Thursday, February 25, 2010

A New Call For Tort Reform

While we are all waiting for some meaningful outcome to President Obama's bipartisan summit on healthcare reform today, another old issue has resurfaced- the staggering cost of defensive medicine. A new Gallup poll released this week by Jackson Healthcare and the Center for Health Transformation now estimates that 25% of our healthcare costs are spent on unnecessary tests and treatments. The sole reason for these procedures is physicians' fears of being sued for possibly missing something no matter how unlikely.

So based on the Centers for Medicare and Medicaid Services (CMS) estimate that we are spending $2.5 trillion annually on healthcare in this country, the cost of defensive medicine is roughly $650 billion each year. Think what these saving would do as part of a real healthcare reform package. We could expand coverage like the President is trying to do while removing the giant sword that is currently hanging over the outstretched necks of hospitals and physicians. If cuts in reimbursement to the healthcare providers could be matched with a real reduction in the services they provide, this may work for everyone.

But before this could ever happen, there are a couple of things to consider. First, even with real meaningful tort reform that allows physician practices to be guided by their judgement and not by fear of lawsuits, some questionable testing will remain. Less experienced physicians order more than their veteran counterparts. Also for inpatients, there is the overriding push to reduce length of stay. If one test at a time is ordered to rule out multiple possibilities, this lengthens the costly hospital stay. So sharp physicians that are dealing with a complex issue use the shotgun approach for testing to get the answer quickly and get the patient discharged. Therefore the real reduction of unnecessary testing would certainly not be 25%, but it ought to be well over half of that amount.

Secondly, and more realistically, there are the political issues blocking meaningful tort reform. The trial lawyers have done a much better job of banding together and spending their money to protect this issue than physicians and hospitals have done to change it. Particularly with a Democratic Administration, House and Senate, the chances for meaningful tort reform are remote.

Still, the current study released this week presents a fresh face and staggering numbers to a longstanding issue at a time when both parties are desperately looking to reduce healthcare costs. Lets hope something meaningful comes out of today's summit. Whether it does or not, here is another healthcare cost reduction idea to put under consideration.

More on this later.

Mark Brodeur

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