Who Pays for Medical Errors? An Analysis of Adverse Event Costs, the Medical Liability System, and Incentives for Patient Safety Improvement

Posted: 24 Dec 2007

See all articles by Michelle M. Mello

Michelle M. Mello

Stanford Law School; Department of Medicine

David M. Studdert

University of Melbourne - Faculty of Law & Faculty of Medicine, Dentistry and Health Sciences

Eric J. Thomas

University of Texas at Houston - McGovern Medical School

Catherine Yoon

Harvard University - Brigham and Women's Hospital

Troyen A. Brennan

Aetna, Inc.

Abstract

Patient safety advocates argue that the high costs of adverse events create economic incentives for hospitals to invest in safety improvements. However, this may not be the case if hospitals externalize the bulk of these costs. Analyzing data on 465 hospital adverse events derived from medical record reviews, we investigated the amounts that hospitals and other payers incurred in medical-injury-related expenses. On average, the sampled hospitals generated injury-related costs of $2,013, and negligent-injury-related costs of $1,246, per discharge. However, hospitals bore only 22% of these costs. Legal reforms or market interventions may be required to address this externalization of injury costs.

Keywords: malpractice, liability, medical, deterrence, patient safety, medical errors

JEL Classification: I10, K13

Suggested Citation

Mello, Michelle M. and Studdert, David M. and Thomas, Eric J. and Yoon, Catherine and Brennan, Troyen A., Who Pays for Medical Errors? An Analysis of Adverse Event Costs, the Medical Liability System, and Incentives for Patient Safety Improvement. Journal of Empirical Legal Studies, Vol. 4, No. 4, pp. 835-860, 2007, Available at SSRN: https://ssrn.com/abstract=1077871

Michelle M. Mello (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-725-3894 (Phone)

HOME PAGE: http://https://law.stanford.edu/directory/michelle-m-mello/

Department of Medicine ( email )

Center for Health Policy / PCOR
Encina Commons
Stanford, CA 94305
United States

HOME PAGE: http://https://profiles.stanford.edu/michelle-mello?tab=bio

David M. Studdert

University of Melbourne - Faculty of Law & Faculty of Medicine, Dentistry and Health Sciences ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

Eric J. Thomas

University of Texas at Houston - McGovern Medical School ( email )

MSB 1.122 6431 Fannin
Houston, TX 76013
United States
(713) 500-6702 (Phone)

Catherine Yoon

Harvard University - Brigham and Women's Hospital ( email )

75 Francis St.
Boston, MA 02115
United States

Troyen A. Brennan

Aetna, Inc. ( email )

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