Communication and Resolution Programs: The Numbers Don’t Add Up
Professor of Law Kathryn Zeiler considers potential costs and benefits of a new approach to lowering the cost of medical malpractice litigation.
Nancy Barton Research Scholar and Professor of Law Kathryn Zeiler’s scholarship applies economic theory and empirical methods to the study of legal issues and research questions. She is currently conducting an empirical study of the effects of tort reform on medical malpractice insurance premiums using an original dataset generated with the help of a grant from the George Mason University Law & Economics Center. In a separate study, she considers potential costs and benefits of Communication and Resolution Programs using findings from published empirical studies:
No one disputes that our medical malpractice liability system is broken. In 2010, the US Department of Health and Human Services allocated $23 million to fund grants in support of efforts to create, implement, and evaluate patient safety approaches and medical liability reforms. Communication and resolution programs (CRPs) are among the alternatives under study.
Under these programs, physicians are required to disclose all adverse events that arise in the treatment of hospitalized patients to the hospital in which the event occurred. The hospital investigates each reported event, and if it finds physician negligence it calls a meeting with the patient and his or her counsel. The mishap and its cause are explained, the physician apologizes to the patient, and the hospital offers immediate compensation for the injury in line with an amount the tort system would provide. If no negligence is uncovered, the hospital explains the problem, informs that patient that it found no negligence, and rigorously defends itself against any claim the patient pursues. The touted benefits over the current system include reductions in litigation costs and the frequency of frivolous claims, mitigation of patient anger and frustration that might drive the propensity to sue, and increased motivation for physicians to share and learn from their own and others’ mistakes.
Opponents of CRPs worry that patients will accept inadequate compensation offers, that hospitals will not act in the best interests of patients, and that physicians’ incentives to disclose and learn from their errors will be weak at best. The general fear is that patients might end up footing even more of their injury costs than they already do without any reduction in the risk of being negligently injured.
To date, test-bed hospitals have reported big reductions in litigation costs, but we don’t yet have data on how CRPs might impact patient safety. One available method to understand the potential effects of the program is to consider whether any rational hospital would adopt a CRP if it were required to apply the program’s rules faithfully. Estimates suggest that faithful compliance with a CRP would dramatically increase a hospital’s costs relative to those it faces under the status quo—estimated from published empirical studies—where patients rarely sue for injuries related to medical care.
If adoption of CRPs all but guarantees an increase in malpractice costs, why have some hospitals chosen to implement them? One possibility is that adopting hospitals do not faithfully implement the program. Hospitals are in a position to benefit from adoption if they can reduce ligation costs and payouts in cases that would have resulted in legal claims while continuing to ignore the other negligently caused injuries.
Evidence suggests that apologies and early compensation offers substantially reduce defense costs and payouts. Early settlement saves physicians from the financial and emotional pain of litigation, and CRPs might also generate an indirect benefit of reduced defensive medicine—the use of unnecessary diagnostics and treatments to reduce litigation risk—although recent empirical evidence suggests that defensive medicine is not widely practiced.
As we move to global payment systems and other incentives that push physicians to reduce health care costs, however, the danger is that the gentler bite of the medical malpractice system might lead to higher rates of preventable patient injury. Unfortunately, currently we are unable to assess whether hospitals that have implemented CRPs are, in fact, enjoying lower error rates because none has provided evidence to support the claim.
Our current malpractice system undoubtedly leaves much to be desired. Communication and resolution programs, however, might not lead to what we most desire—fewer medical errors.
Professor Zeiler will present this research project at the 39th Annual Health Law Professors Conference, held at Boston University School of Law June 2–4.