Is malpractice reform the answer to physician shortages?

Clinton Frederick “Rick” Miller is not the Rick Miller who used to play the outfield for the Boston Red Sox and, later, the California Angels. But when he looks at his net income these days, he might wish he were. Miller, a neurosurgeon, is part of a three-physician neurosurgical practice covering the six regional hospitals on the New Hampshire Seacoast.

Last year, by his own count, he saw 380 new patients, 450 established patients, and performed more than 100 brain and spinal operations. His typical work week, he said was 70 to 80 hours, and he was on call for emergencies every third day. For his services, he billed the various third-party payers, including Medicare and Medicaid, a total of $720,000, but received only $320,000 in payments.

So after paying the salaries, health-care and other benefits of his office employees, his medical malpractice insurance, rent, utilities and other costs, his after-tax earnings totaled $64,000. Not a great deal of money, he says, with which to support himself, his wife and four children, two of whom are in college. In fact, he said, $64,000 barely covers tuition costs.

“We’ve had to dip pretty heavily into our savings,” he said, after sharing those numbers at a recent House Judiciary Committee meeting.

But what really bothers him, and the reason he was before a legislative panel in Concord, is that his take-home pay turns out to be $20,000 less than his annual premium for malpractice insurance. The rock-bottom rate for neurosurgeons in New Hampshire is $84,151, he said, nearly $25,000 more than a physician with the same loss-free record pays in Maine.

The difference, Miller insists, is that Maine has a long-established practice of requiring all medical malpractice litigants to go before a screening panel before being brought to trial. A unanimous finding of a three-member panel, either for or against the plaintiff is admissible as evidence in a subsequent trial. When the panel is divided, no finding is passed on to a jury trial. House Bill 1413 would establish the same system in New Hampshire.

“Pre-trial screening panels serve the interest of both plaintiff and defendant,” Miller told the committee, by making clear to each side the odds for and against the suit prevailing in court. “A unanimous finding on behalf of the defendant should make the plaintiff’s legal counsel seriously reconsider whether the case has sufficient merit to pursue or should be dismissed,” he said. A similar finding for the plaintiff would inspire the defendants to settle before trial. The likely result would be “a minimizing of legal costs to both sides,” Miller said.

Dwindling OB/GYNs

Dr. Cynthia Cooper of Dover also is concerned about medical malpractice claims, both as president of the New Hampshire Board of Medicine and as a private practitioner.

Formerly an obstetrician/gynecologist , Cooper now limits her practice to gynecology only. The cost of medical malpractice insurance for obstetricians has driven her out of that business, she said.

“My malpractice (insurance) bill for gynecology was $9,300 for 1999,” she said. By 2001, it had gone up to $15,000. The same coverage cost her $20,000 in 2003 and $26,000 this year.

But it would cost considerably more if she were still doing obstetrics, she said. The lowest rate quoted her for an OB/GYN — one with no history of malpractice judgments or out-of court settlements –was $45,434. A practitioner with a less perfect record might have to pony up as much as $136,302. Cooper said she believes a rising tide of litigation is driving the increase in premiums.

“The average OB/GYN has 2.5 lawsuits in his or her lifetime,” said Cooper. “Eight out of every 10 are sued at least once.” She counts herself among eight practitioners in the Seacoast area who have gotten out of the baby business, reducing by one-third the number of obstetricians in the region.

“I love delivering babies,” she said. But at an average of $2,000 per patient for pre-natal care and delivery, she would have to handle an additional 20 cases a year to make up the difference in her malpractice premium. “You’d have to run a mill,” she said.

The Seacoast is not the only area of the state where obstetricians are fleeing the field, said Dr. Gary Woods, a Concord orthopedic surgeon and president of the New Hampshire Medical Society.

“I can give you the names of 20 OB/GYNs who are no longer doing obstetric services in New Hampshire,” said Woods. The declining numbers represent a greater problem in less populous parts of the state where the distances between doctors is greater.

The same is true of neurosurgeons. There are now only two serving the Concord-Manchester-Nashua region, where once there were five. “From my office window I can see the helicopters coming to take (patients) from the Concord Hospital” to Dartmouth-Hitchcock in Hanover, Woods said.

Falling investments

Woods was another of the several doctors, health-care providers and insurance company representatives testifying in favor of HB 1413.

But lawyers appearing before the committee argued that the legislation would place an unnecessary and potentially costly roadblock to patients seeking redress for damages, without any assurance that the panels would lower malpractice costs.

The contribution of screening panels to the lower malpractice premiums in Maine, they argued, is far from certain. A 1997 study conducted by that state’s Bureau of Insurance found that the panels had resulted in fewer claimants receiving awards, but was unable to determine the impact on the cost of medical malpractice insurance or the overall cost of health care.

David Withers, property and casualty actuary with the New Hampshire Department of Insurance, said one of the factors driving up insurance rates everywhere has been the decline in companies’ investment portfolios. During most of the 1990s, insurance companies were able to offset their underwriting losses with robust returns on their investments. Companies with specialties like medical malpractice insurance were holding rates down while competing for a larger share of the market. That’s no longer the case, said Withers.

In order to make remain profitable, companies have had to charge more for the policies they are underwriting. “Some of those companies that were underpricing have become insolvent,” said Withers.

Woods conceded that screening panels are not the whole solution to rising malpractice costs, but insisted it would be a good start.

‘Where’s the justice?’

The medical society president also has testified in recent weeks in favor of a number of tort reform bills in the state Senate, including one that would cap non-economic damages in medical malpractice cases at $250,000.

Manchester attorney Richard Fradette argued the cap would grant a legal protection to doctors that other citizens don’t have. In a hypothetical suit involving a school teacher who runs a red light and runs over a 12-year-old pedestrian, there would be no cap on damages, he said.

“Where is the justice,” Fradette asked the House Judiciary members, “in a system that allows a physician who earns $200,000-plus a year and has amassed substantial personal assets to limit his risk at $250,000, when the schoolteacher, who earns $40,000 a year and is barely making ends met, is at risk of losing her home?”

Bruce Felmly of Manchester was among the lawyers arguing that the screening panels bill is unconstitutional, citing a 1980 ruling by the state Supreme Court in Carson v. Maurer. The high court struck down a law requiring medical malpractice plaintiffs to notify the defendants of pending action 60 days before filing suit. The law “unfairly postpones the time at which a malpractice victim may expect to recover for his injuries,” the court declared in ruling the statute “unconstitutional and void.”

Felmly seemed confident in predicting the same fate awaits HB 1413, should it become law. “It’s dead on a arrival at the Supreme Court,” he told the committee.