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Medical Malpractice Reforms and the Location Decisions of New Physicians

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  • Pinka Chatterji
  • Siyang Li
  • Gerald R. Marschke

Abstract

Spatial inequalities in access to physicians is a long-standing problem in the US, and it may be an important underlying cause of SES-related and racial/ethnic disparities in health outcomes. One important factor underlying spatial inequalities may be the enactment of state-level malpractice reforms, which could affect physician supply to a state, and/or lead to sorting among physicians across states along characteristics such as physician quality. In this study, we test whether state-level malpractice laws affect new physicians’ location decisions and sorting of physicians by quality measures across states. We use data from the New York State (NYS) Residents’ Exit Survey, which includes all exiting medical residents from hospitals in NYS, and includes the practice locations these new physicians have chosen. We focus on two malpractice reforms – caps on noneconomic damages and caps on punitive damages. Our findings suggest that both types of reforms are associated with an increased probability of new physicians locating in the state that passed the reform, but only the caps on noneconomic damages are statistically significant at conventional levels. Effects of the laws are stronger for physicians in specialties which tend to face the highest risk of malpractice awards, while the opposite is true for physicians in specialties with the lowest risk of malpractice awards, as well as for osteopathic physicians. Physicians entering solo practice and partnerships respond more to damage cap laws than physicians entering group practices, hospital-based practices and other practice settings. While we do not find that median MCAT scores in the medical schools attended (among physicians from medical schools in New York State (NYS)) interact with the effects of the laws, we do find that US citizens attending foreign medical schools, as well as international medical graduates more generally, respond more to damage caps laws compared to physicians trained only in the US. If we consider the degree of selectivity of the medical school to be a measure of physician ability, this finding may suggest that damage cap laws influence location choices more among lower-ability physicians.

Suggested Citation

  • Pinka Chatterji & Siyang Li & Gerald R. Marschke, 2018. "Medical Malpractice Reforms and the Location Decisions of New Physicians," NBER Working Papers 24401, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24401
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    References listed on IDEAS

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    1. Sloan, Frank A, 1990. "Experience Rating: Does It Make Sense for Medical Malpractice Insurance," American Economic Review, American Economic Association, vol. 80(2), pages 128-133, May.
    2. Ronen Avraham, 2007. "An Empirical Study of the Impact of Tort Reforms on Medical Malpractice Settlement Payments," The Journal of Legal Studies, University of Chicago Press, vol. 36(S2), pages 183-229, June.
    3. Toshiaki Iizuka, 2013. "Does Higher Malpractice Pressure Deter Medical Errors?," Journal of Law and Economics, University of Chicago Press, vol. 56(1), pages 161-188.
    4. Jonathan Klick & Thomas Stratmann, 2007. "Medical Malpractice Reform and Physicians in High-Risk Specialties," The Journal of Legal Studies, University of Chicago Press, vol. 36(S2), pages 121-142, June.
    5. Janet Currie & W. Bentley MacLeod, 2008. "First Do No Harm? Tort Reform and Birth Outcomes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 795-830.
    6. 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.
    7. Daniel P. Kessler, 2011. "Evaluating the Medical Malpractice System and Options for Reform," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 93-110, Spring.
    8. David A. Matsa, 2007. "Does Malpractice Liability Keep the Doctor Away? Evidence from Tort Reform Damage Caps," The Journal of Legal Studies, University of Chicago Press, vol. 36(S2), pages 143-182, June.
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    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

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