October 9, 2007

Malpractice Awards Increasing?

In an earlier thread, a debate broke out about whether malpractice awards have increased so rapidly as to contribute to the rise in health care costs. I decided to take the evening to research the topic while I watched an excellent History Channel documentary on Christopher Columbus' last voyage. It turns out that the data isn't that easy to find. I spent quite a while doing Internet searches and coming up with plenty of commentary but little hard data.

Finally, I came across the National Practitioner Data Bank, which takes in all reports of malpractice payouts. Since 1991, the government has directed all such payouts to be reported into a database that allows healthcare providers and patients to research physicians, nurses, and other caregiver types to see what actions have been taken against them. They have historical data prior to that year, but it's not comprehensive. It also doesn't list actions that don't result in payouts, which create legal costs that also do not appear in the data.

Their website has its limitations. The data only comes in a large text file, which takes a lot of manipulation in Microsoft Access to use. I spent a couple of hours working the data into tables and building the first few queries. By the time I finished, I had a good idea why the data is so hard to find.

Still, it gives enough data to see trend lines, and the numbers look fairly oppressive -- but stable. In the past 16 years of complete data, can see that the malpractice numbers went steadily upwards in both awards and amounts. In 1991, the NPDB shows 17,964 malpractice awards paid for a total of $2.3 billion. Ten years later, in 2001, malpractice awards peak at 20,425 awards totaling $4.823 billion, over double what it was in 1991. While the number of awards start declining, the amount of the awards remains high, peaking in 2003 at $4.859 billion.

The steady increase has come in dollars per award. In 1991, when the data first became complete, the average payout for a malpractice award was $163,192. It has increased in every year since, except in 2005 when it dropped slightly before exceeding 2004's level in 2006. In those fifteen years, the average award went to $269,227. In 2007, with six months data on the books, the average award jumped significantly to $288,445.

Has there been an explosion in malpractice awards? No, but the awards have become much more lucrative in the last fifteen years. Last year, the number of awards paid dropped to the lowest level in the 15-year period -- but it resulted in $4.259 billion in payouts, higher than the amount paid in the year with the second-highest number of awards. In those 15 years, insurers and practitioners have had to pay almost $60 billion just in awards, apart from legal fees and the like.

I'll be playing with this database a little more. I'd like to analyze trends for states with malpractice caps, for example, to see whether that affects the number of awards. In the meantime, this data should start an interesting discussion in the comment thread.


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