By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    medicare part d benefits
    Everything that You Need to Know About Medicare Part D
    August 15, 2022
    Best Ways to Boost Your Immune System this Winter
    Best Ways to Boost Your Immune System this Winter
    November 15, 2022
    back pain issues
    Ways to Treat Constant Back Pain
    August 21, 2023
    Latest News
    How Probate Planning Shapes the Future of Your Estate and Family Care
    July 17, 2025
    Beyond Nutrition: Everyday Foods That Support Whole-Body Health
    June 15, 2025
    The Wide-Ranging Benefits of Magnesium Supplements
    June 11, 2025
    The Best Home Remedies for Migraines
    June 5, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    More On Wellness Programs To Improve Health and Reduce Costs
    January 25, 2012
    Privatizing Social Security and Medicare: Who Can Defuse Political Dynamite?
    June 12, 2011
    Study: Risk of Death in Elderly Patients with Dementia Doubled with Some Antipsychotic Medications
    February 26, 2012
    Latest News
    How IT and Marketing Teams Can Collaborate to Protect Patient Trust
    July 17, 2025
    How Health Choices and Legal Actions Intersect After an Injury
    July 17, 2025
    How communities and healthcare providers can address slip and fall injuries with legal awareness
    July 17, 2025
    Let Your Lawyer Handle the Work Before You Pay Medical Costs
    July 6, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: An Alternative to Malpractice
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Business > An Alternative to Malpractice
Business

An Alternative to Malpractice

JohnCGoodman
JohnCGoodman
Share
9 Min Read
SHARE

About three decades ago, University of Chicago law professor Richard Epstein proposed a radical alternative [gated, but first page available] to our system of malpractice liability. He called it “liability by contract.” The idea: let patients and doctors voluntarily agree in advance how to resolve things if something goes wrong.

About three decades ago, University of Chicago law professor Richard Epstein proposed a radical alternative [gated, but first page available] to our system of malpractice liability. He called it “liability by contract.” The idea: let patients and doctors voluntarily agree in advance how to resolve things if something goes wrong.

In nonmedical fields, Epstein’s idea is actually quite commonplace. Contracts for performance often have provisions detailing what the parties will do if something goes awry. If the parties disagree, contracts often spell out dispute resolution procedures (such as binding arbitration).

One version of this idea in medicine has already been tried. For years, hospitals asked admitting patients to sign a form agreeing not to sue the hospital or the doctors, no matter how negligent they were. When these forms showed up at the courthouse, however, judges routinely dismissed them on the grounds that the patients were too sick, too scared and too uninformed for there to have been a true meeting of the minds.

More Read

Medicaid Stops Paying for Non-ER, ER Care
Asset Management the Siemens Way
Reasons to Reform Medicaid
Patient Protection and Affordable Care Act (PPACA) Impact on the Future Healthcare Workforce
Most Medical Decisions Are Not Risk-Free

My colleagues and I at the National Center for Policy Analysis believe we have found here and here. Let the state legislature decide on the minimum elements (including the amount of monetary compensation) that must be in such contracts in order to make sure patients are fairly protected. Then widely publicize these elements so that people generally understand (before they get sick) what will happen if they opt out of the malpractice system. Courts would be required to accept these contracts as binding.

Recently we have added a new element to the proposal, as a result of our work on hospital safety. Whereas the current system is absorbed with finding fault, for reasons explained below, we propose a system of voluntary, no-fault contracts under which patients and their families are compensated for deaths and injuries that arise from any cause other than the medical condition which caused them to seek care.

By voluntary, we really mean voluntary. If doctors and hospitals choose not to opt out of the tort system, they can practice under the rules of existing law.

 

In my last Alert, I reported on the general results of the hospital safety literature. Judging by the comments I received you would have thought I had joined an anti-medicine, left-wing conspiracy. Yet hospital safety is not a left/right issue. Betsy McCaughey, for example, is a valiant crusader for lower hospital infection rates and most people would put her well to the right side of the political spectrum. In fact there are very few people — regardless of politics — who have looked at this issue and concluded that the current system is satisfactory.

