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Obstetrical Care for Low-Income Women: The Erects of Medical Malpractice on Community Health Centers DANA HUGHES, M.P.H., M.S., SARA ROSENBAUM, J.D., DAVID SMITH, M.D., AND CYNTHIA FADER, B.S.N. ~ he field of obstetrics has undergone intense and rapid change in recent years, in large part because of the crisis in professional liability. Rising premiums for malpractice insur- ance and escalating numbers of lawsuits have transformed obstetrics for providers and patients alike. Among the most dramatic changes has been the exodus of obstetricians and family doctors from obstetrical practice. Studies show that as many as 12 percent of obstetricians and 60 percent of family doctors have elected to omit obstetrics from their medical practices for malpractice-related reasons.) 2 Many more have decreased the number of deliveries they will perform for medically high- risk patients. The American College of Obstetricians and Gynecologists (ACOG) estimates that as many as 14 percent of obstetricians have decreased the number of their deliveries and 23 percent have decreased the percentage of their practice time devoted to high-risk obstetrics.3 These malpractice-driven reductions in obstetrical services are occur- ring at a time when the number of practicing obstetrical providers may already be poised to decrease, for three reasons. First, the "graying" of America is reducing the need for obstetrical services and increasing the need for gynecological care. The issue of professional liability is fueling this process. Second, the number of uninsured and publicly insured women has increased substantially in recent years. Census data show that, between 1980 and 1985, the number of Americans under the age of 65 without 59

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60 MEDICO P~FESSiONAL I: VOILE ~ health insurance grew by 40 percent.4 By 1985, there were 14.5 million women of childbearing age without health insurance that covered ma- ternity care and 9.5 million such women without any health insurance at all.5 In response to this problem Congress has greatly expanded the Medi- caid program in recent years to cover more low-income women who otherwise would be uninsured, substantially increasing the number of publicly insured women. Nevertheless, the U.S. General Accounting Office (GAO) found in a recent study that women covered by Medicaid at the time of delivery are only slightly more likely than uninsured women to receive early care.6 Several factors explain this phenomenon. The unwieldy Medicaid enrollment process alone can prevent a woman from receiving care until well into her pregnancy.7 Another clear contribut- ing factor is the relatively small percentage of obstetricians who will accept Medicaid patients. Only 63 percent of obstetricians reported that they take any Medicaid patients; of those who do, most see only a small number.8 The average obstetrician who accepts Medicaid devotes about 8.3 percent of his or her patient load approximately 12 patients a years to Medicaid beneficiaries. The extent to which women are uninsured or publicly insured is especially important in a discussion of the delivery of maternity care because of the pivotal role that health insurance plays in the acces- sibility of care. The GAO found that less than one-third of uninsured women received adequate prenatal care, compared with 81 percent of insured women.~ As a declining proportion of women of childbearing age are insured, obstetricians' ability and willingness to practice an expensive form of medicine are also likely to decline. A third factor that contributes to the declining availability of obstetri- cal providers is the changing demographics of childbearing, which is increasingly concentrated among young, low-income, poorly educated women who, as a group, represent an unattractive patient load. Obste- tricians may be subconsciously, if not consciously, responding to this trend. Although the availability of obstetrical providers has declined in recent years for all women, there has always been inadequate care for poor women. For example, much is made of obstetricians' "growing" unwillingness to accept Medicaid patients; in fact, the pool of obstetri- cians participating in the program shrank only slightly between 1977 and 1986, from 64 percent to about 63 percent. Indeed, a critical obstetri- cal shortage for poor women had been recognized by 1972 when the National Health Service Corps was created to deploy providers in under- served communities. At that time, priority was given to the placement of maternity care providers because of the critical shortage in many com-

