title: Liability, insurance and medical practice.
abstract: We test for effects of tort liability on the use of certain diagnostic procedures, where the health care providers' expected cost of litigation is proxied by the risk-sharing arrangements agreed with their insurers. 2SLS and GMM estimators are adopted to test for possible endogeneity of these risk-sharing arrangements. Our findings are consistent with the exercise of liability-induced discretion by hospitals, especially regarding use of costly diagnostic imaging procedures. Hospitals facing higher expected costs per claim as a consequence of higher deductibles used these tests more frequently, after controlling for activity levels and casemix. These results are consistent with hospitals reacting to the incentives provided by a clinical negligence compensation system.
authors.affiliation: Nottingham University Business School, Jubilee Campus, Nottingham, UK. paul.fenn@nottingham.ac.uk
authors.forename: Paul
authors.initials: P
authors.lastname: Fenn
authors.forename: Alastair
authors.initials: A
authors.lastname: Gray
authors.forename: Neil
authors.initials: N
authors.lastname: Rickman
mesh_terms: D003955:Diagnostic Tests, Routine / Q000706:statistics & numerical data*; D004469:Economics, Hospital; D007351:Insurance, Liability / Q000191:economics*; D008318:Malpractice; D020414:Risk Sharing, Financial; D013222:State Medicine; D006113:United Kingdom