[PLUG-TALK] Malpractice (was Prescription Drugs)

Keith Lofstrom keithl at kl-ic.com
Mon Sep 6 00:23:35 PDT 2004

Russell Senior <seniorr at aracnet.com> writes:

> >>>>> "Keith" == Keith Lofstrom <keithl at kl-ic.com> writes:
> Keith> Now, if you want to make medicine cost less, worry a little
> Keith> less about advertising and worry a lot more about lawyers.
> That table says nothing about the relative contribution of lawyers to
> health care costs.  The thesis of that whole set of slides seems to be
> that we have a "medical services" industry rather than a "health
> system".
> You'll get no argument from me that the health care system we have in
> this country is insane, but if you really want to lay it at the feet
> of the legal representation of malpractice victims, you are going to
> have to back that up with real data.  If you really want to reduce
> malpractice insurance costs, it seems to me that a good way is to
> reduce malpractice.  Another way is for society to compensate medical
> error victims in a more uniform way, the absense of which just about
> requires victims to sue to try to help fund the consequences of the
> error.

How about letting doctors sue patients that don't follow instructions?
98% of health care mistakes are made by patients.  "Don't take your
pills, lose your house".  Doctors would make out great, and have
plenty of money to pay for the mistakes they sometimes make.  How about
lawsuits for computer bugs?  A single human cell is more complicated
than all of the computers on Earth.   So if a doctor, dealing with 
systems of trillions of cells, must be perfect, then I suppose
programming mistakes represent such criminal carelessness that the
generators of software bugs should be flayed to death.  Well, not

Mistakes happen, and everyone, including the doctors, are victimized
by them.  It is true that some doctors should not be practicing.  But
most doctors that are sued are doing the best that can be done for most
of their patients, and threats do not improve the quality of outcomes.
They just remove needed skills.

I like the idea of "compensating victims in a more uniform way".  But
now you get into the tough question of how you compensate the idiots,
or more precisely, hou do you motivate people to act responsibly about
their own health?  As I said before, this is where the real problem
lies, and where the greatest improvements can  be made.  Russell,
for example, is a bicycle rider who wears a helmet and appears to
be careful with his diet;  he should not be paying for a bunch of
clowns that drink and drive and weigh 300 pounds.   If everyone was
as careful with their health as he is, we could slash medical spending
by 75%.  So who is the real victim here?

When you reward "victims", you create more victims.  When you attack
the powerful, they deflect your attacks towards the least powerful
(otherwise, how do you think they got powerful?).  All revolutions
evaporate, and leave another slime layer of bureaucracy.  There is
no easy substitute for focusing your attention on solving problems
at the individual level, one by one.  Just like debugging code.

> If you want to "cap" medical malpractice claims for its social
> benefits, I don't see why you should stop there.  Capping corporate
> profits, CEO income, etc, are other good candidates.
> See this:
>   <http://www.cnn.com/2004/LAW/07/27/sebok.edwards/>
> Which indicates actually malpractice damage awards have gone down from $754
> million in 1992 to $596 million in 2001.  The article also says that
> malpractice insurance represents 2% of health care spending.  That
> leaves the other 98% unaccounted for.

Yes, malpractice is a small part of total health care spending.  So
is doctor compensation; perhaps 5% to 10%.  Far bigger chunks go to
staff, the pharmas, construction, insurance companies, etc.  The
problem is, the denominator of the malpractice fraction is not 100%
(the hospital construction company never pays in malpractice suits),
but the percentage of health care spending that goes to primary care
physicians, the folks that actually do most of the curing - who, as
non-surgeons, get a fraction of the doctor's fraction of total medical
spending.  Thus, the malpractice ratio for primary care docs is
more like 40%.  Remember also that this large ratio generates a lot
of otherwise-useless cover-your-ass activity, i.e. don't do anything
that is hard to explain to a jury that lacks medical training.

For OBs, the fraction approaches 60%-70%.  And what that means is that
you have to do financial triage on your patients.  Low paying pregnant
women (and that is a lot of them) are more likely to have behaviors 
that risk the health of the baby, yet these women can't pay for the
care they do get.  Their inevitable problems are just as attractive
to the ambulance chasers.  So, who do you think gets invited in for
prenatal screening and counseling?  Who gets ignored?

When I point at the cost per saved life, I am assuming that there is
not a magic pot of "other" money available to pay these lawsuits.  It
passes through insurance companies, who make profits and have overhead,
and who also engage lawyers to fight the lawsuits.  The cost of all
this is passed through as malpractice premiums, paid out of the
compensation of doctors (quite nonuniformly).  And those malpractice
premiums come out of the supply of money that people pay into the
health system, either directly or out of the money available for 
compensation at their work.  The demand curve slopes down;  as the
price of a product goes up, people buy less of the product.  But the
demand curve is aggregate behavior, and hides the nasty truth that
the curve slopes down because individuals that don't want to pay a
lot for prenatal care drop off the curve entirely.  So it is an
interesting form of population control, tacitly accepted by both
ZPG liberals and stone-hearted conservatives.

There are poor people who still buy;  they are like the Hispanic
folk that would show up in groups of 5 or 10 when little Manuel sees
the pediatrician (but can't leave followup info, because the Feds
use this to track down illegals).  And there are other poor folk
who will never pay, like Yolanda with two kids in respirators and
a drinking habit that will do the same to number three in the oven.
But the lawyer won't do a damn thing for Manuel's family, while
Yolanda can be cleaned up for a week of court and have her
fetal-alcoholed kid exhibit number one of the carelessness of
defendant doctors.

The big numbers and curves are an aggregation of millions of 
individual cases, which is why you have to understand how they are
generated and what they mean.  I can tell you about aggregates 
because I have some economics training, and I can tell you about
individual cases because I see them myself, and have talked socially
with hundreds of practicing and former doctors (including quite a
few that have fled Canada and the U.K.).  If you gather the same
information, I assume you would be smart enough to come to similar

Some think the magic cure is to put the politicians in charge of
health care.  Golly, that means that lying ex-lawyers get to control
ALL the money, rather than a large fraction of it.  Look at the
stats for people actually served by the American system and by the
Canadian system (not the indirect numbers about people "insured"),
and you will find that things are indeed broken, but not in the
same way as you have been led to expect by the media.  There are
no magic cures;  clap your hands, and Tinkerbell is still dead.


On another individual note, one fellow that my wife saw this weekend
(instead of being home for my birthday) who "didn't think he needed
a doctor", and whose chirpy little intern thought should go home,
got admitted to the hospital at the insistence of my wife.  She also
insisted on a good cardiac consult, and the cardiologist found the
guy was weeks or days away from The Big One.  The patient gets a
triple bypass on Tuesday.  He might die under the knife, but he is
far more likely to live for another decade or two.  Chances are, my
wife's stubbornness saved this fellow's life.  I am proud as hell
of her, even though her intervention subjects her to the risk of a
lawsuit, while eschewing involvement and letting the patient go home
to die of an M.I. next month would make it an "act of God" without
legal consequences.


Keith Lofstrom           keithl at ieee.org         Voice (503)-520-1993
KLIC --- Keith Lofstrom Integrated Circuits --- "Your Ideas in Silicon"
Design Contracting in Bipolar and CMOS - Analog, Digital, and Scan ICs

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