The Association between Patient Safety Indicators and Medical Malpractice Risk: Evidence from Florida and Texas

According to tort law theory, medical malpractice liability may deter negligence by health-care providers. However, advocates of malpractice reform often argue that most malpractice claims are unrelated to provider performance. We study the connection between hospital adverse events and malpractice claim rates in the two states with public data sets on medical malpractice claim rates: Florida and Texas. We use Patient Safety Indicators (PSIs), developed by the Agency for Healthcare Research and Quality, to measure rates for 17 types of adverse events. Hospitals with high rates for one PSI usually have high rates for other PSIs. We find a strong association between PSI rates and malpractice claim rates with extensive control variables and hospital fixed effects (in Florida) or county fixed effects (in Texas). Our results, if causal, provide evidence that malpractice claims leading to payouts are not random events. Instead, hospitals that improve patient safety can reduce malpractice payouts. We also study local variation in adverse event rates, in the spirit of the Dartmouth Atlas work on variation in treatment intensity. We find large variations, both across counties and across hospitals within counties. This suggests that many adverse hospital events are avoidable at reasonable cost, since some hospitals are avoiding them.