The Shocking Truth about Medical Malpractice [INFOGRAPHIC] referralMD

We are presently in the midst of another medical malpractice insurance crisis, not unlike the crisis that occurred in the late 1970s. The availability of medical malpractice insurance is diminishing; insurance premiums are soaring; insurance carriers are going bankrupt or refusing to write malpractice insurance policies.

In some areas, the cost of malpractice insurance is prohibitive, causing physicians to leave medicine. The most concerning effects are felt among patients, whose access to care is being compromised.

It is easy to blame insurance companies, plaintiff lawyers, and runaway juries. It is much more difficult to examine our countries health care practices and ask ourselves what we could do to change our feelings about the system that compels us to sue doctors, hospitals, and nurses.

 

Identifying the Motivating Factors for Malpractice

In this age of phenomenal technological innovations and highly successful treatments and cures, why is it that we, the patients, are so dissatisfied with our health care to such a degree we feel compelled to file a lawsuit?

Several papers have been published that address this question. The authors of these studies utilized different study techniques to tap into the mindset of the patient/plaintiff.

• In one study, deposition transcripts were reviewed.
• Another team used questionnaires to survey plaintiffs.
• The third team conducted their study by telephone survey.

In all 3 studies, common themes emerged. The 4 most common reasons prompting us, the patient, to file a lawsuit included:

1. A desire to prevent a similar (bad) incident from happening again.
2. A need for an explanation as to how and why an error was made.
3. A desire for financial compensation to make up for actual losses, pain, and suffering or to provide future care for the person who has been harmed.
4. A desire to hold doctors accountable for their actions. Overwhelmingly, the dominant theme in these findings is breakdown in the patient-physician relationship, most often a lack of communication.

Study participants described the perceived communication problems as follows:

1. Physicians would not listen, would not talk openly, attempted to mislead them, or did not warn them of long- term neuro-developmental problems. (in the case of newborn injury)
2. Other communication problems cited included perceptions that doctors deserted them or were otherwise unavailable, devalued patient or family views, delivered information poorly, or failed to understand the patients concerns.

 

Early Detection and Appropriate Treatment

Additionally, there are staggering statistics that are telling us our healthcare system is failing to provide early detection and treatment. Why is the American healthcare system and our doctors missing the mark?

In the United States, although focus has been placed on gaps in the quality of medical care and interest in improving it has expanded rapidly among policymakers, corporations, clinicians, the media and you, the public, there are many of us who cling to the false perception, “Americans have the best medical care in the world.” However, the basis for this statement is unclear, since statistics are telling you and I otherwise.

International data on quality of healthcare, life expectancy and infant mortality statistics place the United States in the embarrassingly lower quadrant of industrialized countries, although we pay more for our healthcare than any other country in the world.

This data raises the question, “Why are we paying more and getting less?”

Let’s take a look at what recent studies are showing us. The most common breakdowns in the diagnostic process are:

• Failure to order an appropriate diagnostic test: 59% of these errors were associated with serious harm, and 30% resulted in death.
• Failure to create a proper follow-up plan: 81 of 181case studies or 45%.
• Failure to obtain an adequate history: 76 of 181 case studies or 42%.
• Failure to perform an adequate physical examination: 76 of 181 case studies or 42%
• Incorrect interpretation of diagnostic tests: 67 of 181 case studies or 37%.

But the leading factors contributing to these failures are even more overwhelming:

• Failure in judgment: 143 of 181 case studies or 79%
• Vigilance or memory 106 of 181 case studies or 59%
• Knowledge 86 of 181 case studies or 48%.
• Patient-related factors 84 of 181 case studies or 46%
• Hand-offs 36 of 181 case studies or 20%.

 

Medical Malpractice Costs Affect the Delivery of Health Care

It is currently expected that medical malpractice costs are going to continue to rise unless healthcare providers recognize the need to change their “treat the numbers” approach to a “patient priority” mentality. To be fair, the majority of doctors are concerned about the welfare of their patients.

