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Prepared Witness Testimony The House Committee on Energy and Commerce
The Medical Liability Insurance Crisis: A Review of the Situation in Pennsylvania
Subcommittee on Oversight and Investigations
Thomas Nasca MD, FACP
Chairman Greenwood, Members of
the Subcommittee on Oversight and Investigations of the Committee on Energy and
Commerce, of the United States of America House of Representatives: Thank you for the opportunity
to address you today on the important issue at hand. By way of introduction, my
name is Thomas J. Nasca, M.D. I am a Board Certified Nephrologist, and am the
Senior Vice President of Thomas Jefferson University, the Dean of Jefferson
Medical College, the 8th oldest medical school in the United States,
and the President of Jefferson University Physicians, the "practice plan" of
the nearly 500 full time clinical faculty of Jefferson Medical College. My
curriculum vitae is attached to my written testimony. I will not present views
concerning the causes of the medical liability insurance crisis in this and a
number of other states. You have many experts providing testimony clarifying
prevailing, often conflicting views on this very difficult issue. Rather, I would like to present
to you the impact, both currently measurable, and anecdotally not yet measurable
(but felt "on the ground") in at least one major medical school and academic
medical center which has served the citizens of this country for nearly 200
years. To do so, I will take the liberty of briefly explaining the missions of
the academic medical center, the basics of its funding streams, and the impact
of rapid escalation of costs, in this case medical liability insurance costs, on
these core missions. Missions of Medical Schools and Academic Medical
Centers
The missions of the 125
allopathic medical schools and their related academic medical centers are public
goods. These missions are carried out in an environment with significant
governmental and accrediting agency oversight. They are threefold:
These institution are not only
the germinal center for the miracle cures and clinical innovations which have
enhanced the life span and quality of life of all Americans. They are also
educational gems, the desired destination of potential physicians and
researchers across the world. Funding Streams to Support the Missions
1. Funding the Educational
Mission Medical student education is
partially supported through tuition dollars of medical students. Educational
efforts of the faculty in the pre-clinical years for medical students are
supported largely through these dollars. In the clinical setting and in
the conference room, trainees are supervised in the care of patients. This model
of progressive responsibility under direct faculty supervision ultimately yields
(after 4 years of medical school, and up to 10 years of graduate medical
education) a practitioner who is competent to practice medicine independent of
direct supervision. There are limited dollars from tuition to support medical
student education. (Tuition supports less than 40% of the total costs of
provision of medical student education at Jefferson Medical College). The
majority of clinical education is supported through willingness of the physician
to perform this important task without institutional compensation. This is done
at a cost of time of the physician faculty. Thus, medical student education in the clinical phase is provided through the volunteer efforts of clinicians who are faculty members of the school, whether they are "full time" or "volunteer" clinical faculty. In essence, the time spent teaching is being subsidized by the clinical income of the physicians' practice. Medicare (and in some states
Medicaid) recognizes faculty expenses incurred in the education of residents and
fellows, but this is not the case for most other insurance providers. Thus,
teaching efforts by the faculty on behalf of residents and fellows in the
clinical setting are partially supported by Medicare Direct Graduate Medical
Education (DGME) funding. These dollars come to the faculty from the hospital,
in Jefferson's case, Thomas Jefferson University Hospital (TJUH). 2. Funding the Research
Mission In general terms, direct
research awards pay for the actual costs of conducting research. Indirect cost
recovery is provided by federal sponsors and some other sponsors to support the
institutional infrastructure costs incurred in creation of the research
environment. Since all direct and indirect costs of the research enterprise are
not reimbursed, shortfalls must be provided by the institution. Of important note in these
discussions is the unique role of the "Translational Scientist-Clinician."
These are the specialized physician scientists who search for cures for illness
found in his or her patients. These physician-scientists are the translators of
discoveries made in the laboratory into relevant clinical treatments,
procedures, or cures. They are usually highly sub-specialized clinicians who
care for a group of patients with a particular disease, while also conducting
laboratory-based research. Thus, they practice medicine "part time," usually
between 15-50% of their effort. Their research time is usually funded through
National Institutes of Health awards, or other sources of research funding.
