Hidden Costs? Malpractice Allegations and Defensive Medicine Among Cardiac Surgeons

Abstract

This article evaluates the impact of private allegations of malpractice against cardiac surgeons on their patients’ outcomes and characteristics. While tort law may impact observable physician costs, malpractice allegations also impose hidden costs that could also affect physician behavior. We employ a large and multi-year panel dataset and patient-level analysis to ascertain whether malpractice allegations influence a surgeon’s practicing behavior. Using a generalized difference-in-difference model that controls for unobserved patient heterogeneity, clustering of patients within surgeon offices, contemporaneous expected risk, and other patient variables, we measure whether an allegation of malpractices affects a physician’s service intensity and use of healthcare resources. Our results find no evidence that physician behavior was sensitive to allegations, findings of or settlements of malpractice claims. This is consistent with either low levels of defensive medicine in this specialty or pervasive and persistent practices — including defensive medicine — that are not significantly impacted by actual claims filed.