Estimates vary on cost of defensive medicine

Some Georgians are finding more than the usual junk mail and bills in their mailboxes -- and we’re not talking about Christmas cards.

There are glossy fliers discussing an effort to drastically change how patients can get compensated from medical malpractice, columnist Charlie Harper noted on his blog, Peach Pundit.

Proponents want state lawmakers to pass a tort reform bill that would create an 11-member board to review alleged malpractice cases and award settlements. Too many doctors are charging for unnecessary medical tests, procedures or consultations in order to defend themselves in case they face lawsuits, say supporters of tort reform.

Defensive medicine, it’s called.

And what’s the impact to Georgians?

"We know that an overwhelming number of Georgia physicians practice defensive medicine," Wayne Oliver, executive director of Patients for Fair Compensation, said on the organization’s website. "In Georgia alone, the practice of defensive medicine costs up to $14 billion annually."

Oliver, a longtime Georgia lobbyist, helped start Doctors for a Healthy Georgia, which cites the same figure. He said approximately 900 physicians have expressed support for the tort reform legislation.

PolitiFact Georgia thought we’d do some lab work to see if the estimate is correct.

Oliver said his interest in the subject began when he worked with the Center for Health Transformation, a group created by former Georgia congressman and House Speaker Newt Gingrich.

In his work with the center, Oliver said he noticed that some doctors were providing care aimed at avoiding litigation. He supports two tort reform bills that weren’t passed last year by the Georgia Legislature. Some believe there should be a cap on malpractice. President Barack Obama has said defensive medicine "may be contributing to unnecessary costs" but has been reluctant to support a cap on malpractice cases.

Oliver has made his case for such legislation in Forbes, The Washington Times and other publications.

Oliver’s team forwarded us a 2012 report that examined the economics of defensive medicine in Georgia. The report, by a German-based team of researchers done for Patients for Fair Compensation, looked at two studies on the economic impact of defensive medicine in this state. The annual figures ranged from $14 billion to $22 billion.

A 2010 Gallup-Jackson Healthcare report is referenced by many tort reform advocates. The report surveyed 462 randomly selected physicians who attribute 26 percent of overall health care costs to the practice of defensive medicine. Another Jackson Healthcare online survey of about 3,000 physicians attributed 34 percent of total health care costs to defensive medicine.

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Jackson Healthcare leaders multiplied federal estimates of health care costs ($2.6 trillion) times the 26 percent estimate from the physicians surveyed to conclude that defensive medicine could cost this country at least $650 billion a year. Georgia represents about 3 percent of the nation’s population. If the Jackson Healthcare estimate is correct, Georgia’s share of annual defensive medicine costs is approximately $19.5 billion, which is halfway between the estimates in the report cited by Oliver.

Emory University economics professor David Frisvold reviewed the study earlier this year at the request of Patients for Fair Compensation. Frisvold cautioned that surveys of physicians to determine defensive medicine costs "are likely towards the upper bound of the extent of defensive medicine as physicians may conflate physician-induced demand practices and defensive medicine practices." Still, the professor concluded Georgia could save several billion dollars in defensive medicine as well as Medicaid costs over a 10-year period through medical tort reform.

The $650 billion nationwide estimate has been used by U.S. Rep. Tom Price, an orthopedic surgeon from north Fulton County, and Georgia Aquarium benefactor Bernie Marcus.

Other reports, though, offer an assortment of conclusions about the financial impact of defensive medicine. Some support Oliver’s argument. Some do not.

University of Michigan professor emeritus J. William Thomas co-authored a report published in September 2010 that found the costs of defensive medicine are "minuscule" nationally. Thomas and his team researched a database of more than 400 million paid medical and pharmaceutical claims amassed from CIGNA Healthcare from July 2004 to June 2006. The report concluded that even with significant reductions in medical malpractice premiums, defensive medicine costs would decline by just 0.4 percent nationally. Thomas said defensive medicine cost estimates vary because most research on the topic focuses on a few conditions.

"The politicians," he told us, "will pick and choose from the evidence they want to cite."

Thomas referred us to another September 2010 report by Harvard University professor Michelle Mello and four other researchers. The report noted that defensive medicine costs are "notoriously difficult to obtain" because the definition varies. What some doctors see as a preventative medical procedure another believes is unnecessary.

The team used a conservative estimate of 5.4 percent for the impact of defensive medicine, based upon a key prior study on the topic, and multiplied that by estimated annual totals for hospital spending of nearly $720 billion, which came up to $38.8 billion. The team then added some other costs it attributed to the impact of defensive medicine.

Mello and her team estimated the national annual cost of defensive medicine was $45.5 billion, but cautioned in their report that the quality of evidence supporting that cost estimate is low because the hospital spending estimates are derived from a narrow range of diagnoses.

The $45.5 billion national estimate is a fraction of the $650 billion estimate cited in the report by Oliver.

"The estimates are all over the board," Oliver agreed. "What we do know is it’s a big number."

To sum up, Doctors for a Healthy Georgia said defensive medicine costs Georgia up to $14 billion a year. The estimate is on target if you rely on some reports. Other reports would suggest the impact to Georgia is far less. Everyone agrees the economic impact estimates are wide-ranging.

To score a True on this one, you would have to acknowledge that there are wide-ranging estimates of the costs of defensive medicine.

This statement is at least partially accurate, but you would need a lot of context to fully understand its full implications.

Our rating: Half True.