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OBSTETRICAL CARE FOR LOW-INCOME WOMEN 61 munities of obstetricians available and willing to serve low-income women. In short the exodus of physicians from obstetrical care gener- ally, and from the care of low-income women specifically, exacerbates what was already a serious problem. MEDICAL MALPRACTICE AND LOW-INCOME WOMEN The threat of malpractice litigation and the high cost of liability insurance impose two strainsone direct and one indirecton the obstetrical system. The direct strain is the cessation of practice among providers unwilling to expose themselves to suit. The indirect strain comes as the price of care is driven so high by escalating insurance premiums that it becomes unaffordable. Poor women are the most likely to be affected by the decline in availability because they cannot afford to pay the escalating rates. Moreover, as a result of their poverty, their insufficient food and poor nutrition, and lifetimes of inadequate health care, low-income women as a rule are at greater social and medical risk of pregnancy-related complications. Therefore, to the extent that obste- tricians elect to limit their practice to low-risk patients, low-income women are, by definition, excluded. Medicaid-covered patients and other low-income women are also un- appealing as patients because providers cannot pass increased costs along to them. Medicaid reimbursement rates, which are always low in comparison with prevailing rates, are further eroded by rising malprac- tice insurance premiumsso much so that few doctors can afford to take many Medicaid patients. In at least eight states malpractice insurance premiums per delivery are higher than global Medicaid fees paid to physicians for prenatal and delivery care.~3 Self-paying patients pose similar problems for doctors because most uninsured patients are un- able to meet normal physician charges, let alone increases related to . . rlslng Insurance premiums. Physicians' fears of malpractice suits have disproportionately affected access to care for poor women because of a widely held but unsubstanti- ated perception among physicians that poor women are more litigious than nonpoor women.~4 Physicians who do not serve Medicaid patients report that this perceived litigiousness is among the principal reasons for their not taking Medicaid patients.~5 Data are limited on the extent to which this crisis has affected care for low-income pregnant women, although the data that are available sug- gest that poor women may be less rather than more likely to pursue a malpractice incident. There is ample documentation that providers who are able or willing to serve uninsured and publicly insured preg- nant women are in limited supply, but these data do not always distin-

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62 MEDICAL PROFESSIONAL LIABILITY: VOLUME II guish the influence of fear of malpractice suits from the influence of other factors, such as low reimbursement rates, slow payment, racial biases, and so on.~7 PURPOSE OF STUDY The purpose of this study was to determine the direct and indirect effects of the medical malpractice phenomenonincluding rising pre- mium rates, the escalating number of claims against obstetricians, and perceptions of increased risk of malpractice suits by poor womenon the availability of maternity services for low-income pregnant women at Community and Migrant Health Centers. Located in federally desig- nated medically underserved areas, Community and Migrant Health Centers receive federal grants to furnish medical care to persons unable to obtain care from other sources. Health centers are explicitly designed to provide free and reduced-cost care to uninsured and low-income patients. Health centers were selected as the subject of the study for three reasons. First, they are a major source of health care for low-income pregnant women. Of the 5.5 million people served by health centers in fiscal year 1986, approximately 1.3 million were women of childbearing age. That year, the centers provided maternity care to 120,000 pregnant women, more than half of whom had family incomes below 100 percent of the federal poverty level. Second, in numerous communities the health center is the only pro- vider willing to accept Medicaid and uninsured patients. Thus, the extent to which health centers are affected by the medical malpractice situation may indicate the effects of the situation on low-income women generally. In other communities the health center is the only health resource; if malpractice concerns affect these centers, care for virtually the entire community is affected. Third, health centers can be expected to play an even greater role in the provision of maternity care in the future. As states expand their Medicaid programs to cover more women, the number of pregnancies covered by Medicaid will increase. In Washington State alone it is estimated that by 1995 one-third of all births will be to Medicaid- covered mothers, in contrast to 17 percent of all births in 1984-1985.~8 Without an increase in the pool of obstetricians who are willing to accept Medicaid patients, current providers, such as Community Health Cen- ters, will have to accommodate this increased demand. In analyzing the impact of the malpractice phenomenon we were mindful of the wide variations in staffing configurations in health cen- ters. Staffing patterns range from full complements of staff profes-

