Fiscal Fitness: How States Cope
Reasons for high ED use are Texas docs responding positively to liability reform
The Texas Medical Association says the state has more physicians who are willing and able to provide needed medical care to sick and injured people because of the state's 2003 health care liability reform changes. As might be expected on this issue, Texas trial lawyers strenuously disagree with the doctors' conclusions.
The medical association reported results of an on-line survey of 1,154 association members and said that 1) doctors find it much easier to recruit new physicians to their communities, even among high-risk specialties and in the "lawsuit war zones" of south and east Texas and 2) Texas physicians are much more likely to accept patients with complex or high-risk problems and many feel comfortable offering their patients new services.
"As it should be, Texas physicians' No. 1 challenge is how to cure the patient, not how to avoid a frivolous lawsuit," said Texas Medical Association president Ladon Homer, a Fort Worth pathologist. "The reforms have worked. They've lived up to their promise."
Meanwhile, the seventh annual Aon Hospital Professional Liability and Physician Liability Benchmark Analysis has found that insurance claims against doctors, nurses, and other medical professionals have stabilized for the first time in years.
The study, which measured 47,735 claims representing more than $4.4 billion of incurred losses in the United States, found that the overall frequency of medical malpractice claims has not increased for the second straight year. While claim frequency is stabilizing, according to the study, the average size of malpractice claims continues to increase at a rate of 6%. However, the actual amount paid to indemnify claimants is increasing at a 3% rate, which amounts paid to defend against liability claims are growing at 17% as hospitals invest in claims management.
"Based on study findings, we believe that the impact of past state level legislative reforms has largely been realized and we do not expect significant decreases in claim frequency or severity resulting from tort reform in the future unless other states pass legislation that withstands challenges," said Aon Risk Consultants director Greg Larcher. "Patient safety initiatives being implemented today, however, may be critical for sustaining a favorable frequency trend into the future."
In 2003, the Texas legislature enacted laws to respond to the state's health care liability crisis by reducing the number of meritless suits filed against physicians and hospitals. The association said lawsuits and "jackpot-sized judgments" had led physicians' professional liability insurance premiums to skyrocket, and thus many doctors had reported they were drastically reducing their services, especially for the most severely sick or injured patients, or were planning early retirement.
The centerpiece of the reforms was a $250,000 cap ($250,000 for physicians, $250,000 for the first hospital or health care facility, and $250,000 for any additional facilities) on judgments for noneconomic damages such as pain and suffering in health care liability cases. There still is no cap on actual damages such as medical bills or lost income. The new look took effect Sept. 1, 2003, and on Sept. 13, 2003, Texas voters approved Proposition 12, which ratified the legislature's authority to adopt the caps.
The association reported the Texas Medical Board is expecting a record 4,500 applications for new physician licenses this year, an increase of more than 40% over 2005. Texas Medical Board executive director Donald Patrick said the group had considered a variety of explanations for the influx of physicians seeking licensure, including 1) displacement of physicians caused by Hurricane Katrina; and 2) more residents wanting a license to moonlight now that an 80-hour work week is being enforced. But he said data indicate those reasons are not responsible for the increase. Also rejected was a suggestion that the increase is from bad doctors fleeing medical malpractice actions in their home states.
Dr. Patrick said that in his role as executive director he examines each applicant with a history of medical malpractice issues and has found that compared to the huge growth in the number of applicants, "there is no significant increase in numbers of physicians with one or more documented malpractice actions."
He said the board is left with only one viable hypothesis — "Tort reform as enacted appears to be working as envisioned by the Texas legislature. Physicians with no malpractice history are flocking to Texas because it provides a more encouraging environment for the practice of medicine."
In the Texas Medical Association survey results, responses from 117 physicians who were not practicing in Texas in September 2003 indicated that the state's professional liability climate was "very important" or "somewhat important" in their decisions to begin practicing in the state. And 83% said the Texas liability climate for physicians is "much better" or "better" than in the states from which they came.
Compared with the association's 2004 survey, more physicians (45% to 37%) have tried to recruit new physicians to their practice, hospital, or community. And some 87% of those who tried to recruit found the recruitment process easier since 2003. Only 13% found it more difficult. In 2004, by comparison, 39% found it easier to recruit and 34% said it was more difficult to recruit.
