New Patients for Fair Compensation Study Finds $8 Billion in Georgia Healthcare Savings by Replacing Medical Liability System

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Patients Compensation System Also Saves Taxpayers Money in Medicaid Costs

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Georgia could save $8 billion annually in healthcare costs if it replaced its current medical liability system with a Patients Compensation System, according to a new study released Wednesday by the healthcare economics firm BioScience Valuation.

The study found that physicians would scale back the practice of defensive medicine or the habit of ordering unnecessary tests and procedures to keep from being sued if the state replaced its medical liability system with a Patients Compensation System. That, in turn, would change physician behavior and result in a first-year healthcare savings of $750 million and grow to $8 billion annually after five years, according to the study.

“Healthcare costs continue to climb because doctors order more tests than are necessary to have peace of mind so they won’t get sued,” said Richard L. Jackson, chairman of Patients for Fair Compensation. “This study validates that with a significant change to our legal system, we could see some real healthcare savings in Georgia.”

The BioScience Valuation study also found that the annual healthcare savings to Medicare would be $200 million in the first year and more than $2.5 billion annually after five years. The estimates are similar for Medicaid.

“Taxpayers are the ones who pay the most for defensive medicine,” Jackson said. “Changing our legal system will not only result in healthcare savings for all of us but certainly for the bottom line for Medicare and Medicaid.”

Under a Patients’ Compensation System, 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:

  • Annual costs for defensive medicine in Georgia is almost $4.5 billion for Medicare and about $4.5 billion for Medicaid.
  • The percentage of healthcare costs that can be attributed to defensive medicine varies between 15 and 35 percent. The Gallup organization puts the estimate at 26 percent.
  • With a PCS, the annual savings would be between $5 billion and $11 billion in healthcare costs for all payors.
  • An annual savings of $1.5 billion to $3.5 billion for Medicare.
  • An annual savings of $1.5 billion to $3.5 billion for Medicaid.

“A change in our medical liability system will not only reduce healthcare costs for all but will help save entitlements,” Jackson said. “Neither individuals, companies nor the taxpayer can continue to bear the financial burden of defensive medicine and what it is doing to the bottom line of healthcare.”

For more information about the report from BioScience Valuation, go to: http://www.patientsforfaircompensation.org/landing-pages/economics-of-defensive-medicine/

To learn more information about Patients for Fair Compensation and the Patients’ Compensation System policy solution, please visit http://www.patientsforfaircompensation.org.

ABOUT PATIENTS FOR FAIR COMPENSATION
Patients for Fair Compensation is a 501(c) 4 organization dedicated to educating and proposing policy solutions to ensure access to real justice for injured patients by eliminating up to $650 billion per year nationally of unnecessary costs due to defensive medicine.

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Susan L. Meyers
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