The Effect of Medical Malpractice on Ob-Gyn Entry

I examine the relationships between medical malpractice tort reform and physician supply, and tort reform and physician location in the case of Texas obstetrics and gynecologists (ob-gyns). The state of Texas implemented sweeping tort reform on September 1, 2003 to reduce liability pressure on providers. This law implemented a punitive damage cap reduction of 50% along with other administrative changes that increase patients’ costs of claiming malpractice. Subsequently, I document a 10% decrease in medical malpractice premiums in ob-gyn specialties across the state. I also estimate an entry model to show that this law generates an incentive for physicians to locate in isolated, underserved areas. The probability that the most isolated areas have an obstetrician or gynecologist increases by 55% immediately following malpractice reform. Moreover, the population required to sustain up to the first three ob-gyn practices is lower post-reform. Thus, my preliminary results show that this reduction in medical liability pressure improves patient access to health care, thereby improving the lives of those living in isolated, under-served areas of our country.