While fewer than one-quarter of respondents who tried to recruit new physicians said they tried to recruit certain high-risk specialists, those who did try were extremely successful, as indicated by these statistics: emergency medicine specialists, 94% successful; obstetricians, 94% successful; orthopedic surgeons, 94% successful; pediatric subspecialists, 88% successful; neurosurgeons, 84% successful; and trauma surgeons, 84% successful.
As a result of the reforms, Texas physicians are much more likely to accept high-risk patients and offer new services or procedures. Some 16% of survey respondents said they now accept complex or high-risk cases they previously referred or denied. That is four times the 4% figure in the 2004 survey. Some 81% said the improved liability climate played a "very important" role in their decision to begin accepting complex or high-risk cases. That compares with 73% in the 2004 survey.
Only 7% of respondents said they have begun denying or referring high-risk cases since 2003, compared with 20% in the 2004 survey. In the association's March 2003 survey, before the reforms, 62% said they had begun denying or referring complex or high-risk cases in the previous two years.
Some 23% of respondents said they had started providing new services to their patients since Sep. 1, 2003, up from only 9% who reported offering new services one year after the reforms took effect. And most of those who reported offering new services (87%) said the perceived or expected improvement in the liability climate was a "very important" or "somewhat important" factor in their decision to offer new services.
While 51% of respondents said they had stopped providing certain services to their patients in the March 2003 survey before the reforms were approved, that percentage dropped to 13% in the 2004 survey and down to 7% last year.
Texas physicians believe the liability climate has improved significantly since passage of the reforms. Some 67% of respondents said the current climate is "excellent" or "good," and 90% said the climate is "much better" or "better" today than it was in 2003.
Asked if they now feel more comfortable practicing medicine in Texas in the manner in which they were trained, 85% strongly agreed or agreed.
Of importance to physicians, also, is the fact that 28% of respondents with the same liability insurance protection and practicing in the same region of the state have seen their professional liability insurance premiums drop by more than 20% since 2003. And half said their premiums declined by up to 20%. Only 10% reported their premiums had increased.
Patrick said that from the Medical Board's perspective, patients can celebrate the improved access to medical care brought about by the liability reforms, but also can rest assured that consumer protection has been strengthened. With the decreased accountability in the Texas tort system, he said, comes a patient complaint-driven system that understands its duty and responsibility to respond to those patients to redress their grievances against their erring physicians.
The Texas Medical Board's strength in holding physicians accountable for the treatment of their patients has reached new highs, he said, creating a deterrent for those practitioners who violate the Medical Practice Act.
If there is a downside to this success story, Patrick said, it is that the agency's resources are stressed. Data for the latest quarterly report showed that the time to review and approve a licensure application has increased to 95 days. Dr. Patrick said the delay affects physicians, their employers, and the public, especially people in communities that are medically underserved. Also, increased vigilance in public protection has strained resources in investigations and litigation.
Beaumont, TX, orthopedic surgeon David Teuscher, chairman of the Texas Medical Association Committee on Professional Liability, tells State Health Watch the 2003 reforms have been "absolutely fabulous. There have been so many aspects to them and they all have been positive."
In his hospital before the reforms, Dr. Teuscher said, neurosurgery had been uncovered 60% of the time and coverage wasn't available 60% of the time in the trauma center. But as a result of the reforms, he said, they have been able to recruit all the specialists they need and got everyone they wanted for the emergency department.
Another indication of the health of the malpractice system, he said, is that there are tens of new insurance carriers now writing policies in the state. And premiums are averaging 40% of what they had been.
"Texas is now being viewed as a Mecca for doctors in high-risk states that have not undertaken malpractice reform," Dr. Teuscher says. "We have gone from 400 claims per month before reform to 175 per month now. My hope is that anyone who is truly injured can get swift justice under the new system."
Houston emergency medicine specialist Jeremy Finkelstein tells SHW the biggest issue for the group of 25 emergency physicians he directs is the peace of mind that has come with the reforms.
"Each lawsuit or threat of a lawsuit is a chink in the physician's armor," he says. "We are trying to work on behalf of our patients. Before the reforms I had many doctors who went back to school for MBAs so they could change careers and now they've decided to remain in medicine."
Dr. Finkelstein says his group has been able to move their coverage from "predatory carriers" and save considerable money on their premiums, which has been a financial benefit to the members of his group.
