...true flaws. A well-functioning malpractice system should focus not only on how to compensate patients for medical errors but also on how to prevent these errors from occurring in the first place.

The United States has faced a medical malpractice "crisis" three times since 1970. Each of these crises was precipitated by conditions that created a "hard" market: decreased insurer profitability, rising insurance premiums, and reduced availability of insurance. And each time the crisis became a polarized battle between trial lawyers on one side and organized medical groups and insurers on the other. On the one side, stakeholders link the crisis to "runaway juries" and "greedy lawyers." On the other are those who blame interest rates and possibly insurer pricing practices. If one attributes the crisis to falling interest rates and bad investments in the stock market, the policy implications are markedly different than if soft-hearted and cognitively limited juries and ambulance-chasing lawyers are blameworthy.

In the end, calm is returned, but the situation of patients is not improved. We are left with a system in which most victims of medical error are not compensated for their losses and in which the overall quality of care is not what it might be.

As a first step in tackling the real problems of medical errors and mediocre quality assurance, we need to debunk the popular misconceptions about the problems with the medical malpractice system. Once these ferocious but ultimately pointless conflicts are defused, we can begin to think about fundamentally reconstructing the system with an eye toward improving the quality of care by giving practitioners effective incentives to deliver the services that people need. There are a variety of options for reform; one of them, called enterprise insurance, has the potential to provide the initiative for systemic change.

Pervasive myths

Many myths about medical malpractice dominate the public discourse. These myths reinforce misinformation and are used to justify statutory changes that benefit certain stakeholders but are not in the broader public interest. Five of the most common are: medical care is costly because of malpractice litigation; only "good" doctors are sued; there are too many medical malpractice claims; dispute resolution in medical malpractice is a lottery; and medical malpractice claimants are overcompensated for their losses.

The high cost of personal health services in the United States is frequently attributed to litigation and the high cost of malpractice insurance. This assumes that premiums and outlays for awards have risen appreciably and constitute a major practice expense. The data, however, do not show appreciable increases over long time periods. Between 1970 and 2000, mean medical malpractice premiums went from 5.5 to 7.5% of total practice expenses. This is not the case for damage awards; payment per claim has increased substantially since the mid-1990s. However, relationships between medical malpractice premiums, claims frequency, mean payment size, and total payments are complex and assumptions should not be made based on a single indicator.

Some critics of medical malpractice contend that being at the cutting edge technologically makes a physician more vulnerable to being sued. There is no empirical evidence that being sued is an indicator of superior performance. However, there is evidence that physicians with no claims histories were rated by their patients as being, or at least appearing to be, more understanding, more caring, and more available. Overall, it is untrue that only good doctors are sued, but at the same time, being sued is not a marker of being a bad doctor either.

The myth that there are too many malpractice claims is a bit more complex. There are two path-breaking studies showing that there are both too many and too few malpractice claims. The first of these studies was conducted in California in 1974. The second, the Harvard Medical Practice Study, was conducted in New York in 1984. In both studies, surveys of medical records of hospitalized patients were conducted to ascertain rates of adverse events attributable to provision of medical care to these patients and rates of adverse events due to provider negligence, termed "negligent adverse events." The California study revealed that of the 5% of patients who experienced an adverse health event while in the hospital, 17% suffered a negligent adverse event. In New York, the corresponding rates were 4% for adverse events, of which 28% were negligent adverse...

NOTE: All illustrations and photos have been removed from this article.



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