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How To Reduce Costs And Improve Quality In Healthcare: A Legal Approach

By Jeff Segal, M.D.

I often attend health policy discussions. I am usually the only physician in the room. My colleagues lament they just do not have time to make their voices heard. As healers, our first duty is to care of the sick and disabled; and to provide comfort when we have little else to offer. I hope the public will listen to one doctor’s voice.

We have many problems to solve: access to healthcare for the uninsured; affordable premiums for those with coverage; outcomes that provide value and keep patients safe. These goals can be realized.

Let me set the stage for a proposed solution; one that can easily complement any number of other proposals.

This year, tens of thousands of physicians will receive a sobering letter. The summons will claim the doctor recklessly, negligently, and with wanton disregard for safety injured his patient. The poor doctor will not recognize this butcher in print and might not even remember the patient, now a plaintiff. The doctor will never forget this day. And this day will have expensive consequences for all of his future patients.

Fear of litigation is ubiquitous. The experience is so odious we physicians will do almost anything to avoid repeating it. We will order tests, perform procedures, and recommend referrals, all to prevent sitting in front of a jury. As one ER physician put it, “I will scan patients until they glow if it will keep me out of court.” And there are 800,000 of us who are fully capable of ordering just as many tests and referrals as the fictional TV character, Dr. Gregory House. We euphemistically label it defensive medicine.

Defensive medicine eludes easy definition, but it is pervasive. Some defensive tests provide value to the patient. Some paradoxically put the patient in harm’s way. Most of the time, no value accrues, just cost and inconvenience.

Combine defensive medicine with a sub-critical mass of health information technology, and the formula is complete for overpriced, idiosyncratic, fragmented care. That said, we can harness the tremendous emotional energy surrounding litigation for more positive ends, benefiting all stakeholders. Let me explain.

Healthcare is a partnership between stakeholders (patients, physicians, and payers); each with different needs and wants.

Patients want lower health insurance premiums without sacrificing timely access to physicians or safety. If something untoward happens, they do not want to lose their home.

Physicians want protection against meritless lawsuits, lower professional liability premiums, and to be front and center in developing the care pathways for managing patients. If they deliver superior outcomes, they want to be paid more.

Payers (insurance carriers, business, and the government) want care delivered in the most cost-effective way possible.

These goals are not mutually exclusive.

We proposed a model which relies on a contractual interaction between the various stakeholders. Patients (consumers) purchase a modified health insurance policy. That policy includes transferring a potential future right to sue – to the payer- or more accurately- to a neutral third party. In exchange, the patient receives not only health insurance, but a disability and life insurance policy. If a patient is injured, he receives a near-term predictable remedy. Not a lottery jackpot, but enough to carry on. He also pays a lower premium. And the system guarantees implementation of health information technology, including patient safety systems.

The payer (neutral third party) now has the ability to sue the doctor down the road if something goes wrong. To minimize any untoward outcomes, payers enter into an agreement with physicians. If the doctor follows cost-effective algorithms, developed bottom up with substantial physician input, the physician is effectively immunized from litigation. If these algorithms are not followed, the doctor could document why. It is only the combination of the physician ignoring the pathways, associated with a breach in the standard of care causing damages, that puts the physician at risk for litigation. Some or all of an award from such litigation could be passed back to the patient.

Physicians would be armed with knowledge of how to predictably avoid an adversarial legal process. The conventional tort system remains as a backstop incentivizing the doctor to voluntarily embrace efficient best practices. Care will be more consistent and patients will be safer. Dollars will be saved.

How much? We ran a sophisticated financial analysis on such a proposal. The system saves enough cash to bundle the disability and life insurance policies at no extra cost; pay for health information technology infrastructure and maintenance; with enough money left over to buy a health insurance policy for every uninsured American. The model ran Monte Carlo simulations that demonstrated if physicians are properly incentivized to follow efficient best practices, there is enough money left over to prefund these initiatives. Monte Carlo simulation is a computer model that generates thousands of probable future outcomes. The simulation looks at a number of inputs combined in ‘‘random’’ order. As a result, it is designed to account for the uncertainty inherent in complex systems such as health care.

The simulation concludes that by providing a formula for decreasing frequency of litigation, patients can paradoxically be safer, have better access to care, and have broader remedies if they are injured. Where the conventional tort system arguably has failed, namely in maximizing patient safety and making those who are injured whole, a reformed system that more often than not keeps doctors out of court could succeed.

While on first blush, the system is financed by decreasing or eliminating the practice and the costs of defensive medicine, the opportunity is much broader. Intertwined with the concept of defensive medicine, but separate, is savings associated with implementation of efficient best practices. Across the country there is considerable variation in practice patterns. This variation imposes considerable costs without a requisite improvement in outcomes. For example, at the population level, Medicare patients with severe chronic illness in higher-spending regions receive more care than those in lower-spending regions but do not have improved patient survival, quality of life, or access to care. In fact, their outcomes appear worse.1 It is reasoned that embracing best practices would improve clinical outcomes at a lower cost; in other words, improve patient safety at a lower cost. Although pay-for-performance programs have been proposed as one way to coax physicians to embrace efficient best practices, an equally powerful incentive would include a solution to litigation.

This model has been vetted and received warmly by those on the left and the right. I want to address three concerns.

