The Effect of Malpractice Law on Physician Supply: Evidence from Negligence-Standard Reforms

39 Pages Posted: 30 May 2017 Last revised: 12 Jun 2017

See all articles by Michael Frakes

Michael Frakes

Duke University School of Law

Matthew Frank

Harvard University, Law School, Students

Seth A. Seabury

University of Southern California - Keck School of Medicine; University of Southern California - Schaeffer Center for Health Policy and Economics

Date Written: May 2017

Abstract

We explore whether the composition of the physician work force is impacted by the clinical standards imposed on physicians under medical liability rules. We theorize that physicians of particular backgrounds will be attracted to regions when the malpractice laws of those regions favor the type of medicine characteristic of those backgrounds. To test this prediction, we rely on a quasi-experiment made possible by states shifting from local to national customs as the basis for setting standards at court, a distinction that captures meaningful differences in the clinical expectations of the law in light of the well documented phenomenon of regional variations in medical practices. Using data from the Area Health Resource File from 1977 to 2005, we find that the rate of surgeons among practicing physicians increases by 2-2.4 log points following the adoption of national-standard laws in initially low surgery-rate regions—i.e., following a change in the law that effectively expects physicians to increase practice intensities. We find that this response is nearly three times greater in rural counties. We also find that this supply effect is unidirectional, with no evidence to suggest that surgeons retreat when initially high-surgery-rate regions change their laws so as to expect less intensive practice styles.

Suggested Citation

Frakes, Michael and Frank, Matthew and Seabury, Seth A., The Effect of Malpractice Law on Physician Supply: Evidence from Negligence-Standard Reforms (May 2017). NBER Working Paper No. w23446. Available at SSRN: https://ssrn.com/abstract=2976186

Michael Frakes (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Matthew Frank

Harvard University, Law School, Students ( email )

1563 Massachusetts Avenue
Cambridge, MA 02138
United States

Seth A. Seabury

University of Southern California - Keck School of Medicine ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

University of Southern California - Schaeffer Center for Health Policy and Economics ( email )

635 Downey Way
Los Angeles, CA 90089-3333
United States

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