Medical malpractice tort reform equals healthcare reform

I’m a big game theory guy.

I think you can explain the actions of the participants in any structured activity or enterprise by looking at the rules of the game. When you look backwards in time you discover that the “players” almost always made choices that represented rational self-interest. This is especially true in games played using zero sum rules: someone wins only if someone else loses. How the game is set up, what the rules are in the beginning, determines who “plays to win” and who plays “not to lose.” Unfortunately, it is impossible to forecast all of the outcomes of a zero sum game before play starts because it is impossible to forecast who and why each player plays the way they do.

The medical malpractice tort system in the United States is a zero sum game.

There is a significant amount of medical care provided in the U.S. that does not have any significant positive effect on medical outcomes. This care has been broadly termed “unnecessary care” and it is rightly cited as a major contributor to the systemic healthcare economic crisis now facing the U.S. Unnecessary care is also a part of the systemic issue of poor health in the U.S. Every time a patient receives care that does not contribute to better health she is exposed to potential complications of that care, and every dollar spent on unnecessary care is a dollar that won’t be spent on care that delivers better health.

“Defensive medicine” is a form of unnecessary care. The best working definition that I know for defensive medicine is medical care of any sort that is ordered or performed solely to prevent either the filing or the loss of a medical malpractice lawsuit. Defensive medicine is typically extra care layered onto reasonable, effective, necessary medical care to provide cover in the event that a bad or unexpected outcome occurs. Various estimates exist regarding the extent of defensive medicine. Anywhere from 15-25% of all medical expenses are said to be some form of defensive medicine. That’s 15-25% of a $2 trillion part of the U.S. economy. $300-500 billion. As I will show below, most of this money does not show up as revenue for the doctor who is playing defense.

How can this be? Why would doctors do this? Well, let’s return to game theory for a moment. The medical malpractice tort system in the United States is a zero sum game. Someone has to lose in order for someone to win. It is a punitive system, one meant to punish the doctor or hospital that committed malpractice. The financial and psychological costs of being sued are so severe for a doctor that nothing is too much to do to prevent being named in a lawsuit (simply receiving a letter stating that a suit is being considered typically results in an increase in malpractice insurance premiums). Doctors therefore play this particular game “not to lose.”

Patients, on the other hand, seemingly have very little to lose under the rules of the American medical tort and medical insurance systems. They are largely insulated from the cost of all of their care by what we call “medical insurance” (which is actually a pre-paid service contract), and a contingency fee system that allows them to bring suit without any personal financial cost, win or lose.

So how does this work? Let’s use an example of a very common medical complaint, and an all too common story of the medical care associated with that complaint. Let’s look at a patient with ma really common type of headache, the migraine headache. Every doctor takes care of patients who complain of headaches. Some, like me, more than others, at least in terms of actually working to diagnose and treat the headache.

A patient, well known to her primary care doctor, comes into the office with a history that is bang-on, straight out of the textbook for a classic migraine headache (there really is just such a diagnosis). It’s a really severe headache and she’s really suffering. she’s scared, because it hurts so much. Her doctor, a “middle of the bell curve” American PCP, which is to say in the top 5% of PCP’s worldwide, makes the diagnosis. classic migraine. Given the history the likelihood that this is the correct diagnosis is in excess of 99%. Less than one our to every 100 patients who present with this history will have anything other than a classic migraine. Fee for the visit: $75.

But it’s a really bad headache, and headache is one of those things that can turn out really badly if the diagnosis is missed. She had some visual symptoms before the headache, some wavy lines in her vision — classic migraines have a prodrome or a warning sign. It still feels like it’s a classic migraine, but just in case better send her to an ophthalmologist (this is how eye doctors get to be headache doctors). She really has a bad headache so a CT scan can’t hurt, and you never know, so let’s have her see a neurologist, too; they’re really the headache experts.

The CT scan is normal (fee: $500; chances of correct diagnosis now 99.9%). The ophthalmologist finds a normal exam and agrees with the diagnosis (fee $125; 99.91%). The neurologist agrees with the diagnosis, too (fee $250; 99.991%) but she spends her entire professional life treating nothing but the rarest and most complex types of headaches. She can name the next 29 diagnoses on the list of the top 30, as well as numbers 71-100, off the top of her head. She suggests an MRI, “just to be on the safe side; just to be sure.” The MRI will cost $750 and a negative test will increase the accuracy of the diagnosis by another factor of 10 to 99.9991%.

But, why would they do this? Why do the doctors keep ordering tests? And for heaven’s sake, why does the patient keep going for these consultations and these tests? Well, let’s return to the rules of this zero sum game, shall we? The patient is insulated from the cost of all of this medical care by the nature of our “health insurance” system in the U.S. and therefore has no reason to question the suggestions of any of her doctors. The doctors, fearing a lawsuit if they miss even the rarest of problems, have no reason not to order more care. There simply is no amount of care that is enough when you are trying “not to lose” if a little more care might prevent a lawsuit. One should note that the additional care, the defensive medicine, the unnecessary care that is ordered by each physician, does not result in income to that physician; contrary to common belief, defensive medicine does not produce income to the doctor practicing defensively.

How do we begin to change the way we pay for healthcare in the United States? I say we start by changing at least some of the rules. Start by changing the medical malpractice tort “game” from a zero sum game to a non-zero sum game and gradually remove the perceived need for doctors to practice defensive medicine. This will also allow for more complete reporting of medical errors and misadventures, which will in turn allow for a more complete “root cause analysis” of these problems leading to better medical care and better health.

Let doctors stop playing “not to lose.” Medical malpractice tort reform equals healthcare reform.