Malpractice Premiums and the Supply of Obstetricians

Abstract

Using longitudinal data on practicing obstetricians from 1998 to 2004 derived from Pennsylvania, Florida, and New York hospital discharge data, this study finds that rising malpractice premiums are associated with an increased rate of exit and a reduced rate of entry for obstetricians. In Pennsylvania and Florida, where premiums rose by an average of 20% per year for four years, the combined effect of more exits and fewer entries was associated with a decline in obstetrical labor supply of 80 physicians, or 5.3% of the supply of obstetricians.The medical malpractice environment has experienced several periods of great volatility over the past 30 years. The most recent crisis, which started in 2000, upset a decade of stability in premiums. It was characterized by average premium hikes of 15% per year, with particularly large premium increases in some geographic areas and in high-risk specialties such as neurosurgery and obstetrics (Rubin 2001;Guadagnino 2001), resulting in abrupt shifts in the cost structure of some physician practices. Although this raised concerns that the availability of medical services may be reduced in certain communities, little evidence exists to support these claims.This study uses rich new data to examine the direct relationship between the growth of malpractice premiums and the size and composition of the physician workforce specializing in obstetrics. The primary data sources for this project are statewide hospital discharge data sets from 1998 through 2004 from Pennsylvania, Florida, and New York. We first identify physicians practicing obstetrics in each state and each year by affirming whether hospital records indicate they performed deliveries in that year. Then, by linking physician information over time, we precisely determine the year when each physician stopped or started his or her obstetrical practice. We show that rising malpractice premiums increased the rate at which practicing obstetricians dropped their obstetrics practice and simultaneously reduced the rate of entry for new obstetricians.

Do noneconomic damage caps reduce medical malpractice insurance premiums? Evidence from North Carolina

“…Our outcomes are medical liability insurance premiums at the county‐level for three different specialties: internal medicine, general surgery, and obstetrics/gynecology. These data were collected in a series of annual surveys conducted by the Medical Liability Monitor (MLM) , and have been used before by studies of malpractice liability at both state and county levels (Baicker et al, 2007; Polsky et al, 2010). The MLM represents the only source of national, longitudinal data about malpractice insurance premium rates.…”

Malpractice Environment vs Direct Litigation: What Drives Nursing Home Exit?

“…A number of studies have examined the relationship between malpractice threat and the supply of physicians with mixed results. [9][10][11] Mello and colleagues looked at the relationship between malpractice premiums and the behavior of physicians in high-risk specialties in Pennsylvania. They found that high-risk specialists stopped practicing in Pennsylvania at a slightly higher rate, while the greatest effect was seen in the specialty of obstetrics/gynecology.…”

“…They found that high-risk specialists stopped practicing in Pennsylvania at a slightly higher rate, while the greatest effect was seen in the specialty of obstetrics/gynecology. 9 Polsky and colleagues 10 showed that rising malpractice premiums increased the rate at which practicing obstetricians dropped their practice and simultaneously reduced the rate of entry for new obstetricians. In contrast, a survey of Michigan obstetricians/gynecologists and family physicians showed no significant impact of malpractice burden on physicians’ likelihood of continuing obstetric care.…”

Opportunities and Challenges in Supply‐Side Simulation: Physician‐Based Models

“…White () finds no effect of CHIP implementation on children's use of physician services but improved access among children in response to increases in physician fees. Others studies have focused on physician responses to medical malpractice policies and premiums: Kessler, Sage, and Becker () find that medical malpractice reform increased physician supply, whereas Polsky, Marcus, and Werner () find that high malpractice premiums are associated with a reduced supply of obstetricians. Finally, Hadley et al.…”