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PFC Board Member John Goodman Discusses Reform on TownHall.com

March 03, 2012, Commentary by John C. Goodman

As things now stand, the only way a victim of an adverse medical event can get compensation is by filing a lawsuit, enduring its trauma and discomfort, and trying to prove malpractice. Yet  only 2 percent  of victims of malpractice ever file a lawsuit. Fewer still ever receive any compensation. On the other hand,  37 percent  of lawsuits filed involve no real malpractice. To add insult to injury,  more than half the money  spent on malpractice litigation goes to someone other than the victims and their families.

Despite this poor track record, the system imposes a heavy social cost- as much as $2,500  per household per year, including defensive medicine, at today's prices. And it may be making hospitals less safe than they otherwise would be.

The malpractice system distorts the incentives of doctors and hospitals by encouraging them to make malpractice events as rare as possible, even if they increase the number of other adverse events. As explained in our  Health Affairs  study, the system encourages doctors to order more blood tests and other procedures in order to reduce the risk of malpractice litigation, even though these procedures may put patients at additional risk.

Fortunately, there is an alternative. For the money we are now spending on a wasteful, dysfunctional malpractice system, we could afford to give the families $200,000 for every hospital-caused death. We could give every injury victim an  average of $20,000-with the actual amount varying, depending on the severity of the harm.

How exactly could this work? We propose to allow patients, doctors and hospitals a voluntary, contractual, no-fault alternative to the malpractice system. In return for forgoing their common law rights to litigate, at the time of entry into the health care system patients would be assured that if they experience an adverse outcome, the provider institution will write them a check-without lawyers, without depositions, without judges and juries-no questions asked.

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