4 WINTER 2024 NO.90 / THOUGHT LEADERSHIP BRIEF Read all HKUST IEMS Thought Leadership Briefs at http://iems.ust.hk/tlb T: (852) 3469 2215 E: iems@ust.hk W: http://iems.ust.hk A: Lo Ka Chung Building, The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon Hyuncheol Bryant Kim is an Associate Professor in the Economics Department and Division of Public Policy at Hong Kong University of Science and Technology. He is an applied empirical micro-economist focusing on causal impacts of policy interventions in health and education sectors through large scale data analysis and social experiment. The main goal of his research is to understand the fundamental relationship between human capital investment and individual and societal well-being in Africa and Asia, which is insufficiently understood. He received an MD from Yonsei University, Korea, MPH from Seoul National University, Korea, and PhD in Economics from Columbia University, USA. His research is published in leading journals such as Science, Review of Economics and Statistics, Journal of Public Economics, Journal of Development Economics, Journal of Health Economics, and other international journals. Xiaotong Li is a PhD candidate in the Division of Public Policy at the Hong Kong University of Science and Technology. Her research interests broadly lie in health economics, policy evaluation, and applied microeconomics. Currently, she is working on projects related to how various financial and non-financial incentives affect the behaviors of healthcare providers and how these behaviors, in turn, impact patient outcomes. Finally, we conduct a back-of-the-envelope calculation to quantify the underlying costs of hospitals' defensive medicine practices. Specifically, we focus on hospitals’ ordering of MRI scans as a result of losing a litigation case. The results suggest that the annual cost of additional MRI scans resulting from losing a litigation is 8.74 billion Chinese yuan or 1.21 billion USD nationwide. RECOMMENDATIONS Our findings have several implications for policy issues regarding the development and reform of the medical malpractice liability system in both developing and developed countries. First, our results show that medical malpractice litigation leads to hospitals engaging in defensive medicine practices, specifically excessive diagnostic testing, where the magnitude of the impact is greater than existing evidence from developed countries. Considering that most developing countries are facing challenges from inadequate or uneven distribution of healthcare resources, defensive medicine practices further exacerbate the pressure on their healthcare system. Implementation of measures such as caps on noneconomic damages, as seen in the United States, may serve as a valuable reference solution. Second, our findings also have implications for the ongoing policy discussions in developed countries. For instance, recent proposals suggest that the primary focus of liability can be shifted from individual practitioners to larger organizations such as hospitals or accountable care organizations. By imposing enterprise liability, we can decrease the medical liability risk faced by individual physicians and consequently reduce the occurrence of defensive medicine practices. However, our results indicate that even when the medical institution bears most of the liability risk, defensive medicine practices is still considerable. Future policymaking needs to consider regulating the responsibility sharing between the organization (healthcare institutions) and individual practitioners.
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