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OBSTETRICAL CARE FOR ~W-INCOME WOMEN 63 signals (obstetricians, family doctors, midwives, nurse-practitioners, and allied personnel) working at centers that are formally affiliated with hospitals, to contractual arrangements with private doctors, hospi- tals, and other providers of maternity care at center sites comparable to community general medical practices without staff specialists. The capacity of the staffs and the strength of the contractual arrangements determine the availability, accessibility, and quality of care that centers can provide. We hypothesized that the malpractice climate especially rising in- surance premiums and the threat of litigationmay have reduced the centers' capacity to provide maternity care in various ways. First, cen- ters that have their own obstetrical staff would be affected as the cost of maintaining that staff rose precipitously with escalating insurance premiums. Second, centers that contract for services would either lose contractors because of the contractors' malpractice concerns or else find themselves unable to afford the prices contractors charge to cover their increasing costs. Health centers are expected to be especially vulnerable to the eco- nomic fallout ofthe malpractice problem: after deep cuts in their federal funding in 1981, they experienced modest increases until fiscal year 1988, when funding was frozen.~9 These increases did not offset the rising costs of providing care. Congress's Office of Technology Assess- ment found that the level of financial support in 1984 was less in real dollars than it had been four years earlier.20 Furthermore, a steep rise in the proportion of uninsured persons occurred during the same time period. We surmised that these two trend~declining financial support and increased demand would leave health centers unable to absorb rising costs and weather the malpractice storm. Adding to the health centers' vulnerability is the virtual demise of the National Health Service Corps, which over the years has placed thou- sands of primary care physicians, including obstetricians, in areas in which there was a shortage of health manpower; most often, these physicians staffed health centers. Federal budget reductions, justified by a projected surplus of 50,000 physicians by 1990, resulted in a decline from 6,409 new corps scholarships in 1980 to 49 in 1987. METHODOLOGY Data for this study were gathered in a survey of Community and Migrant Health Center directors during April and May 1988. A random sample of 208 centers was selected, representing 37 percent of all cen- ters. Of the 208 questionnaires in the original sample, 69 were ulti- mately excluded because the respondents were not Community Health

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64 MEDICAL PROFESSIONAL LIABILITY: VOLUME II Centers.22 Thus, the actual sample size was 139, or 25 percent of all federally funded health centers. Centers were mailed a six-page questionnaire and given the oppor- tunity of answering either by telephone or by mail. Most responded by mail. Follow-up calls to clarify answers or to complete missing data were conducted for the majority of centers. Fifty-eight completed question- naires were received, representing 42 percent of the sample. Table 1 compares the distribution of health centers responding to the survey and the total distribution of centers by U.S. Public Health Ser- vice region; the percentages are similar. Likewise, responding centers reflected overall distributions of size and annual number of patients (Table 21. Although the responses resemble the true distribution and size of all health centers, it is possible that the sample may be limited by a selection bias. Among the questions asked of the centers was whether a medical malpractice claim had ever been made against them. Some centers that have actually experienced such claims may have elected not to complete the survey. In that case our sample would represent a disproportionate number of centers without claims, whereas centers TABLE 1 Distribution of Total and Responding Health Centers, by Region, 1988 Public Health Service Region Total Centers Responding Centers Number Percentage Number Percentage I (Me., Vt., N.H., Mass., Conn., 37 7 5 9 R.I.) II (N.Y., N.J.)a 50 9 3 5 III (Pa., Va., W.Va., Md., Del., 74 13 4 7 D.C.) IV (Ky., Tenn., N.C., Miss., Ala., 139 25 17 29 Gal, S.C., Fla.) V (Minn., Wis., Mich., Ill., Ind., 64 12 6 10 Ohio) VI (N.M., Tex., Okla., Ark., La.) 53 10 9 16 VII (Neb., Iowa, Kans., Mo.) 23 4 2 3 VIII (Mont., N.D., S.D., Wyo., 31 6 3 5 Utah, Colo.) IX (Calif., Nev., Ariz., Hawaii)b 48 9 6 10 X (Wash., Ore., Idaho, Alaska) 27 5 1 2 Unknown 2 3 Total 546c 100 58 99 aExcludes Puerto Rico and the U.S. Virgin Islands. bExcludes Guam and American Samoa. CThere are 568 centers in the United States and its territories. This figure excludes those located in Puerto Rico, the Virgin Islands, Guam, and American Samoa. Total percentage does not equal 100 due to rounding.

