The effect of rising malpractice premiums on physicians' behavior

Date of Award




Degree Name

Doctor of Philosophy (Ph.D.)



First Committee Member

Alphonse G. Holtmann - Committee Chair


In today's litigious environment, there is a popular perception that malpractice suits and large jury awards have little effect on the practice of medicine. It is the purpose of this research to show that, due to rising liability insurance costs and the increasing number of malpractice claims, physicians alter the way they practice medicine to suit their own needs, rather than the needs of their patients. Specifically, the research focuses on five major questions dealing with physicians' behavior: (1) Are physicians self-insuring as a response to rising malpractice costs? (2) What types of defensive medicine are physicians employing? (3) Does defensive medicine lower the probability of a malpractice claim? (4) Are physicians making their choice of specialty based on malpractice costs and potential exposure? (5) Are physicians avoiding the (malpractice) "crisis states" in order to lessen malpractice costs and exposure?The paper proposes theoretical models of expected utility that include the addition of a reputational loss, and three separate measures of defensive medicine as loss-preventive goods. In particular, the work examines the effect of the potential loss of reputation on purchase rates of malpractice insurance, as well as the effectiveness of so-called defensive medical practices on the probability of being sued. Using a theoretical model similar to that of Wu and Colwell (Journal of Risk and Insurance, 1988), we show the marginal benefits and marginal costs to the physician of the three types of defensive medicine.The empirical section of the research examines a unique data set derived from a number of sources, including state data from the National Practitioners' Data Bank and the American Academy of Family Physicians and pooled data from the American College of Obstetricians and Gynecologists. The empirical results show some evidence that dropping obstetrics and providing patients with information are successful in lowering the probability of a claim, while prescribing more tests and consultations are not. The research also supports the hypothesis that, if the cost of malpractice insurance in the market becomes high enough, physicians will choose to self-insure.


Law; Economics, General; Economics, Labor; Health Sciences, Medicine and Surgery

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