The system is like a dog chasing its tail. Hospitals, clinics and other healthcare facilities place emphasis on profit, they under-staff and overwork the doctors, nurse practitioners and nurses who in turn spend less time with you, the patient, who is paying increasing health insurance premiums and getting less adequate healthcare for the sake of profit, while the insurance companies, who are paying out more to settle malpractice lawsuit claims are passing that cost on to you and the good doctors who can hardly afford to pay their malpractice insurance premiums of, on average , $275,000 a year.

It is causing an increasing number of good physicians to abandon their practice for a more lucrative career. In order to implement change that will correct the present system, we, our government agencies, and the healthcare industry as a whole, are going to have to identify and acknowledge a different, more efficient model.    Until then, you and I are going to have to take a more active role in monitoring our own health by becoming better informed.

 

Use of Costly New Technologies and Drugs

Health care costs are disproportionately high for many reasons that health care professionals and the insurance would have you believe are the largest single factor increasing health care costs.

Use may be appropriate or inappropriate, but in either case, cost is increased. An example of appropriate but costly treatment is the use of fibrinolysis or angioplasty to treat an MI; before the 1980s, when these treatments began to be used commonly, treating an MI was much less costly (but also less effective). On the other hand, many new and costly treatments, including some in popular use, are ineffective, offer only marginal advantages, or are used inappropriately for patients unlikely to benefit. An example is use of lower lumbar spinal fusion to treat chronic low back pain; many experts think this treatment is ineffective and grossly overused.

Use of many such costly treatments tends to vary considerably among geographic areas and among physician practices within a geographic area (termed practice variation). For some specific disorders (eg, coronary artery disease), health outcomes are no better in areas where adjusted health spending is high than in areas where it is low. What is that telling us? I believe the answer goes back to the previous case studies.

Corporate and governmental subsidization removes some economic disincentives to health care use and has been assumed to contribute to better health care practices. But same systematic conditions still apply.

 

Increased Costs of Health Care Goods and Services

Drug costs have increased. One reason is the increasing cost of developing a new drug, often in the vicinity of $1 billion. The cost of drug development decreases the economic incentive to develop drugs with lower profit potentials, even those that could substantially benefit particular groups (eg, drugs to treat rare diseases) or public health in general (eg, vaccines, antibiotics).

The drug companies are a link in the system that is failing us in potentially serious ways. We only have to look at the number of recent whistleblower, False Claims Act lawsuits to determine where the drug companies priorities lie, the Stock Market.

 

Marketing of New Drugs and Devices

Intensive marketing to physicians and consumers (with direct-to-consumer advertising) has been suggested as a cause of overuse of costly new technologies and drugs. Some of these new measures may be no more effective than older, less costly ones.

 

Overuse of Specialty Care

Specialists are increasingly providing more care; reasons may include a decreasing number of primary care physicians who are leaving their practices, and an increased desire by patients to see a specialist.

Specialty care is often more expensive than primary care; specialists have higher fees and may do more testing (often pursuing less common diagnoses) than primary care physicians. Also, evaluation and treatment of a patient who could have been managed by a single primary care physician, may require more than one specialist.

 

High Administrative Costs

The percentage of health care dollars spent on administration is estimated to be 20 to 30%.

Most administrative costs are generated by private insurance, and most of those costs are generated by marketing and underwriting, processes that do not improve medical care; however, the Affordable Care Act limits the amount private insurance can spend on administrative costs. Also, the existence of numerous private insurance plans in the same geographic area typically increases health care providers’ costs by making processing claim submissions complicated and time-consuming.  referralMD, a marketing and referral processing application can help offset many of the labor costs associated with managing patient hand-offs, and keeps an accurate audit trail in-real time so both organizations (the referring and referred) are kept in the loop.

 

Physician Fees

Physicians in the US are more highly compensated than other professionals in the US and than physicians in many other countries. This disparity occurs partly because physicians in other countries typically spend far less on their medical education and malpractice insurance than those in the US and have lower office overhead. Because physician fees account for only about 20% of total health care costs, even a significant reduction in physician fees would have only a modest effect on overall costs.

