Deterrence of Medical Errors: Theory and Evidence for Malpractice Reform
Posted: 24 Oct 2002
Abstract
Health care providers' incentives to participate in quality improvement and medical error reduction initiatives hinge on the degree to which they internalize the costs associated with hospital adverse events. The medical malpractice system potentially creates a "business case for quality" by providing a mechanism to force providers to absorb those costs. However, little is known about the effectiveness of malpractice litigation in deterring medical negligence. In this Article, we review the available evidence about its deterrent effect, including information from studies we have conducted of medical injury and malpractice litigation in New York, Utah and Colorado. We find some limited evidence of deterrence, but conclude that overall the evidence is thin. We review possible explanations for the weakness of the deterrent signal, including insurance effects, the poor degree of fit between who is injured by medical negligence and who sues, and the problem of cost-externalization. We then suggest a series of tort reforms that could focus deterrence and create incentives sturdy enough to improve quality. We advocate a shift to a system emphasizing greater enterprise liability and characterized by three features: channeling, experience rating, and limited no-fault compensation for preventable adverse events. We conclude that a reformed liability system could play an important role in making a business case for quality and safety in health care.
JEL Classification: K13, K32
Suggested Citation: Suggested Citation