Defensive Medicine Increases Health Care Spending

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The cost of defensive medicine ranges from 26% to 34% percent of total annual health care costs, according to a report by Jackson Healthcare, a health care solutions company. Annual spending on medical orders intended to avoid lawsuits, rather than to treat patients, totals $650 to $850 billion, the report indicates.

In its report, “A Costly Defense: Physicians Sound Off on the High Price of Defensive Medicine,” Jackson Healthcare, a healthcare solutions company, summarizes physician opinions on defensive medicine collected between October 2009 and May 2011 and concludes that fear of being sued drives physicians to order tests and treatments as added insurance. The end-result, the report indicates, is increased health care spending.

“Unfortunately, there is little agreement on how much defensive medicine is actually costing us,” says Richard L. Jackson, Jackson Healthcare’s chairman and CEO. “However, the reality is that it is generating significant costs and waste, with ripple effects beyond the economic impact. For example, patients are being under- and over-treated with medically unnecessary tests and procedures. Plus, the physician/patient relationship has been breached as physicians are forced to protect themselves against any third party attacks on their treatment decisions.”

Among key report findings, physician compensation accounts for only about 8% of total U.S. health care costs. Medical orders, such as prescriptions, imaging, lab tests, admissions, and surgery fees, yield approximately 6% of physicians’ total compensation, with many physicians practicing “rule-out medicine” rather than “diagnostic medicine” to guard against missing a diagnosis and subsequently being served with a lawsuit. “So the belief that physicians order tests and treatments for profit appears to be a myth,” Jackson asserts.

Research participants who claim to practice “defensive medicine” say 35% of the diagnostic tests they order are medically unnecessary and defensive in nature, as are 29% of laboratory tests,19% of hospitalizations, 14% of prescriptions, and 8% percent of surgeries.

“If we can reduce the incidence of unnecessary tests and procedures ordered by healthcare providers to prevent malpractice lawsuits, we can lower healthcare costs,” Jackson concludes. “I believe the way we can do this is by eliminating both the personal financial liability of physicians and the litigation process.”

To download the report, click here: http://www.jacksonhealthcare.com/media-room/healthcare-research/?sc_cid=...