In the model, what happens to dangerous doctors? Most doctors who are sued are not repeat offenders. To the extent individual physicians pose a recurrent danger, their care would be reviewed, and action would be taken, on an administrative level.

Isn’t the model cookbook medicine? No. Almost no clinical algorithm is applicable 100% of the time. Nonetheless, physicians must use their judgment 100% of the time. Physicians need latitude to deviate from algorithms. The proposed model allows such deviation if, in the physician’s clinical judgment, it is the right thing to do. There, the physician has contemplated the algorithm and consciously avoided its use with his patient. In such a setting, he is presumably doing so because he believes it is in his patient’s best interest. Such deviation will not trigger litigation.

How will plaintiff’s attorneys react? This model has been reviewed by a number of seasoned veterans. To their credit, those surveyed find much to like, preferring a bottom-up contract based approach to a top-down legislative dictate. Further, the current paradigm is a high stakes, high risk, long term game of poker. By the time a case gets to trial, an attorney has spent tens of thousands, sometimes hundreds of thousands, of his own money. He has to hire experts, attend depositions, file motions, and more. And, he often loses in court. If the system were more predictable and transactional, even attorneys could find a great deal to cheer about.

The outline sketched above just scratches the surface. There are many more details. We live in a time of great change. Any model that earns the support of physicians, patients, payers, and attorneys might actually be the change we have been waiting for.

***

1.  Fisher E, Wennberg D, Stukel T, Gottlieb D, Lucas F, Pinder E. The implications of regional variations in Medicare spending. Part 2: health outcomes and satisfaction with care. Ann Intern Med. 2003;138:288–298.

Dr. Segal, a neurosurgeon, is the founder and CEO of Medical Justice Services.
Medical Justice Services is a member organization of Center for Health Transformation.


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4 Responses to “How To Reduce Costs And Improve Quality In Healthcare: A Legal Approach”

  1. Roy says:

    My initial reaction was “hey, this could work.” But then I thought, “but docs won’t feel safe deviating from EBM, resulting in a paralysis of litigation fear when treating patients who don’t respond to – or have relative contraindications to – the EBM guidelines.”

    Now I’m thinking “let’s not throw the baby out with the bathwater.” There would need to be a mechanism that would not incentivize lawyers in the same way that occurs now whenever a drug is found to have a serious side effect (think antipsychotics/diabetes, Vioxx/cardiac). Yes, that fear would keep docs on the EBM side, but it may force them to have adversarial relationships with pts who want or need to vary from the scripted treatment plan. (LOL, instead of the current adversarial relationships that develop due to the insurance middle-man’s rules.)

    At least this approach would allow us docs to THINK again and make rational deviations from routine care, rather than MINDLESSLY following insurance-dictated rules based solely on money or red-tape.

    Let’s do it!

  2. JS says:

    My main concern would be that although this certainly has the potential to save costs by using EBM algorithms, there isn’t a huge incentive for doctors to avoid using more expensive approaches if they can somehow justify that it was medically appropriate. Considering that most studies on therapies can be interpreted many different ways based on patient population, power of the study, methodology, etc, I can see a situation where many doctors continue to use their clinical judgment (and still appropriately) to routinely order things that are more expensive than the algorithms.

  3. Oliver says:

    Totally aside from the fact that the article overlooks that other nations with less frequent litigation and different penalty systems (e.g. no punitive damages) have significant problems with healthcare costs as well, and thus the issue tackled here is unlikely to have truly significant effects, I found one point problematic:

    “There, the physician has contemplated the algorithm and consciously avoided its use with his patient. In such a setting, he is presumably doing so because he believes it is in his patient’s best interest. Such deviation will not trigger litigation.”

    As the saying goes, the road to hell is paved with good intentions. Well-meant and well done are two distinct things and there is no reason to prevent litigation when for all the good reasons, a physician blundered his patient into permanent disability. This attitude overlooks the issue that litigation is totally separate from personal understanding. While I may understand why someone did what he did, that doesn't make it right, nor does it exempt him from the responsibility for his actions.

  4. Rebecca says:

    This plan is flawed in the same way as our current healthcare system in that it throws the ball in the court of commercial enterprise, whose sole reason of existence is to make more money. One can imagine that the proposed algorithms for treatment will provide further time-restraints on the physician, who is already struggling to maintain evidence-based knowledge of up-to-date practices– now, in addition to extensive reading on best -practice, the physician will be required to maintain knowledge of how those practices deviate from the most recent algorithms. How are those algorithms written and maintained? How often are they updated? It appears to be a logistical nightmare to maintain accurate recommended practices, especially for rapidly-changing fields. Additionally, physicians would be more likely to prescribe to the algorithm rather than fill out additional paperwork justifying their decision to go against the system. The endless paperwork and bureaucracy inherent in current medical practices are already dissuading intelligent young people from entering the field of medicine, and this plan does nothing to address that concern. The proposed plan claims to decrease the likelihood of malpractice suits, but the system would instead increase the likelihood of out-of-court settlements with the parent corporation, which would stand to increase profit and minimize bad press by keeping doctors in-line with extortion. The only way to address current problems with our health care system is to sanction nation-wide not-for-profit health care insurance alternatives with salaried (no fee-for-service) payments to doctors. To limit malpractice suits, one need only remove incentive from the patients by limiting monetary awards to reasonable values, and/or by reserving a portion of the winnings for government/not-for-profit purposes.

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