Defensive medicine adds billions to healthcare costs

Doctors order tests to fend off lawsuits

ATLANTA -- Physicians estimate the cost of defensive medicine to be between 26 and 34 percent of total annual healthcare costs, according to a recent report by Jackson Healthcare. At an estimated $2.5 trillion in annual spending, this means $650-850 billion is spent each year on medical orders intended to avoid lawsuits rather than treat patients.

In its report, “A Costly Defense: Physicians Sound Off on the High Price of Defensive Medicine,” Jackson Healthcare summarizes physician opinions on defensive medicine collected between October 2009 and May 2011 and concludes that the fear of being sued drives physicians to order tests and treatments as added insurance, which inflates healthcare spending.

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“Unfortunately, there is little agreement on how much defensive medicine is actually costing us,” said Richard L. Jackson, chairman and CEO of Jackson Healthcare. “However, the reality is that it is generating significant costs and waste with ripple effects beyond the economic impact. For example, patients are being under- and over-treated with medically unnecessary tests and procedures.”

Not everyone agrees with Jackson Healthcare’s figure.

J. William Thomas, professor of population health and health policy at the Muskie School of Public Policy in Portland, Maine, believes the cost of defensive medicine is much lower.

“The Jackson Healthcare estimates of defensive medicine costs are significantly higher than those based on current research,” said Thomas.

“My own estimate of defensive medicine costs is much lower, in the range of $13 billion. This estimate is based on the most comprehensive data source currently available, and is in agreement with the results of other recent studies using comprehensive data,” he continued.

The Congressional Budget Office estimates the cost of defensive medicine to be $54 billion over ten years, yet another distinctly different number.

“There is a problem with defining defensive medicine. It’s difficult to know the exact cost,” explained Kevin Pho, MD, a Nashua, N.H.-based primary care physician who comments regularly on healthcare issues from the provider perspective on his blog

“However, regardless of the exact cost, there is a significant impact. One thing to emphasize is why doctors fear malpractice lawsuits. Even if a case ultimately gets settled and they do not have to pay out of pocket, it is tremendously disruptive, both personally and professionally.”

Pho believes the high cost of defensive medicine will continue to plague the U.S. healthcare system because American healthcare consumers are conditioned to believe more tests equals better care and because physicians are terrified of being sued.

“There is not a lot of incentive to prevent over-testing. The news stories are about doctors who didn’t do enough. You rarely hear that over-testing is the problem. Physicians want to avoid being sued.”