiring the federal government to standardize everything. Unfortunately, the article claimed that this dissemination process was not going to work with health care reform. The individual state models that were examined in the article were no better than the present system.
Now, fast forward to the NY Times editorial of June 13, 2009. In it, the Times apparently decided to collectively broadside physicians, probably in response to the American Medical Association’s recently stated position, that it will oppose creation of a government-sponsored insurance plan. The NY Times editorial cited Dr. Gawande and his research showing that physicians have driven up the cost of health care in the US, by ordering unnecessary drugs and tests. Doctors have claimed all along that this “defensive medicine” was needed to preclude unwarranted malpractice suits. The Times thought differently, referring to research showing that in states where malpractice litigation had been restricted, there was no evidence that physicians prescribed either less drugs or testing. In my view, the NY Times is both right and wrong on this issue. First, no matter how much medical liability has been reduced in certain US venues, it is still not enough. The threat of litigation is always on a doctor’s mind, when seeing a patient, even for symptoms as benign as either a nosebleed or a cough.

But the NY Times is correct about there being too much casual dispensing of drugs and too much reliance on expensive medical technology. But watch any of the evening television news shows. Many of the commercials are for prescription drugs, often those that can’t be prescribed anyway, because most health insurers require that physicians prescribe generic drugs. But that doesn’t stop the pharmaceutical industry from spending billions of dollars on promoting their wares. And to whom are they giving the sales pitch? Surely, it’s not the doctors. It’s the patients that see the ads and come in clamoring for the “little purple pill”. And why are so many middle-aged men running to the bathroom and needing a drug to stop that terrible medical condition? Could it be that many of them are also taking a diuretic for high-blood pressure? Nah, probably not, they probably have BPH or some other syndrome that no one had even heard of, twenty years ago. And who pays for these commercials? It’s the patients.
And the lure of the dark side of the technology “force” is strong. It would be hard to find a woman who either doesn’t want regular mammograms or doesn’t want that high resolution, digital ultrasound of their next newborn. But all this extravagant hardware comes with a high cost, almost to the point where most physicians can’t afford to replace their aging equipment.

So I’ve thought a lot about these issues and one day, when sitting with my check book and looking at my ever-increasing electric utility bill, I got an idea. It wasn’t a grand, elaborate idea, but rather a simple one. Back a number of years ago, the electric power industry in the US was heavily regulated. Those days are gone, of course, swept away in a fury of deregulation, mostly done by Republicans, with support from their business allies. Back then, a state like NY was divided into geographic regions and each electric utility had a regional monopoly, like Niagara-Mohawk upstate, Consolidated Edison in the NY City and LILCO on Long Island. These companies couldn’t just raise electric rates on a whim. They literally spent years, justifying to regulators even a modest increase in the rates that they could charge to the consumer. Every aspect of their business model was thoroughly inspected and restricted. They couldn’t build too many power plants or wander away investing in other risky capital projects. The good news was that electric rates remained stable for years. In addition, everyone who invested in the stock market always kept some low risk, utility stocks in their portfolio, to cushion the blow when there was a recession. But the utility company CEOs complained loudly to the politicians. In a matter of years, that stable system, designed for the public benefit and run by private entrepreneurs, was dismantled.

Now what does this have to do with health care? It has lot to do with it. The debate over health care reform has degenerated into sloganeering and as Senator Schumer suggested, someone has to propose a middle ground. Else, we will continue to only hear that a single payer system is “irresponsible, heavy-handed socialism” and the present system is “rampant, self-serving capitalism”. Schumer’s middle ground is embodied in my idea.

Under my proposal, private health insurance companies would bid to the federal government on obtaining a regional monopoly for a specific geographic area. Within that area, there would be no other purveyors of health insurance; no Medicare, no Medicaid and no other private insurers. For those patients who are employed, the employer would pay the geographic insurer. For those patients without employment, the federal government would reimburse the insurance company on a capitation basis and at the private employee rate. In exchange for their geographic monopoly, the government would heavily regulate health insurers’ profits and limit the annual increase in profit to either some small percentage (3 per cent?) or the rate of inflation, which ever was greater. It would be up to each “monopolist” to set insurance costs and provider reimbursement rates within its geographic region, within some guidelines established by the federal government. In addition, these private insurers would pay no federal, state or local income tax. The private insurance company would also bear the burden of paying out any malpractice claims, as both legal liability and malpractice insurance would be eliminated, for individual physicians, hospitals and other health care providers. After all, they are insurance companies. The federal government would monitor various health care metrics within each geographic region, in an attempt to assure that there was some consistency in the quality of care throughout the country. If no private insurance company wished to bid on a particularly "risky" geographic area, the federal government could step in with a subsidized public insurance entity.

That’s the idea, in one paragraph. I’m sure that there are a myriad of reasons, why this middle ground “won’t work”. But in that regard, my idea is no worse than the other proposals that have been floated for reforming the US health care mess. The health care sector in the US is always referred to as “a growth industry”. Investment advisers and economists proudly point to its continued vigor during our present recession. The problem is that it shouldn’t be a growth industry. It should be a stable system, designed for the public benefit and run by private entrepreneurs.