What’s a Little Malpractice Between Friends? How Malpractice Affects Referral Relationships Between Physicians

In this paper, I estimate the effect of being sued for medical malpractice on specialist physician’s referral relationships. Recent work has shown that patients and their referring physicians are less likely to choose a specialist that has been sued. However, this work cannot determine the relative roles of patients and referrers in this decrease. I use difference-in-differences and event study methods to study the effect of being sued for malpractice on the number of physicians who refer to a specialist, the total volume of referrals, and the degree to which these referrals are concentrated among the referring physicians. I find that a medical malpractice claim has no statistically significant effect on any of these outcomes. While point estimates are generally relatively small, standard errors are large enough that my confidence intervals cannot exclude the possibility of effects of about 8 percent relative to the mean across all outcomes.

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