The Impact of National Medical Liability Standards on Local Access to Physician Services

There is a substantial empirical literature has arisen that explores the extent to which the local malpractice environment affects an area’s physician supply. These studies all focus on the notion that the looming threat of liability and/or the expenses associated with insuring against damage awards may discourage physicians from practicing in regions with particularly severe malpractice pressure.  While these are important issues that bear on patient access to care, these studies largely treat the threat of malpractice in relatively simplistic and coarse terms.  There are certain structural features of medical liability rules that may impact physician supply patterns in manners that are unaccounted for by the existing literature.  Malpractice law carries with it certain clinical expectations, which are established through the standards of care set by the law.  To the extent that they are binding, these legally-imposed standards of care could bear on the clinical practices observed in regions.  For instance, the standard expected for a given clinical scenario in a particular region may call for a “low intensity” (more management-oriented) practice style rather than a “high intensity” (intervention-oriented) practice style.  Such expectations may necessarily bear on the supply of physicians serving that area as well.  Perhaps relatively few surgical specialists will be inclined to set up shop in a low intensity practice area given the legal resistance to intervention, even if such physicians were otherwise inclined to bring their skills to that region.  On the other hand, the operable law in that region, given its clinical expectations for low-intensity care, may be comparatively more favorable to general practitioners.  As such, malpractice forces may, through their impact on the nature of clinical practices demanded under the law, discourage the supply of some types of physicians while simultaneously encouraging the supply of others. 

In this project, we explore the extent to which the evolution of malpractice-standards laws changed the specialty mix of physicians.  Using physician population data at the county level from 1977 to the present, we find that a number of counties (mostly rural counties with low-intensity practice styles) began the sample period with below-average rates (per patient population) of surgical specialists and above-average rates of general practitioners.  While the adoption of a national-standard rule in these regions did not impact the total number of physicians operating in those regions, this legal reform did increase the ratio of surgical specialists to total physicians, bringing the physician mix within those regions to be in greater accord with the rest of the nation.  However, in regions that began with ratios of surgical specialists to total physicians above the national average ratio, we observed no change in the physician mix (i.e., no decline in surgical specialist rates) after switching to national standards.  This suggests that a shift from local to national malpractice-standard rules serves to normalize not just the care that individuals receive, but their access to different types of medical procedures.