Does Medical Malpractice Deter? The Impact of Tort Reforms and Malpractice Standard Reforms on Healthcare Quality

Abstract

Despite the fundamental role of deterrence in the theoretical justification for medical malpractice law, surprisingly little evidence has been put forth to date bearing on its existence and scope. Using data from the 1979 to 2005 National Hospital Discharge Surveys and drawing on an extensive set of variations in various tort measures (e.g., damage caps) and malpractice standard-of-care rules (Frakes 2012a), I estimate a small and statistically insignificant relationship between malpractice forces and two metrics of healthcare quality emphasized by the Agency for Healthcare Research and Quality: avoidable hospitalization rates (reflective of outpatient quality) and inpatient mortality rates for selected medical conditions. At most, the evidence implies an arguably modest degree of malpractice-induced deterrence. For instance, at one end of the 95% confidence interval, the lack of a non-economic damages cap (indicative of higher malpractice pressure) is associated with only a 4% decrease in avoidable hospitalizations.

Keywords: malpractice, healthcare quality, deterrence, defensive medicine

JEL Classification: I18, K13