 

Malpractice Costs Us Directly and Indirectly

The issue of malpractice adds to the cost of medicine directly and indirectly by triggering defensive medicine. So you are asking yourself, “What is defensive medicine?”

Defensive medicine refers to diagnostic tests or treatments that providers do to guard against the possibility of malpractice litigation, even though such tests and treatments may not be warranted clinically. For example, a physician may hospitalize a patient who is likely to do well with outpatient treatment to avoid a lawsuit in the unlikely event of an adverse outcome.

The direct cost is the malpractice insurance premiums paid by physicians, other providers, health care institutions, and medical drug and device manufacturers. These premiums, which cover claim settlements and malpractice insurance company overhead and profits, must ultimately be paid be paid by you from health care revenues.

 

As difficult as premiums and the threat of lawsuits can be for individual physicians — particularly in certain high-risk specialties and geographic areas — the total annual malpractice premium amount paid 2013 by physicians and institutions topped $55.6 billion, (according to US News & World Report), representing only about 2.4 percent of annual health-care spending. Researchers said their estimate includes $45.6 billion in what’s known as defensive medicine costs.

Actual Malpractice Settlements Paid Out in 2013, (According to Diederich Healthcare’s 2013 Medical Malpractice Payout Analysis).

1. Dollars in payouts: $3.6 billion.
2. Total payouts for medical malpractice: 12,142 (one every 43 minutes).
3. Payouts resulting from judgments: 5 percent.
4. Payouts resulting from settlements: 93 percent.

Infographic:

   Infographic by: Diederichhealthcare.com

Aging of the Population

Although often cited as a factor, population aging is probably not responsible for recent increased costs because the generation now in old age has not yet increased disproportionately; also, more effective health care has tended to delay serious illness in this generation, and they are less likely to file malpractice lawsuits. However, the aging of baby boomers may affect costs more as the proportion of the population who reach 65 increases from about 13% currently to almost 20% after 2030.

Key Points

• Use of costly new technologies and drugs may be the largest single factor among the many that increase US health care costs.
• Use of such technologies sometimes varies widely between geographic areas, and increased use does not always result in better clinical outcomes.
• The percentage of US health care dollars spent on administration is 20 to 30%.
• Reducing physicians’ fees is not likely to decrease health care costs very much.
• At first glance, direct malpractice costs have a small effect on overall health care costs, but the costs of defensive medicine, done to guard against malpractice suits, are difficult to measure and may attribute to a greater degree.
• Aging of the US population probably has not contributed greatly to the disproportionate increases in US health care costs but may do so as baby boomers age.

 

 Medical Malpractice Costs Affect the Delivery of Quality

Health Care. Based on the statistical data provided, I think we can all agree with this statement

It is currently expected that medical malpractice costs are going to continue to rise unless healthcare providers recognize the need to change their “treat the numbers” approach to a “patient priority” mentality. To be fair, the majority of doctors are concerned about the welfare of their patients. The system is like a dog chasing its tail. Hospitals, clinics and other healthcare facilities place emphasis on profit, they under-staff and overwork the doctors, nurse practitioners and nurses who in turn spend less time with you, the patient, who is paying increasing health insurance premiums and getting less adequate healthcare for the sake of  profit, while the insurance companies, who are paying out more to settle malpractice lawsuit claims are passing that cost on to you and the good doctors who can hardly afford to pay their malpractice insurance premiums of, on average , $275,000 a year.

It is causing an increasing number of good physicians to abandon their practice for a more lucrative career. In order to implement change that will correct the present system, we, our government agencies, and the healthcare industry as a whole, are going to have to identify and acknowledge a different, more efficient model. Until then, you and I are going to have to take a more active role in monitoring our own health by becoming better informed.

Author: Frank Kurnik – Strategic Investor/Advisor of referralMD

Images courtesy of: www.nylawsuitreform.org, www.cdimiami.com, www.cnn.com, www.vox.com