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OBSTETRICS CASE FOR INCOME WOMEN 65 TABLE 2 Distribution of Total and Responding Health Centers, by Number of Encounters, 1987 Number of Total Centers Responding Centers Encounters Numbera Percentage Number Percentage < 4,999 226 41 19 33 5,000-9,000 170 31 14 24 10,000-14,999 77 14 11 19 > 15,000 69 13 12 21 Unknown 46 1 2 3 Total 546 100 58 100 a There are 568 centers in the United States and its territories. This figure excludes those located in Puerto Rico, the Virgin Islands, Guam, and American Samoa. b No female users aged 15-44 years. with claims would be underrepresented. If so, the data from this survey on the severe difficulties of health centers become even more troubling because the responses would not include centers that have actually experienced malpractice litigation. RESULTS The vast majority of health centers reported that medical malpractice issues either directly or indirectly affected the provision of maternity care. Thirty-nine centers (67 percent) indicated that the medical mal- practice phenomenon has affected either their ability to furnish obstet- rical services or the scope of services they could offer. Nineteen of the centers (33 percent) reported that they were unaffected (Tables 3 and 41. Of the 19 centers reporting no problems, most had some protection against financial and provider drain. Four were affiliated with hospitals and received medical malpractice insurance coverage through them. Two indicated that their doctors were commissioned officers of the U.S. Public Health Service and thus were either covered under the Federal Tort Claims Act or had their malpractice insurance paid for by the federal government. Four offered no maternity care at all, either be- cause they were too small to justify establishing the service or because there were free services available in the community to which they could refer patients. Therefore, only 9 of the 19 centers (16 percent of total respondents) that reported themselves to be unaffected by the malprac- tice situation had no obvious protection against its high financial and professional costs. Of these 9 centers, most reported that they expected to be affected soon. "We are very fortunate," one center wrote, "but there is no question that [malpractice] represents a very serious problem."

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66 MEDiC~ P~FESSiONAL If: VOILE ~ TABLE 3 Malpractice Problems Among Responding Health Centers, by Region, 1987 Public Health Service Region Respondents (N = 58) Malpractice Malpractice Did Not Total Posed Problems Pose Problems I (Me., Vt., N.H., Mass., Conn., 5 4 R.I.) II (N.Y., N.J.)a 3 0 III (Pa., Va., W.Va., Md., Del., 4 3 D.C.) IV (Ky., Tenn., N.C., Miss., Ala., Gal, S.C., Fla.) V (Minn., Wis., Mich., Ill., Ind., Ohio) VI (N.M., Tex., Okla., Ark., La.) VII (Neb., Iowa, Kans., Mo.) VIII (Mont., N.D., S.D., Wyo., Utah, Colo.) IX (Calif., Nev., Ariz., Hawaii)b 6 5 X (Wash., Ore., Idaho, Alaska) 1 0 Unknown Total 17 6 9 2 3 12 5 4 3 2 2 58 39 3 19 a Excludes Puerto Rico and the U.S. Virgin Islands. b Excludes Guam and American Samoa. The professional liability climate affected health centers in two major ways: (1) by reducing their capacity to furnish or purchase maternity care through staff or contract providers and (2) by forcing some centers, as a result of certain practices in insurance policy writing, to furnish care that might ultimately place the centers at greater risk for malprac- tice suits. The net effect was to curtail access to maternity care for Tow- income women and in some areas to force centers to make practice deci- sions based on the requirements of insurance carriers rather than on standards of quality medical practice. TABLE 4 Adverse Effects of Malpractice Costs Among Responding Health Centers, 1988 Effect Respondents (N = 58) Number Percentage Limited number of physicians under contract 19 33 Hampered recruitment and retention of physicians 25 43 Limited number of physicians hired 26 45 Reduced number of maternity patients seen 26 45

