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Medical errors: Getting the incentives right

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  • Grepperud, Sverre

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    (Institute of Health Management and Health Economics)

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    Abstract

    This work examines the role of penalties as providers of incentives to prevent medical errors and ensure that such incidents, once they occur, become common knowledge. It is shown that a scheme with two penalties (accountability and non-report) is able to induce the first-best solution. However, this scheme needs not imply a punitive environment, but may, under given circumstances, yield insignificant and even negative penalties. Alternative incentive systems, such as voluntary reporting and legal immunity, are found to have less desirable properties. An exception is the principle of confidentiality (anonymity) which turns out to be an optimal scheme. It is also shown that when a judicial upper limit is binding, for the non-report penalty, it becomes rationale to go “soft” on the accountability penalty.

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    File URL: http://www.hero.uio.no/publicat/2003/HERO2003_10.pdf
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    Bibliographic Info

    Paper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2003:10.

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    Length: 27 pages
    Date of creation: 21 Jun 2009
    Date of revision:
    Handle: RePEc:hhs:oslohe:2003_010

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    Postal: HERO / Institute of Health Management and Health Economics P.O. Box 1089 Blindern, N-0317 Oslo, Norway
    Phone: 2307 5309
    Fax: 2307 5310
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    Web page: http://www.hero.uio.no/eng.html
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    Related research

    Keywords: Iatrogenic injury; adverse events; reporting incentives; confidentiality;

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    1. Kessler, Daniel & McClellan, Mark, 2002. "Malpractice law and health care reform: optimal liability policy in an era of managed care," Journal of Public Economics, Elsevier, vol. 84(2), pages 175-197, May.
    2. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    3. James Thornton, 1999. "The impact of medical malpractice insurance cost on physician behaviour: the role of income and tort signal effects," Applied Economics, Taylor & Francis Journals, vol. 31(7), pages 779-794.
    4. Dubay, Lisa & Kaestner, Robert & Waidmann, Timothy, 1999. "The impact of malpractice fears on cesarean section rates," Journal of Health Economics, Elsevier, vol. 18(4), pages 491-522, August.
    5. Malik Arun S., 1993. "Self-Reporting and the Design of Policies for Regulating Stochastic Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 24(3), pages 241-257, May.
    6. Kessler, Daniel & McClellan, Mark, 1996. "Do Doctors Practice Defensive Medicine?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 353-90, May.
    7. Andreoni, J. & Erard, B. & Feinstein, J., 1996. "Tax Compliance," Working papers 9610r, Wisconsin Madison - Social Systems.
    8. Patricia M. Danzon, 1991. "Liability for Medical Malpractice," Journal of Economic Perspectives, American Economic Association, vol. 5(3), pages 51-69, Summer.
    9. Danzon, Patricia M & Pauly, Mark V & Kington, Raynard S, 1990. "The Effects of Malpractice Litigation on Physicians' Fees and Incomes," American Economic Review, American Economic Association, vol. 80(2), pages 122-27, May.
    10. Jensen, Gail A. & Spurr, Stephen J. & Weycker, Derek A. & Bulycheva, Maria, 1999. "Physicians and the risk of medical malpractice: The role of prior litigation in predicting the future," The Quarterly Review of Economics and Finance, Elsevier, vol. 39(2), pages 267-289.
    11. Lewin, Jeff L. & Trumbull, William N., 1990. "The social value of crime?," International Review of Law and Economics, Elsevier, vol. 10(3), pages 271-284, December.
    12. Daniel P. Kessler & Mark McClellan, 1996. "Do Doctors Practice Defensive Medicine?," NBER Working Papers 5466, National Bureau of Economic Research, Inc.
    13. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 37(1), pages 29-53, October.
    14. Heyes, Anthony G., 1996. "Cutting environmental penalties to protect the environment," Journal of Public Economics, Elsevier, vol. 60(2), pages 251-265, May.
    15. Frank A. Sloan & Lindsey M. Chepke, 2008. "Medical Malpractice," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262195720, December.
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