Malpractice Reform and the Sorting of New Physicians by Medical Human Capital
NBER Working Paper No. 24401
We test whether state malpractice reforms differentially attract physicians whose human capital attributes may predispose them towards higher-than-average malpractice risk. Using an exit survey of physicians completing graduate medical education between 1998 and 2017, we estimate willingness-to-pay to locate in a reformed malpractice state. On average, new physicians are willing to give up about $11 in hourly wages to locate in a state that has passed reform. Estimates show that new physicians trained in specialties with high malpractice indemnity payments are willing to forego a marginally statistically significant $19 more in hourly wages to locate in reformed states compared to new physicians in specialties with lower payments. Estimates for these differences for new physicians who graduated from less versus more selective medical schools, and for those trained in lower versus higher-ranked hospitals, range from $18 to $24. We find residency quality and training length are uncorrelated with willingness-to-pay for reform.
Document Object Identifier (DOI): 10.3386/w24401