Targeting Bad Doctors: Lessons from Indiana, 1975-2015

Abstract

For physicians, quality of care is regulated through the medical malpractice and professional licensing/disciplinary systems. The medical malpractice ("med mal") system acts through ex post private litigation; the licensing system acts through ex ante permission to practice (i.e., licensure), coupled with ex post disciplinary action against physicians that engage in "bad" behavior. How often do these separate mechanisms for ensuring quality control take action against the same doctors? With what result? We study these questions using forty years of data (1975-2015) from Indiana, covering almost 30,000 physicians. Disciplinary sanctions are much less common than med mal claims - whether paid or unpaid. Only a small number of physicians are "tagged" by both systems. Disciplinary risk increases with the number of past med mal claims. Paid claims have a greater impact than unpaid claims, and large payouts (≥ 100k, 2015$) have a slightly greater impact than small payouts on disciplinary risk. The risk of a paid med mal claim increases with more severe disciplinary sanctions (i.e., revocation and suspension). Our findings suggest an obvious model for the interaction of these two systems.

Keywords: medical malpractice, professional discipline, overlap, bad doctors

JEL Classification: K13, K23, K41