Their clinical time must be supported through their clinical practice. Since
their practice is part time, high fixed costs, such as medical liability
insurance premiums, make the economic dimensions of clinical practice
increasingly difficult, or impossible. Shortfalls in research faculty, facility and other related costs are born by the institution. Sources of funding for these shortfalls are: a. Institutional Endowments b. Philanthropy c. Surplus clinical revenue from the practice plan (the "dean's tax") 3. Funding the Clinical
Mission Clinical care is supported
through the clinical revenue generated in the care of patients. Institutional
support is provided during start-up of new faculty, but the clinical enterprise
is expected to be largely self-supporting. Academic physicians and their
institutions care for all patients who come to their doors, regardless of their
ability to pay. Furthermore, patients with severe or unusual illnesses seek out
experts at academic medical centers. These patients require more time, more
effort, and oversight. Reimbursement for these services is not routinely
recognized by third party payors, and is often systematically inadequate to
cover the costs of provision of care. Academic physicians have traditionally
accepted lower salaries in order to participate in the tripartite mission of the
medical school and academic medical center. Indeed, medical schools have
utilized this altruistic dimension of the academic physician to subsidize the
education of medical students, residents, and clinical fellows over the past 100
years, in the post-Flexnerian era of medical education. The Impact of the Current Crisis on Jefferson Medical CollegeThe tenuous balance between
clinical service, education, and the funding of research at Jefferson is in
jeopardy of disruption due to the recent, unprecedented increases in cost for
medical liability insurance. Figure 1. Total Medical Liability Insurance Premiums, Jefferson University Physicians
The impact of such dramatic
increases, in excess of 100%, are significant on the financial health of the
organization. With approximately $145,000,000 in total revenue and expenses in
the practice plan (Jefferson University Physicians), malpractice costs in the
current fiscal year account for 12.8% of all expenses. Furthermore, the increase
in medical liability insurance costs has not abated since it doubled in
2001-2002. The continued annual increase in premiums has forced increases in
clinical service provision to merely "keep pace" with the unprecedented
costs of insurance. Further, it should be noted that Jefferson University
Physicians has had a lower than expected claims history over the past 15 years
than expected (by specialty) according to actuarial analysis. It is also
important to understand that these figures do not include medical liability
insurance costs for the University Hospital (TJUH), where resident physician
liability costs hare borne. They are merely the cost of insuring the 469 full
time clinicians of the faculty. It is instructive to review
specialty specific data. Below in Table 1. is listed the per physician medical
liability insurance annual premiums for Jefferson physicians for 1996-97 to the
present. As can be seen in this data, the striking increase has not only been
seen in specialized surgical disciplines such as Obstetrics and Gynecology, but
also in the primary care discipline of General Internal Medicine. The impact on
actual salaries of physicians in these disciplines is predictable, and seen in
Table 2. Table 1. Specialty Specific Medical Liability Insurance Premiums, Jefferson University Physicians
Table 2. Median Specialty Specific Compensation, Jefferson University Physicians
The result of these increases in medical liability insurance costs at Jefferson has been threefold.
The net result of such
phenomena is predictable. Faculty morale is suffering, and individual faculty
members are questioning the utility of spending as much time in direct clinical
practice as the physicians in private practice, with less and less time able to
be dedicated to research and education. This phenomena is not confined to
Jefferson. In a soon to be published study conducted by the Group on Practice
Affairs of the Association of American Medical Colleges, faculty morale brought
about by these and related phenomena is dropping significantly. (Lynne Davis
Boyle, AAMC, unpublished data). The impact on faculty, if
continued, is clear. Dissatisfaction with the academic practice of medicine will
lead to loss of faculty from medical schools, and the inability to recruit the
best and brightest young faculty to fill their shoes. Deterioration of the
educational and translational research efforts will have long-term disastrous
effects on the public. As the country is looking to the academic medical
community to solve problems such as cancer, heart disease, while providing
protection from bio-terrorism and emerging diseases, the academic medical
community will be disintegrating. Much has been written concerning the fragility of the American Health Care system. After over a decade of absent capital reimbursement, "cost minus" adjustments in hospital reimbursement, managed care "discounting" of physician reimbursement, recent reductions in Medicare reimbursement for physician services, and dramatic escalations of medical liability insurance premiums for hospitals and doctors, the health care system is in a precarious state. An important subset of this health care system is the Medical School-Academic Medical Center. These 125 medical school based delivery systems are a national resource. They clearly are jeopardized, and the message is reaching those who are choosing medicine as a career. In addition to those students who have chosen not to pursue medicine as a career (applications are down from a high of >45,000 in 1996 to <32,000 in 2002, source, AMCAS, AAMC), the attitudes of graduating students and residents are instructive. Attached in the Appendix to this testimony are two documents obtained from the Association of American Medical Colleges (AAMC). The first is a comparison of the results of the graduation questionnaire administered to all medical students (>95% response rate). In analysis of this question, responses of students indicating an intent to ultimately practice in the state of Pennsylvania are compared to all other students completing the questionnaire. Of note are two important phenomena. First, there was little difference between students interested in practicing in Pennsylvania and the rest of the country in 2001. Additionally, there were 525 students intending to practice in Pennsylvania. Second,
in 2002, there is a clear trend seen in the students interested in ultimately
practicing in Pennsylvania, with 92.1% of students agreeing or strongly agreeing
(with 60.0% strongly agreeing) with this statement, in comparison to a stable
84.6% (40.1% strongly agreeing) in students interested in practicing in other
states. Finally, a trend may be developing. There were only 445 students
indicating intention to practice in Pennsylvania. This is a reduction of 80, or
15% over the prior year. Table 3. Opinion of Graduating
Medical Students (2001 and 2002) on Medical Liability: Students
Planning to Practice in Pennsylvania vs. All Graduating Students Question:
Based on your experiences, indicate whether you agree or disagree with the
following statement: "Physicians'
legal liabilities and the high cost of malpractice insurance are major problems."
