"BioScience estimates doctors would
reduce the practice of defensive medicine by 30 to 70 percent under
a Patients' Compensation System as proposed by Patients for Fair
Medicaid, Medicare Expenses Would Decrease $1
ATLANTA (July 19, 2012) - Replacing the American medical
liability system with a no-fault, Patients' Compensation System
would create at least $2.6 trillion in savings over 10 years,
according to a new study released today by the German economics
firm BioScience Valuation.
The actuarial study, commissioned for Patients for Fair
Compensation, found that doctors would scale back the practice of
defensive medicine if the medical tort system were replaced with
one that is legally patterned after workers' compensation.
BioScience Valuation, a company that specializes in healthcare
economics and financing, estimates that defensive medicine costs in
the United States run about $270 to $650 billion annually.
Defensive medicine occurs when physicians order more tests and
procedures than are medically necessary to keep from being
BioScience estimates doctors would reduce the practice of
defensive medicine by 30 to 70 percent under a Patients'
Compensation System as proposed by Patients for Fair
"We believe every state should embrace this model to bring
enormous healthcare savings to consumers," said Richard L. Jackson,
chairman of Patients for Fair Compensation. "There is no single
effort that could reduce the cost of healthcare as quickly as
eliminating the practice of defensive medicine."
Under a Patients' Compensation System, similar to one found in
Sweden, a patient who was medically harmed could file a claim for
review by a panel of experts. If that panel deemed the injury was
"avoidable," the claim would be forwarded to a Compensation Board
to award compensation.
This would create a predictable model where patients are assured
their cases would be heard. Injured patients would have access to
justice. And unlike the current tort system, low-value claims would
be heard. The system would provide more injured patients
compensation. They would receive predictable settlements in much
faster time. Doctors would know they wouldn't be hauled into court
for frivolous reasons.
Among highlights of the BioScience Valuation report:
- The Patients' Compensation System would bring a savings to
taxpayers of about 12 percent of the Medicare budget or about $7
billion in the first year and an estimated $80 billion annually
after the first five years. Savings for Medicare over 10 years
would be an estimated $700 billion.
- All healthcare payors would see a savings of $156 billion to
$363 billion annually from 2015 and beyond.
- Medicaid would save an estimated $48 billion to $113 billion
annually beginning in 2015. The projected 10-year savings total
would be similar to Medicare.
- Under a PCS, 34,000 patients a year would be compensated for
their injuries - 77 percent more than currently receive
- The average payment could increase 100 percent to $640,000 per
patient harmed by a physician, without increasing malpractice costs
currently incurred by doctors and hospitals.
"A change in our medical liability system of this magnitude
would not only create a significant savings in healthcare but would
be helpful to those truly harmed," said Jackson. "It really is the
path toward bringing fiscal sanity to spiraling healthcare costs in
America while promoting a system that provides real access to
justice and improves patient safety."
For more information about the report from BioScience Valuation,