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Malpractice Insurance, Defensive Medicine Apparently Not That Big a Deal

Philip Betbeze, for HealthLeaders Media, September 10, 2010

The idea that Medical malpractice costs and defensive medicine are big reasons for higher healthcare costs has long been an attractive bogie for the physician lobby in this country. For as long as I have been covering healthcare (a decade), I've heard true story after true story from the physicians themselves who have had to leave their state because malpractice awards for their profession made malpractice rates too high or made malpractice insurance too unattainable for them to continue to practice there.

I've talked to hospital CEOs who have had trouble hiring or attracting the physicians they need to offer a full array of services because of malpractice premiums. But I'll admit, it's been awhile, which is one of the reasons I've been surprised at the frequency and volume of studies and press releases about this issue I've seen over the past couple of weeks.

Medical malpractice costs (and the defensive medicine they beget) remain a real problem, but not to the crippling degree they appeared to be several years ago. It's not a problem just because greedy, ambulance-chasing lawyers are filing frivolous lawsuits. That happens, sure, but hospitals and physicians sometimes get away with malpractice, too. That doesn't mean the whole system is broken. In fact, it's in a lot better shape than it used to be.

But the fact remains that hospitals and health systems have tackled challenges with high malpractice insurance premiums very aggressively over the years. A large percentage of hospitals are now self-insured for malpractice, greatly reducing the cost to themselves from profit-making companies that sell the insurance.

They make fewer serious errors too. Most hospitals have gotten the message that quality is important and are emphasizing it with data and zeal. Further, the size of the groups of physicians hospitals are able to insure helps smooth out some of the peaks and valleys so that specialties that see a high number of lawsuits (OBGYN, for example) don't have sky-high rates while those that don't get sued often have very low rates.

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