RB: Some forward-thinking hospitals want to short-circuit the adversarial nature of what happens to injured patients. Hospitals have come forward, apologized, and covered the injured person’s medical costs and economic damages. It’s good risk management and heads off adversarial proceedings. In some states, there are laws that permit providers to apologize without an admission of guilt. It’s an attempt to take this out of an adversarial situation.
TL: When a case does make it through the court, are the big jury awards reduced?
RB: The large ones are often reduced. Doctors and hospitals want protection from huge damage awards. In malpractice, rarely are there punitive awards. Most of the large awards are for non-economic damages, which are often reduced by the court. So concessions to cap punitive damages by law sound meaningful, but are not really so.
TL: Do caps on malpractice damages reduce overall health care costs?
RB: In states where there are caps, there is no reason to believe that the costs of care are much different than they are in neighboring states with more liberal malpractice laws. Liability insurance premiums, however, are lower and more affordable for providers.
TL: Then, to sum up the malpractice issue, is it fair to say that the fight over caps is largely a fight over preserving incomes of doctors and lawyers, and the needs of injured patients are not being addressed?
RB: That may be too facile a conclusion. But I agree that there are other approaches that offer promise for patients and patient safety that get little attention because trial attorneys and physicians both are defending somewhat different versions of an adversarial approach that may not well serve injured patients.
TL: If journalists should not be talking about malpractice reform as a solution to rising health care costs, what should we be talking about?
RB: Providers and some physicians have found how to get tremendous market power—the payment rates they get from insurance companies are a major cost driver. This was not talked about in the health reform debate. There are hospitals already with assets in the bank of over $1 billion that are able to generate price increases far in excess of the cost of doing business. As we move toward universal coverage, it’s hard to justify that they need those kinds of profits—called “retained earnings” for non-profits—to cover uncompensated care.
TL: Was this discussed during the debate?
RB: No. Most of the talk was about insurance companies driving up premiums and insurers became a convenient—and often deserved—target, whereas hospitals and other providers were viewed more favorably. But what’s partly driving up premiums is providers demanding higher prices and fighting limits on the excessive volume of services they generate.
TL: What should be done?
RB: The new law has important pilot programs for serious cost containment approaches, but the market power of providers is not addressed. Also, there needs to be more evidence-based medicine. That would hold providers to account for producing services that serve their own financial interests, rather than what is best for their patients.
And a much more vigorous attack on fraud is needed. Agencies such as the Centers for Medicare and Medicaid services (CMS) often can’t spend one dollar to save ten dollars in fraudulent activities. So whatever budget constrains are placed on administrative budgets, it would be foolhardy to reduce the resources that CMS and other agencies need to go after fraud and abuse. There are fewer employees at CMS today than in 1980. That’s crazy.
TL: What do providers do to exploit these weaknesses?
RB: A growing minority of physicians apparently are putting their financial interests above the interests of their patients and society. Many argue they have no duty to be prudent in the spending they generate. I am not now referring to the outright crooks, a different group altogether.
TL: Can you give some examples?