Defensive medicine is the idea that doctors order unnecessary tests and medical procedures as a means to avoid medical negligence lawsuits. While proponents of tort reform argue that defensive medicine drives up the cost of health care, government researchers question whether defensive medicine truly exists. The Congressional Budget Office has called the evidence of defensive medicine “not conclusive,” and summarized, “On the basis of existing studies and its own research, CBO believes that savings from reducing defensive medicine would be very small.”i Researchers at Dartmouth College echoed these conclusions, saying, “The fact that we see very little evidence of widespread physician exodus or dramatic increases in the use of defensive medicine in response to increases in state malpractice premiums places the more dire predictions of malpractice alarmists in doubt.”ii
The Government Accountability Office (GAO) has issued similar statements questioning the occurrence of defensive medicine, saying, “the overall prevalence and costs of [defensive medicine] have not been reliably measured,” and “study results cannot be generalized to estimate the extent and cost of defensive medicine practices across the health care system.”iii The GAO reported that even “officials from AMA [American Medical Association] and several medical, hospital, and nursing home associations…told us that defensive medicine exists to some degree, but that it is difficult to measure.”iv
Practicing “Defensively” Generates Extra Income for Doctors
To the extent that defensive medicine does exist, research has found that the motivation behind it is not liability but rather a desire to simply help a patient or, in some cases, boost physician income. One government agency found that doctors chose not to order any tests or diagnostic procedures 95 percent of the time. Doctors who ordered tests almost always did so because of medical indications, and only one half of one percent of all cases involved doctors who ordered tests due solely to medical negligence concerns.v
The GAO has also found that doctors may actually practice “defensively” because it generates more income. They identified “revenue-enhancing motives” as one of the real reasons behind the utilization of extra diagnostic tests and procedures.vi In Florida, health authorities determined diagnostic-imaging centers and clinical labs were ordering additional tests because the majority were physician-owned and the tests provided a lucrative stream of income. Federal law now prohibits the referral of Medicare patients to certain physician-owned facilities, many of which charge double the amount in lab fees.vii As Mello and colleagues commented, “In medicine practiced as a business, defensive medicine is understood and may even be profitable.”viii
The CBO, in its analysis, recognized that there was a financial incentive but also identified health benefits to patients: “so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients.”ix Researchers at Tulane University found similar benefits to patients.x Their analysis of the National Practitioner Databank and the Nationwide Inpatient Sample (NIS) found that increased medical negligence risk was associated with an improvement in mortality, and concluded that the idea that defensive medicine had no positive effect on patients was untrue.
Defensive Medicine is Not Driving Up Health Care Costs
If doctors feel they need to practice “defensively” and order extra tests to avoid the liability, and if all this defensive medicine results in excess health care costs, then states that have already limited liability for doctors through tort reform should experience significantly lower health care costs than states that do not limit liability. Texas has some of the strictest caps in the country, which should eliminate any need to practice “defensively,” thereby lowering health care costs in the state. Yet Texas has some of the highest health care costs in the country.
Health care costs in McAllen, Texas, have been growing at a faster rate than any other area in the country, and the cost of health care per patient is currently second highest in the nation. An article published in the New Yorker found that some physicians and hospitals went to an extreme length in applying business principles to the practice of medicine. “Health-care costs ultimately arise from the accumulation of individual decisions doctors make about which services and treatments to write an order for. The most expensive piece of medical equipment, as the saying goes, is a doctor’s pen.”xi Because Texas has a strict cap on damages that can be collected in medical negligence lawsuits, there should be little motivation for physicians in McAllen to practice defensively.
One physician told CNN that more tests were ordered to generate additional income, explaining, “doctors are able to profit not just from being physicians like we have traditionally but by ordering tests on equipment that they own, or sending patients to facilities that they own, or x-rays on equipment that they own, or sending patients to facilities that they own, or have a financial interest in.”xii
In Florida, the majority of diagnostic-imaging centers and clinical labs are owned by physicians. Health officials in the state found that owning such facilities and ordering additional tests has provided a lucrative stream of income to physicians. Federal law now prohibits the referral of Medicare patients to certain physician-owned facilities, many of which charge double the amount in lab fees.xiii
The American Hospital Association is currently debating a policy that would ban doctors from referring patients to hospitals in which they have a financial stake.xiv Many researchers believe that physicians cherry-pick patients and self-refer profitable procedures and insured patients to their own hospitals, pulling much-needed income from community hospitals.xv These self-referral “behaviors may damage the health care system at large by adding costs and weakening the health care safety net as community hospitals see their mix of patients becoming more complex and less well financed.”xvi