Medical Malpractice Reforms and the Location Decisions of New Physicians
Medical Malpractice Reforms and the Location Decisions of New Physicians
Pinka Chatterji
Associate Professor, Economics Department, University at Albany
pchatterji@albany.edu
Jerry Marschke
Associate Professor, Economics Department, University at Albany
gmarschke@albany.edu
Since the 1970’s, almost all states in the US have passed reforms intended to reduce unnecessary litigation and excessive settlements related to medical malpractice. Some previous research suggests that these state-level reforms have reduced physicians’ malpractice costs. There is less information, however, regarding how state-level reforms may affect physicians’ location decisions. Laws that reduce the likelihood of facing a lawsuit, as well as the size of the penalty, may affect the number and types of physicians that states attract. This may be particularly true of new physicians, who are choosing their practice locations for the first time.
In this study, we test whether state-level malpractice laws affect new physicians’ location decisions. We use data from the 1998-2013 New York State (NYS) Residents’ Exit Survey, which includes all exiting medical residents from medical schools in NYS, and includes the zip codes of the practice locations these new physicians have chosen. The survey also collects detailed information on type of residency training, medical education, factors in location choice, and socio-demographic characteristics. In addition, we utilize state-level data on medical malpractice reforms (including caps on punitive damages, caps on noneconomic damages, joint and several liability reform, and collateral source reform) as well as local market characteristics from the Area Resource File . Following Chou and Lo Sasso (2009), we estimate a conditional logit model in which the dependent variable is an indicator of location choice. The independent variables include state malpractice laws and local market characteristics, as well as interaction terms between individual characteristics and these variables. These interaction terms allow us to test, to some extent, whether state malpractice reforms affect the types of physicians who chose to practice in those locations.
With the passage of the Affordable Care Act in 2010, federal reform of malpractice laws is increasingly being viewed as part of a broader package of reforms to reduce waste and increase the cost-effectiveness of the health system. Findings from this paper will be helpful in informing this debate by providing recent information regarding how states’ malpractice laws affect location decisions of new physicians.