Threat of Medical Malpractice and Choice of Practice Location: The Case of Obstetrics and Gynecologists in the USA

Presenter: Mahmud Khan, Tulane University

Abstract

Threat of malpractice lawsuits is considered important in affecting physician relocation and pre-mature retirement, especially for high-risk specialties like OB/GYN. We examine the effect of malpractice threats on choice of work location: what should be the geographic distribution of OB/GYNs if location decision is determined by healthcare “needs” alone? Does malpractice affect the location decision of “new” physicians? How important is the malpractice in long-run location decision?
Malpractice threat in a state is defined as the total number of paid claims over the previous three years per 1000 adult women in the state.

We assume that the “need” for OB/GYN services in a state is given by Ni and there are P number of OB/GYN physicians in the country. If physician income is an increasing function of healthcare need to physician ratio, a physician will locate in state i if [Ni/(Pi+1)]>[Nj/(Pj+1). Let the need-based physician distribution vector be [P*]. Percent deviation of actual number of physicians from the need-based estimates are affected by factors influencing location decision. Both bivariate and multivariate analyses were conducted. Data were obtained from National Practitioner Data Bank (NPDB), Department of Census, BLS, AMA, and Area Resource File 2006. State level information was collected for the years 1995, 2000, and 2004. Need for OB/GYN services was derived by taking a cost-based weighted average of number of pregnancies, normal and c-section deliveries, and number of adult women in the state. Using the “need” vector and number of OB/GYNs in the country, an iterative program written in Turbo C was run to place each and every OB/GYNs among the states based on maximum expected market share.

Need for OB/GYN services for each of the states and Washington DC was calculated. Some states show presence of significantly higher number of physicians than expected (CT, DC, MA, MD, NJ, NY). Number of OB/GYNs was significantly lower than expected in 11 states in 2004. The states with higher than expected OB/GYNs show higher per capita income, better quality of life, lower poverty, higher HMO penetration, lower uninsurance rate, and higher malpractice threat compared to others. Malpractice threat coefficient was found to be negative for explaining the differences of need-based OB/GYN numbers by state for the years 2000 and 2004 but the coefficient becomes statistically insignificant if proportion of state population living in medically underserved areas is incorporated.

Income earning potential is the most important factor affecting physician location. Need index alone explains 94% variation of inter-state distribution of physicians. Number of OB/GYNs in a state is determined by demand and quality of life factors. Malpractice threats show no negative impact on location decision. Negative correlation between the degree of malpractice threat and “new” physician’s work state is not an indication of preference for low malpractice threat market; it implies that physician density is already high in relatively high malpractice threat states and new physicians choose to practice in low physician density areas. Empirical results are not consistent with the claim that physicians are being driven out of a state due to high malpractice threat.