Part 5: Malpractice Insurance and Providing Healthcare in a litigious society

The cost of malpractice insurance is often cited as a major culprit in increasing fees and costs for providing healthcare. But the cost of the insurance itself is only a small factor, rather it is the culture malpractice lawsuits has created that has helped to create the modern health care economics we now have.

                The problem is in our current society if anything goes wrong in any aspect of life, someone has to pay. Personal responsibility is gone, someone, something is always to blame. If we go back to the turn of the century, the balance of rights of people vs. business and government agencies was probably to one sided for the business and government. In that era if you went to a business a bought a defective product and injured yourself with it, tough luck, next time don’t buy from that store.

                Obviously things needed to change, but now the pendulum has swung too far. The infamous McDonalds’ coffee burn lawsuit is probably the highlight of this new “someone has to pay” mentality. But numerous other examples of this attitude in all aspects of life drive prices and the cost of doing business up. McDonalds’ paid there settlement, but then they had to reprint billion of cups with the words “caution coffee is hot” on them. They had to put signs up in all their restaurants indicating it isn’t a good idea to pour hot coffee on your skin. That cost was passed on to all of us.

                Healthcare is no different. Every time a doctor gets sued for something even if the doctor believes he did the right thing he will change the way he practices. When a doctor loses a lawsuit because if by chance he had ordered a lab test for something that may have picked up some disease no matter how rare, he now will order that test for all his patients even if it is not in the best interest of the patient or the society in whole, because he will no longer take any chances he may miss something. The doctor has now taken his years of education and experience and will not use that knowledge to make a decision; rather he will play not to lose, even if better judgment would rule against such decision. The one person who doesn’t know that coffee is hot has made the vast majority of us who do, change the way everyone does things. Game changer!

                The cost of defensive practicing healthcare is probably mind blowing, when you consider every unnecessary drug prescribed, test ordered and procedure done to “cover your butt”. Dentistry is right there too. A great everyday example: you don’t need an antibiotic every time a root canal is done, but if you are the dentist that had a patient hospitalized after a root canal that became infected, guess what you are prescribing an antibiotic after every root canal. The reaction might be, well good, no one will ever be hospitalized after a root canal ever again. But you can’t live life nor practice medicine or run a government or business with that mentality. Number one, it will bankrupt any system that behaves like that and it is not in the best interest of individuals to be treated to avoid one in a million occurrences. When does it end? Either when the healthcare system is unsustainable or people understand that there are risks in living and not everything can or should be avoided to achieve a zero risk world.

Part 4: Insurance

“Meet the new boss, same as the old boss”

-          Pete Townsend

Insurance for dentistry doesn’t make sense. Why do you buy insurance? To protect yourself against an unforeseen event that could result in expenses you can’t afford.  Automobile insurance is important because in the event you get into an accident and total your car, you may not be able to buy a new car that you need.

The only insurance that works for dentistry or healthcare in general would be catastrophic coverage.  Catastrophic coverage in medicine insures you against an unforeseen illness that could be very expensive to treat, like a heart attack.

When people try to “insure” themselves against things that are likely to occur it becomes impossible for an insurance company to make a profit when they know eventually they will have to pay out it this scenario.  To make it work from a business perspective the premiums would have to be very high and pay outs would have to be monitored and limited to make sure that the amount of money the company takes in remains higher than what they pay out.

Except for the rarity, people have to have dental treatment eventually, even if only a cleaning or a filling. And regular checkups are important to prevent bigger problems from occurring. But insuring yourself for these services that you will need on a regular basis becomes a conundrum economically. Back to the automobile insurance analogy, let’s say you were concerned about the high cost of tires, so you went to your insurer and said in addition to accident coverage, I want you to pay for new tires every 20,000 miles. Well the insurance company knows at 20,000 miles they will have to pay for new tires, so they would have to charge you at least the same as the cost of the tires to break even, and actually more if they want to make a profit (which they are in business to do). Makes no sense! To make it work basically you would be paying the insurance company to get tires for you and somehow they can make money and you can still get your tires. What usually happens is the middleman (the insurance company) makes money, the consumer (you) get an inferior tire or service and the seller (the tire company or garage) has to cut corners all so the middleman gets paid. For more on this see my previous blog about Dental insurance.

How does insurance raise the cost of dental care? Well, we added a middleman who needs to get paid. So now patients have dental bills and insurance bills. And even if your company is paying for a portion of the premium or for that matter the entire premium, money is being funneled out to the middleman resulting in less for you or the healthcare provider.  MetLife’s gross revenues last year were in excess of $70,000,000,000.00 (70 billion dollars). That’s some middleman!

On the level of the dental practice the costs are driven up by insurance because of the added administration necessary to process and get claims paid. Most offices now have a full time person (insurance coordinator) who spends all their time dealing with the insurance company. This additional salary, as well as the mailing, phone and computer costs is a completely new expense category created by insurance that impacts the fees healthcare providers must charge.  The Center for Information and Technology, a non-profit healthcare research group estimates the cost of just fighting denied claims is as much as 10 billion dollars a year in administrative expenses.