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Dr. Richard Anderson, CEO of TDC: Is further Tort Reform Necessary?

By Richard E. Anderson MD, CEO and Chairman of The Doctors Company, the nation’s largest physician-owned medical malpractice insurer to Defensive Medicine


The State of Defensive Medicine Our guest on Healthcare Matters is Richard E. Anderson MD, CEO and Chairman of The Doctors Company, the nation’s largest physician-owned medical malpractice insurer. In part 6 of our State of Defensive Medicine series, we ask Dr. Anderson if further tort reform is necessary, given that the medical malpractice insurance industry is experiencing a drop in claims and medical malpractice insurance rates continue to fall, creating what is essentially the longest softest market in history. We asked Dr. Anderson questions on many different topics:
  1. Defining “Defensive Medicine” and why it’s a violation of the doctor/patient relationship.
  2. How should physicians handle patients requesting unnecessary tests?
  3. The BMJ study: Physician spending and subsequent risk of malpractice claims: observational study
  4. Alternative dispute resolution systems.
  5. MICRA’s most effective provisions.
  6. Is further tort reform necessary?
  7. The current state of the medical liability insurance landscape.
  8. Watch the full interview with Dr. Anderson.
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Mike Matray: Okay. Medical malpractice claims frequency is at an all-time low and medical malpractice insurance industry has been experiencing its longest soft market in history. Are further tort reforms necessary if claims frequency is at an all-time low and the cost of medical malpractice insurance is stagnant? And if so why?

Dr. Anderson: Yes, very interesting. There are a couple of things to say about that. First of all, everything you said is true. In other words, the frequency is down around the country by almost half since 2004. We have half the number claims over the last decade than we did in probably prior decades. That is great. There is nothing about that that isn’t great. It’s really good news. But then the question is okay, it’s half. Half of what? Well, it turns out that it’s half of a crazily big number. So half of a crazily big number is still way too high. To give you an idea of what way too high is, using contemporary frequencies, the average neurosurgeon or other high risks specialists will still spend about a quarter, 25%, of his or her career in court defending an open malpractice claim, a quarter of a career. So the fact that it’s down is great, but it is still way, way, way too high.

Mike: Okay. As a follow-up to that question, do you see a scenario when the future of a claim’s frequency and medical malpractice insurance rates go up or have the already instituted tort reforms effectively turned this lower, albeit lower of a crazily big number, in a soft market the new normal?

Dr. Anderson: Yeah, that’s a great question. I would say both things are probably true. In other words, I think we have to say that right now this is the new normal, but I do emphasize right now. And what I mean…I’m using the term, as you suggested, there is no reversion to the mean here. In other words, I don’t see any reasons to believe that there is any force which automatically drives backwards to the higher levels of frequency that were more common a decade ago.

But on the other hand, as I look ahead, there are two competing scenarios one is that continued application of really system integration, patient safety principles, physician risk aversion, better informed patients, more highly evolved surgical techniques, more refined medications, and so on and so forth, better imaging studies, that it’s possible that we’ll continue as we have been over the last decade, to improve medical outcomes and that the frequency of medical malpractice litigation will continue to come down. Certainly that would be a very, very happy outcome.

The alternative hypothesis though is not as cheery. The alternative hypothesis says that the consolidation of healthcare that is occurring in American medicine at absolutely unprecedented rate, creates so much dislocation, dis-coordination, interferes in such a profound way with the doctor-patient relationship that we have to expect that, at least in some interim period of time until the new health care system has sort of fully emerged, that we will see an increase in litigation because of botched hand-offs, ruptured doctor-patient relationships, confusion with inadequate electronic medical records and other kinds of things that…the change in medicine is as promised, but it’s incredibly disruptive. And it’s hard to imagine that in an environment with this much change, this much disruption that there won’t be the opportunity, unfortunately, for more litigation.