The Impact of Malpractice Risk on the Use of Obstetrics Procedures

Recent malpractice premium hikes and President Bush’s federal tort reform proposal have focused attention on medical liability costs. One frequent justification for tort reform proposals is the potential impact of liability on defensive medicine. There is however, scant and conflicting evidence on whether malpractice risk alters physician practices. In this paper, I examine whether malpractice risk alters the procedure choices of obstetricians, who face one of the highest rates of malpractice lawsuits and pay much larger malpractice premiums than most other medical specialties. The primary data set for this analysis is the Natality Detail File, which is a census of all births in the United States. By focusing on obstetricians, I can observe the impact of malpractice risk on the use of procedures such as cesarean sections, vaginal births after cesareans, prenatal care visits, the use of diagnostic tests such as ultrasound and amniocentesis, and the use of various equipment and techniques during the delivery such as fetal monitoring, forceps and vacuum extraction. Malpractice risk is measured in two ways: (1) the number of OB/GYN claims per birth in each state over the last three years, and (2) the amount of OB/GYN claims paid per birth in each state over the last three years, using the National Practitioner Data Bank. Because the measured malpractice risk may signal something unobserved about physician quality or practice style, I use malpractice claims against non-OB/GYNs as an instrument for OB/GYN claims. I find that cesarean section rates and most other measures of physician behavior are not sensitive to medical malpractice risk. __________________________ * 3105 Tydings Hall, Department of Economics, University of Maryland, College Park, MD 20742. Email: [email protected]. I am extremely grateful to William Evans for encouragement and many valuable comments. I also wish to thank Jeffrey Smith and Mark Duggan for many helpful comments. Seth Sanders, Jonah Gelbach, Alexander Whalley, Emily Owens, Julian Cristia, Sarah Bohn, Marilyn John and participants of brown bag seminar at University of Maryland also offered helpful comments on this paper. David Dranove and participants of Medical malpractice liability conference at University of Chicago Law School also gave me helpful comments on this paper.