The Impact of Medical Malpractice Reforms on Hospital-Based Obstetric Services

Abstract

Policy-makers and public health researchers are concerned that rapidly rising medical malpractice insurance premiums and reduced supply of malpractice insurance coverage have discouraged health-care providers from providing some key but high-risk services in certain geographic regions. Obstetricians/gynecologists and family practitioners who also provide obstetric services appear to be particularly vulnerable to pressure from malpractice litigations. They are frequently sued and face large damages when they lose. To mitigate perceived adverse effects of malpractice litigation on physician behaviors, states have introduced a variety of tort reforms such as caps on malpractice damage awards since the mid-1970s. This thesis examines the effect of direct tort reforms - those reforms that are expected to have a direct and significant impact on the size of malpractice damages -- on access to hospital-based obstetric services.

Using data from the American Hospital Association's annual survey of hospitals, we document a significant decline in the availability of hospital-based obstetric services in a county, particularly in rural communities, from the mid-1980s to the early 2000s. By combining hospital data with novel data on the introduction and repeal of tort reforms at the state level, we are able to measure the effects of different types of reforms on the likelihood that a county has hospital-based obstetric services available. Applying a difference-in-difference approach to data from 1985, 1990, 1995, and 2000, we find some evidence that caps on total damages and the mandatory offset of compensation from collateral sources in total damages improve the availability of hospital-based obstetric services at the county level. Caps on non-economic damages have smaller effects while caps on punitive damages or allowing periodic payment of damages do not appear to have an impact on the likelihood that a county has hospital-based obstetric services available. The mandatory offset of collateral source rule is found to have a larger impact in rural counties. However, our estimates were not statistically significant at conventional levels and thus no firm conclusions concerning the impact of direct tort reforms on the provision of hospital-based obstetric services can be drawn.