View From a Height

Cost of Malpractice Suits

During the Colorado Senate race, Ken Salazar was fond of claiming that the cost of medical malpractice suits was only 0.1% of all medical costs. Sadly, Pete Coors never really articulated an effective response to him. In today's Wall Street Journal, solo practitioner Benjamin Brewer summarizes nicely the actual costs of out-of-control tort lawyers.

Here's the map:

And here are the numbers:

At this point, I am the only doctor in a county of 14,000 people and 486 square miles who regularly performs Cesarean sections -- a delivery method any mother must be prepared for even if it's not what's planned. (One of my hospital's two general surgeons will do a C-section in an emergency if I'm out of town.)

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While base rates can be around $150,000, some rates reached as high as $230,000 in the Chicago area in 2004, according to a report cited in a publication of the American Medical Association. (Rates vary based on the number of surgeries performed and babies delivered, as well as doctors' claims experience.)

ISMIE, a mutual medical malpractice insurer in Illinois, raised rates 35% in 2003 because of an increase in the size of payouts and number of lawsuits, according to its annual report. (Only three percent of ISMIE's invested assets are in common stocks, the report says.)

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At Gibson Area Hospital, where I deliver, we had five family doctors doing OB care five years ago. At the end of 2004, we had just two. Of those two, only I do C-sections.

At least our hospital delivers babies. Of the 102 counties in Illinois, 26 have no hospital obstetric services. An additional 23 counties have no hospitals at all. In many of these areas, women travel far within our state or travel to bordering states to deliver their babies.

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Some hospitals with critical needs have subsidized some of the increases in insurance costs for delivering doctors. For hospitals in rural areas, this strategy only goes so far. Red Bud Regional Hospital in southern Illinois closed its OB department in November when the insurance costs for their two delivering doctors reportedly hit $250,000 per year -- or $2083 per baby.

My hospital is helping me continue to practice. It paid most of the $31,000 increase in my insurance costs for 2004. (I pay taxes on the money they paid on my behalf, which cuts down on the benefit a bit.) I paid the remainder of the $49,500 bill for professional liability insurance. I deliver about 60 babies a year. I haven't been sued.

Ironic that the same people who romanticize the little guy, the solo practitioner, the small businessman, when it comes to HMOs and WalMart, are so eager to back a system dedicated to their destruction.

Certainly the left's first response will be to subsidize the service, which really means subsidizing the tort lawyers. Their second response will be to require hospitals and doctors to provide an increasing number of services at below-market prices, and thus, substandard quality.

As you see, it isn't merely the dollar amount of the damage awards that matters. It's the cost of the litigation. It's the cost of keeping attorneys on staff, or on retainer to deal with these. It's the cost of insurance, which companies need to have money on hand in case Typhoon Edwards strikes. It's the rising risk-aversion that pervades every aspect of our medical care and, increasingly, the rest of our society as well.

All isn't lost. Dr. Brewer notes that Texas and Mississippi have both restored some sanity to their systems, and even California has made some progress. But until we start adding in other costs, citizens of states like Illinois will continue to drive for hours to deliver their babies.