Malpractice Standards of Care and Regional Variations in Physician Practice Styles

Abstract:     
Physician practices vary in a striking and persistent manner across different regions of the United States. In this paper, I explore the association between regional variations in physician behavior and the geographical scope of the standards of care to which physicians are held in malpractice actions. Malpractice laws that require physicians to comply with the standards set by local physicians may help to perpetuate divergent practice patterns. The adoption of laws requiring physicians to comply with national standards of care, on the other hand, may lessen regional disparities by inducing physicians to practice closer to the national mean. Over time, most states have come to modify their malpractice laws in this latter direction. Drawing on this rich set of legal variations and using data on physician behavior from the 1977-2005 National Hospital Discharge Surveys, I test for evidence of convergence in state utilization rates towards national rates as states abandon the use of “locality” rules in favor of national standard-of-care laws. Focusing on obstetric practices, I document robust evidence of convergence in cesarean section utilization, whereby as much as 40-60% of the gap between state and national cesarean rates is closed upon the adoption of a national-standard rule.

Keywords: malpractice, standard of care, regional variations, locality rule

JEL Classifications: I10, K13, K41

Working Paper Series