"Even one year ago, some companies wouldn't touch emergency medicine and now we can get 10 bids," he says. "And we're not seeing the big premium increases we had seen before. It's not necessarily that the companies are lowering their rates, but they are reentering the market and competition has helped keep the increases down."
Emergency department doctors are an easy target for plaintiffs' attorneys, Dr. Finkelstein says, because they don't usually have a relationship with their patients and sometimes don't have access to the patient's medical record before beginning treatment. Because emergency department physicians were such a target, he says, hospitals required them to carry $1 million/$3 million policy limits, even though the general medical staff usually was able to carry $200,000/$600,000 in coverage. But hospitals are now allowing emergency physicians to lower their coverage, he says, noting that his group has gone from $1 million/$3 million to $500,000/$1.5 million at a significant premium saving.
As might be expected, Texas trial lawyers have a very different view of the changes. Former Texas Trial Lawyer Association president Paula Sweeney, a Dallas attorney, tells State Health Watch the doctors' claims that new doctors are coming to the state are correct, but notes there was an influx of doctors to the state even before the reforms. And, she says, counties that were under-served by doctors continue to be underserved because they are economically unable to support a physician.
"The quality of medical care decidedly has not improved," Ms. Sweeney declares. "The stories we hear from patients are worse than ever. There's not much attorneys can do for people unless they are fairly well-off breadwinners, and not children or nursing home patients, or spouses."
The problem, Ms. Sweeney says, is the caps on pain and suffering and the fact that there is now a very expensive process in which there is the potential that it will be necessary to fight an appeal to have a suit dismissed even before the suit goes to trial.
"It's true there are thousands fewer suits," Ms. Sweeney says, "but they're not frivolous cases. "They deal with family members who have been killed, maimed, or raped but there is nothing we can do for them because the most they can get is $250,000. For doctors who rape patients in their offices, the liability climate is much better than it was."
Houston attorney Jim Perdue Jr. tells SHW there is nothing good about the reforms from a patient's perspective. He said insurers love the changes and doctors are left not seeing the benefits they were promised.
"It represents a significant setback in the health of the system and of those who are insured," Mr. Perdue says.
Asked about physicians' claims that more doctors are moving to Texas or deciding to continue to practice medicine, Mr. Perdue says it is hard to respond to anecdotal stories.
"The statistics show there was no decrease in the number of doctors before tort reform," he says. "They show that more doctors came to Texas in 2003 than in 2000. The fact that still more doctors are coming in 2006 doesn't necessarily correlate with tort reform."
Mr. Perdue said doctors like to talk about counties that didn't have an obstetrician, but the reality is that even with tort reform, they still haven't attracted an obstetrician because there's not enough market to support one.
"No study has ever shown that underserved counties are now getting services generally or from specialty care due to capping the recovery of someone who was injured by a doctor," Mr. Perdue declares.
Both Ms. Sweeney and Mr. Perdue believe there is a growing sentiment to roll back some of the changes. Ms. Sweeney notes changes in the composition of the state legislature, including the fact that the two sponsors of the reform legislation no longer are in the legislature.
"Members of the legislature are hearing from their constituents that they went too far," she says. "There's a growing sentiment that changes need to be made, including finding a way to change the caps, possibly through indexing them to the Consumer Price Index or raising the limits, at least in cases of death or serious injury."
Mr. Perdue says there is a growing recognition that there was a false promise of benefit that "unfortunately flowed to the insurance companies to the detriment of the quality of care and injured victims. I'm hopeful that some balance can be restored, if not in this legislative session than certainly in the short term."
Mr. Perdue says he has nothing against good physicians.
"Doctors shouldn't have to defend false claims," he says. "But good doctors understand that mistakes are made. I can't imagine that a good physician actually would believe that the recovery for a child injured by an incompetent physician should be capped to the point that the child can't get needed medical care."
Information on the Texas Medical Association perspective on professional liability is available from the association on-line at www.texmed.org. Contact Brent Annear at (512) 370-1381 or e-mail [email protected]. The trial lawyer perspective is available from the Texas Trial Lawyer Association at www.ttla.com. Contact them at (512) 476-3852. Information on the Aon study is at www.aon.com. Contact Al Orendorff at (312) 381-3153 or e-mail [email protected].
The Texas Medical Association says the state has more physicians who are willing and able to provide needed medical care to sick and injured people because of the state's 2003 health care liability reform changes.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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