Another Reason That Malpractice Reform is Overrated

One of the few points of consensus in the “replace” part of “repeal and replace” is that malpractice reform should play a central role. Proponents claim that fear of lawsuits drives substantial over-utilization of services by clinicians practicing “defensive medicine.” In other words doctors are doing a lot more than medically necessary just to cover their own behinds.

I don’t buy this argument. First, when the extent of defensive medicine has been studied it’s been shown to have a rather small impact. Second, “the number and total value of malpractice payments made on behalf of physicians” has dropped every year for the last eight. These arguments are relatively well known.

But there’s another reason malpractice reform is a bit of a yawner. People accept without question the assertion that doctors and hospitals do more for defensive reasons. Financial incentives are rarely mentioned, yet in today’s fee-for-service environment defensive medicine can actually increase providers’ incomes. As we move to bundled payments and Accountable Care Organizations, which don’t have such incentives, my sense is that providers will become less defensive and start to forego some of the defensive practices in place today.