As things now stand, the only way a victim of an adverse medical event can get compensation is by filing a lawsuit, enduring its trauma and discomfort, and trying to prove malpractice. Yet only 2 percent of victims of malpractice ever file a lawsuit. Fewer still ever receive any compensation. On the other hand, 37 percent of lawsuits filed involve no real malpractice. To add insult to injury, more than half the money spent on malpractice litigation goes to someone other than the victims and their families.

Despite this poor track record, the system imposes a heavy social cost — as much as $2,500 per household per year, including defensive medicine, at today’s prices. And it may be making hospitals less safe than they otherwise would be.

As explained in our Health Affairs study and at a previous blog post, the malpractice system distorts the incentives of doctors and hospitals by encouraging them to make the malpractice events as rare as possible, even if they increase the number of other adverse events. For example, doctors may order more blood tests and other procedures in order to reduce the risk of a malpractice lawsuit, even though these procedures may put patients at additional risk.

Fortunately, there is a better way. For the money we are now spending on a wasteful, dysfunctional malpractice system, we could afford to give the families $200,000 for every hospital-caused death. We could give every injury victim an average of $20,000 — with the actual amount varying, depending on the severity of the harm.

How exactly could this work? We propose to allow patients, doctors and hospitals a voluntary, contractual, no-fault alternative to the malpractice system. In return for forgoing their common law rights to litigate, at the time of entry into the health care system patients would be assured that if they experience an adverse outcome for some reason other than the medical condition for which they seek care, the provider institution will write them a check — without lawyers, without depositions, without judges and juries — no questions asked.

This proposal would take quality-of-care issues out of the hands of the legal system and put it in the hands of people who are best able to do something about it. Providers would soon realize that every time they avoid an adverse death, they will save, say, $200,000. They would come to view every life as equally valuable — regardless of whether the cause of harm is negligence, preventive steps not taken or an “act of God.”

To pay off the claims, hospitals would probably purchase insurance just as they purchase malpractice insurance today. Insurers would become outside monitors of hospital quality and their premiums would reflect doctor and hospital experience. Those with higher adverse event rates would pay more. Those with lower rates would pay less. Further, if patients desired to pay an additional premium and top up their potential compensation — doubling or quadrupling the amount — they would have that option as well.

Under this proposal, state legislators would establish a commission to set the minimum compensation patients must receive for various adverse events. An independent commission (with patients, doctors and hospitals all represented) would regularly review hospital records and determine whether an adverse event has occurred in marginal cases. The decision to opt out of the malpractice system is a decision to accept these nonjudicial parameters.

Note that the minimum compensation for adverse events really is a minimum. Hospitals would be free to offer much better terms and no doubt many would. Geisinger Health System, for example, offers a “warranty” on its heart surgeries. Patients don’t pay for readmissions, regardless of whether there is an adverse event.

In addition to Epstein, Emory University economist Paul Rubin has proposed nonjudicial mechanisms for creating a market for resolving liability issues. Our proposal builds on the pathbreaking work of these scholars, and we believe it can make liability by contract a reality. It is an idea whose time has come.

   

TAGGED:health care business
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

Grounded Healing: A Natural Ally for Sustainable Healthcare Systems
How IT and Marketing Teams Can Collaborate to Protect Patient Trust
Global Healthcare Policy & Law
July 17, 2025
paramedics in surgical gloves and masks
How Health Choices and Legal Actions Intersect After an Injury
Health care
July 16, 2025
a woman giving a key
How Probate Planning Shapes the Future of Your Estate and Family Care
Health
July 16, 2025
a woman with kinesio tapes on her back arm
How communities and healthcare providers can address slip and fall injuries with legal awareness
Health care
July 16, 2025

You Might also Like

Medical Device Marketing, Product Marketing, Online Marketing
BusinesseHealthFinanceMedical DevicesSocial MediaTechnology

What the Leader of the World’s Largest Medical Device Community Says About Marketing

April 14, 2014
ID-100272857
BusinessFinanceHospital AdministrationOrthopaedics

Insurance Verification and Pre-certification: Two Separate Issues

December 11, 2014
Global HealthcareHospital AdministrationMedical Ethics

Corporate Social Responsibility in Healthcare

August 13, 2012

Changing Behavior to Conquer Obesity

September 23, 2012
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?