Threat of Malpractice Lawsuit, Physician Behavior and Health Outcomes: A Re-evaluation of Practice of 'Defensive Medicine' in Obstetric Care

Abstract

Although “defensive medicine” is defined as utilization of medical resources beyond the optimal level of use due to malpractice threat, empirical studies often consider increased use or provision of medical care itself as the indicator of defensive medicine. This study estimates the changes in resource use as well as health outcomes in obstetric care due to medical malpractice lawsuits. Improved health outcomes associated with medical malpractice pressure may lead to cost-savings in the health sector. If this cost-saving exceeds the marginal cost of malpractice-triggered use of medical services, the increased use represents an improvement in net social benefits rather than a decline, as should be the case for defensive medicine. To measure malpractice risk, we use the National Practitioner Data Bank (NPDB), a comprehensive data set of all paid claims for medical malpractice. For the inpatient data we use the Nationwide Inpatient Sample (NIS) which provides detailed information on all inpatient hospital stays. Unlike other studies, we have estimated the effect of malpractice risk on “resource use” after controlling for underlying risk factors associated with obstetric interventions. Cross-state variations in risk-factors may confound the effect of malpractice on resource use. In this study, all pregnancy cases have been divided into two groups: pregnant women with and without the presence of medical indications for C-section. Results suggest that a higher degree of malpractice risk increases the probability of C-section delivery for both the groups. For majority of patients (86% of all patients), short-run marginal benefits are found to be higher than the marginal costs implying that malpractice pressure has actually pushed resource use towards a higher level from a sub-optimal level. Presence of defensive medicine may be a problem only for Medicaid patients with clinical indications for Csection.