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While Congress and the public are outraged over these instances of hidden information and betrayed trust, they should take a look at America's medical-malpractice system, which is designed to keep crucial information from the people who need it most. The same standards of accountability and transparency that are needed to protect America's 401(k)s should obviously be applied to protect Americans lives in hospitals and delivery rooms. And by that standard, our system of medical-malpractice litigation is a true enemy of public well being. Medical-malpractice litigation undermines accountability in the response to medical error and clouds the transparency needed to foster accountability. Medical-malpractice litigation undermines accountability because the awards are nearly random. Most patients injured by medical errors or negligence are never compensated at all. Most of the people who collect money from a malpractice suit weren't even injured by medical negligence in the first place. And even those people who do collect money they deserve have to share nearly half of it with the lawyer. Malpractice litigation doesn't compensate enough patients, doesn't increase safety, and it doesn't chase bad doctors from practice. Trial lawyers paint any reform as an attempt to take money out of the hands of deserving patients who have been injured by incompetent or malicious physicians. The truth is that administrative costs consume the lion's share of money that goes into the system — by some estimates 60 cents on the dollar or more. When you combine this with the fact that only a tiny percentage of injured patients receive compensation, society's return on its investment in the tort system is practically criminal. Why doesn't the average
malpractice award — $3.5 million dollars according to Attorneys who take malpractice cases typically work on a contingency-fee basis — often 33 percent and upwards. In order to make a return on their investment, trial lawyers cherry pick the most winnable cases out of the system and try and turn them into Powerball-size verdicts. But since awards don't track malpractice effectively, giant verdicts don't translate into better medicine for the average patient. Since accountability is sporadic and inconsistent, doctors have an incentive to hide information from the system rather than reveal it. When accountability is lost, transparency is impossible. The best we can hope for today is more knee-jerk defensive medicine, higher insurance costs, and fewer doctors in high-risk specialties. Adversarial litigation, designed to bring big paydays to a lucky few and their attorneys, makes healthcare less safe and more expensive for everyone. How can we bring transparency and accountability back into the system? We need to get our priorities straight. Imagine you are starting a healthcare system from scratch. How could you build a system that promotes safe and affordable healthcare, once you realize that human error is inevitable and that about 4 percent of people who enter the healthcare system will be injured by it? Would you design a system where a tiny fraction of injured patients were over-compensated while the vast majority got nothing? It depends on whether or not you think a crippling medical injury is worth any amount of money. Most rational people would rather not have a leg amputated even if they could get millions of dollars in return. Most rational people would choose safety for themselves and their families — not retribution, not even compensation — and would design a malpractice system that made safety innovation its highest priority. The good news is that we still can. Safety, in any system, is promoted by the efficient exchange of information. In the case of patient safety this means that you have to give healthcare providers incentives for reporting accidents when they happen and making that information systematically available to patients and doctors. What kind of incentive? Doctors and hospitals that promote best practices and timely disclosure of errors should receive protection from an irrational tort system. In this tradeoff everyone wins. If doctors get malpractice reform that encourages more forthright accounting of medical errors, safety will improve for every patient. Malpractice reform can improve safety innovation, still offer reasonable compensation for injured patients, and punish physician negligence. Isn't this what the tort system is supposed to do? — Paul Howard is deputy director of the Manhattan Institute's Center for Legal Policy. |
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ccountability.
Transparency. These are the two words that keep recurring in the debate
over how to fix the problems of corporate misbehavior and CEO compensation.
The Enron and WorldCom meltdowns have taught us that financial markets
work well only when investors have confidence that executives are accountable
for their actions, and, accordingly, that it is clear who did what.