Source:
2001 and 2002 Medical School Graduation Questionnaire, Association
of American Medical Colleges. Lynne Davis Boyle, personal communications.
Medical students are years away
from a practice site choice. Residents and fellows make that choice at the end
of their training. GME Track (AAMC) is a survey intended to follow these and
other trends. Results from the recent GME Track survey provide more concerning
information which, if it is a trend, would demonstrated significant concerns for
the future flow of young physicians to Pennsylvania. Pennsylvania-Trained
Residents in "High-Risk" Specialties:
Immediate Career
Plans Upon Completion of Training Programs, 2000 - 2002*
Source: AAMC GME Track, 2000 - 2002
Summary:
*Notes on Data: · "GME Track" surveys residency program directors annually. The survey
includes a request for program directors to identify the immediate career plans
of residents who have completed their training. · Data reflects only those residents who have completed their training,
plan to enter private practice, and whose program directors responded to the
survey. · "High-Risk" reflects specialties commonly identified by the physician
community and the press, as well as specialties that have helped lead recent
physician "strikes". As can be seen from this early
data, the Pennsylvania practice environment is viewed negatively by young
physicians entering residencies (graduation questionnaire) and leaving residency
and entering private practice (GME Track data). These data, coupled with the
emerging national data on faculty morale, the local information I have provided
to you raise issues which must be addressed.The emerging realization that Medical Schools and Academic Medical
Centers are nearing their limit of survivability of the external economic
factors that are buffeting all of health care should be of concern to all. The physician who educates the next generation of physicians is performing a societal good greater than the actual provision of patient care. She is making it possible for thousands of other patients to receive health care from those she is training. The physician-scientist who creates a new treatment not only treats the patient on whom the treatment is proven efficacious, he gives that treatment to others, to treat others. I was approached by a young
physicians who was completing his training at Jefferson last June. I have known
him for almost 10 years. He was from coal country in Pennsylvania, and was a
high school quarterback. He was a local hero, but decided to pursue his dream of
becoming a doctor rather than play football in college. He came to Jefferson,
graduating in 1993. He completed his Internal Medicine residency at Jefferson,
and just complete 4 years of Cardiology training. He had a budding career in
academic medicine, having already written two research papers, and showing
tremendous teaching talent as well. He was offered a position on the faculty,
but reluctantly declined. He entered the private practice of Cardiology less
than 2 miles away, across the river in New Jersey. His reasoning was that he was
afraid that the medical liability crisis in Pennsylvania could never be solved,
and that he had to be sure that he could support his family, and pay back his
student loans. He clearly indicated that this was a pragmatic decision, as he
always had dreamed of being a teacher of doctors. (Physician's name withheld). A young surgeon at Jefferson developed a new machine that would permit the safe operation of a previously lethal heart problem. He worked on this machine day and night for over 5 years, testing it in animals, working with engineers from a computer manufacturer, and discussing each nuance with a host of other medical specialists. His salary was paid by the institution, from funds generated by others. He finally tested his machine on a patient, and it worked. That test occurred 50 years ago this Spring, at Jefferson. The physician was John Gibbon, M.D., and the machine he tested was the first cardiac by-pass machine ever successfully used in a human. Dr. Gibbon revolutionized the care of patients with heart disease, and has saved millions upon millions of lives because of his invention. He was a Clinician Scientist, a translator of results from the laboratory to the bedside. He was doing something that no one thought feasible. Were he trying to accomplish a like feat in today's environment, there might be inadequate institutional money to support his clinical research. We cannot, as a nation, loose
the physician teachers, or the physician scientists. We cannot permit the
medical liability insurance costs to consume tens of millions of dollars per
year at Jefferson, or any other institution. These are dollars required to
constructively build the future of health care, its practitioners, and its
innovations, with a goal of improving the care of our citizens. I believe that
states such as Pennsylvania, because of unique circumstances, may be incapable
of fixing this problem. Short term fixes fail to solve the fundamental
structural issues, and merely divert resources from other needs. I wish you well
as you tackle, and hopefully solve for all of us, this pressing national issue
that threatens the fabric of our academic medical centers. Respectfully submitted, Thomas J. Nasca, M.D., FACP Senior Vice President, Thomas Jefferson University Dean, Jefferson Medical College President, Jefferson University Physicians
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