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A New Approach to Medical Malpractice Reform

By Kelly McCutchen

KELLY McCUTCHEN President, Georgia Public Policy Foundation

KELLY McCUTCHEN
President, Georgia Public Policy Foundation

Preventable medical errors kill more people in the United States each year than automobile accidents or guns. Billions of dollars are wasted each year on “defensive” medicine – unnecessary procedures and tests ordered to protect health care providers in case of a lawsuit. Instead of focusing on reducing medical errors, however, Americans are trapped in a system based on a false sense of access to justice that thwarts efforts to improve patient safety.

As one paper put it, “The current tort system does not promote open communication to improve patient safety. On the contrary, it jeopardizes patient safety by creating an intimidating liability environment.”

This quote is not from a conservative think tank, but from a paper written for the New England Journal of Medicine in 2006 by then-senators Hillary Rodham Clinton and Barack Obama. The facts support their statement: Statistically, you are just as likely to be a victim of medical negligence today as you were 40 years ago. Clearly, this approach to medical errors is a failure.

For more than a decade, the Georgia Public Policy Foundation has proposed an approach that would move medical malpractice away from litigation to an administrative system. It wasn’t until two years ago that the Foundation found a detailed plan – the Patients’ Compensation System – to implement the approach.

The Patients’ Compensation System (PCS) is an alternative to adversarial litigation. It is designed to provide patients with fair and timely compensation for avoidable medical injuries without the expense and delay of the court system. PCS focuses on improving the overall quality of patient care by encouraging reporting and analysis of medical errors so the medical community can learn from its mistakes.

This approach does require individuals to give up their right to litigation. Unfortunately, most people don’t understand how limited that right is already. The vast majority of those injured by medical negligence never get their day in court. A handful of victims win big awards each year, but 97 percent receive zero compensation for their injuries.

What we have is jackpot justice for some rather than justice for all.

Emory law professor Joanna Shepherd-Bailey told Georgia legislators this week that, “Many legitimate victims of medical malpractice are unable to obtain legal representation and have no meaningful access to the civil justice system.” Most lawyers reject over 90 percent of the cases they screen, she said. Who are disproportionately affected? Females, children, the elderly, demographic minorities and the poor.

Can Georgia afford a system that financially compensates more victims? PCS “provides the unique opportunity to more than double the amount of money going to patients while reducing the total cost of the medical malpractice system,” according to Aon Global Risk Consulting, which studied the proposal. Aon projects an 8 percent reduction of medical malpractice insurance premiums. Add to that the cost savings from reducing defensive medicine and the total savings would be bigger than any tax cut in Georgia history.

If payments to patients increase and premiums decrease, where would the money come from? Savings from lower payments to attorneys and lower insurance company profits – due to the lower risks of a more predictable system – would more than offset the increased payments to patients. (See table.)

Georgia-Based Medical Malpractice Carrier Cost Comparison

Categories (Cents per Dollar)

Current System

PCS

Percentage Change

Collected Premium

1.00

0.92

-8%

Paid to Patients

0.23

0.51

122%

Paid to Attorneys

0.30

0.09

-70%

Administration Costs

0.17

0.17

0%

Insurance Company Profit

0.30

0.15

-50

Source: Aon Global Risk Consulting

Improving patient safety involves better policing of negligent providers. The Georgia Composite Medical Board is the only authority with the duty to license health care providers, investigate negligence claims and administer disciplinary actions. Under an administrative system, independent medical panels will scrutinize 20 times the number of cases currently investigated by the Medical Board. These panels will have a duty to report providers to the Medical Board that are a danger to the public, thereby increasing the effectiveness of the Medical Board.

The medical malpractice system is broken:

  • From a social justice perspective, it is unacceptable that most victims, especially the poor and elderly, are not compensated for their injuries.
  • From a patient safety perspective, it is unacceptable that patients today are no safer than they were in the 1970s.
  • From a cost perspective, it is unacceptable that medically unnecessary costs are dramatically increasing the cost of health care.

This patient-centered model that eliminates litigation gives Georgia the opportunity to be a national leader and an innovator. Even more important, it gives Georgia the opportunity to do the right thing because Georgians deserve better.

Kelly McCutchen is president of the Georgia Public Policy Foundation, an independent, state-focused think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (March 1, 2013). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.

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