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OBSTETRICS CARE FOR [OW-iNCOME WOMEN 67 Service Capacity As noted earlier, most responding health centers provided some ma- ternity care (either prenatal care alone or both prenatal and delivery services). Services were provided in several configurations: 21 centers (36 percent) reported that they offered maternity care through a combi- nation of staff and contract providers; 12 (21 percent) said that they contracted out all maternity care; and 13 said they had sufficient staffto furnish all maternity care (Table 51. Only 22 of the 34 centers with maternity care providers on staff indicated that the providers included obstetricians. Of these 22 centers, 15 (65 percent) reported that the doctors were assigned to them through the National Health Service Corps; only 7 had full- or part-time staff obstetricians that had not been acquired through the federal govern- ment. Thirteen centers used family physicians on staff for maternity care, either alone or in concert with contract physicians for backup or referral. Only 10 centers reported using midwives or midIeve] practi- tioners for maternity care. Affected centers reported that their existing maternity care systems were threatened or weakened because rising medical malpractice insur- ance costs or the specter of litigation, or both, limited their ability to recruit and retain staff or to establish and maintain contractual ar- rangements. Provider Recruitment and Retention Since their inception, Community and Migrant Health Centers have had difficulty recruiting and retaining physicians because of the rela- tively low salaries they must pay, their isolated locations, and the TABLE 5 Arrangements for Providing Maternity Care Among Responding Health Centers, 1987 Arrangement . Contract part of services All salaried staff Contract all services No obstetrical care Referring for delivery without formal contract Respondents (N = 58) Number Percentage 21 13 12 6a 5 36 22 21 10 - Did not respond to question 1 2 Total 58 100 a Of these, three have informal referral arrangements for pregnant patients, and three do not.

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68 MEDICAL PROFESSIONAL HABILITY: VOLUME lI intense work demanded of employees. The National Health Service Corps was established in large part because health centers and other providers in medically underserved areas had difficulty attracting staff. Although the corps provides a temporary remedy for health centers, it addresses only one aspect of the centers' recruitment problem at best: a potential pool of physicians. To recruit and retain corps assignees or any other staff, centers must also have the resources to pay competitive salaries. Over the years, most centers have managed to scrape together the funds needed to recruit corps assignees and other persons. However, the rising cost of malpractice insurance has cut deeply into the resources available for compensation, so much so that many centers are unable to provide all aspects of perinatal care and are unable to piece together a financial package that is adequate to retain recruited staff. T~renty-five (46 percent) of the 54 responding centers that reported furnishing maternity care stated that the high cost of medical malprac- tice insurance limited their ability to recruit and retain maternity care providers. Moreover, the high cost of obstetrical care was a key factor in centers' decisions to offer no such care at all. Some centers stated that the rising premium rates being demanded for obstetrical providers were simply unaffordable. For other centers, malpractice insurance costs cut so deeply into their total compensation package that they could not offer competitive salaries and benefits. Thirty-three of the responding centers reported no problems recruit- ing doctors; however, 38 percent of these centers were staffed exclusively with doctors from the National Health Service Corps. With the planned demise of the corps (the last 100 obligated scholars will be placed in 1994), the protection provided these centers by the corps will not last long. Ironically, four centers indicated that malpractice problems made recruitment and retention of staff easier. These centers were all aff~li- ated with hospitals; thus, their ability to offer malpractice insurance as a benefit through the hospital was a major incentive for physicians to work for them. Contractual Arrangements Community and Migrant Health Centers commonly contract with other providers for services that cannot be furnished on site. Twenty- one (36 percent) of the responding centers indicated that they con- tracted with local providers for some maternity services. Twelve centers (21 percent) contracted for all of their maternity services (see Table 51. Contracting arrangements were established either to provide spe- ciaTized backup or to supplement family practice physicians and mid-

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OBSTETRICS CARE FOR LOW-INCOME WOMEN 69 wives on staff. Of those centers that reported contracting for some or all of their maternity care, most did so because their family doctors or midwives were not allowed to attend deliveries. Because we did not ask specifically why family doctors could not attend deliveries, the reasons why centers contracted for maternity services are unclear; however, some centers volunteered that they could not afford the additional insur- ance costs required for coverage of delivery services. In some cases it appeared that hospitals refused to extend admitting privileges to family practitioners and midwives, thereby curtailing the ability of health center staff to deliver even low-risk patients. Effect on Access to Maternity Care The most profound effect of the malpractice phenomenon revealed through the survey was its impact on access to maternity care. Twenty- five centers (43 percent) indicated that they were forced to "turn patients away" because they were understaffed and were unable to recruit or contract with enough maternity care providers. The centers either could not afford the additional costs associated with treating these patients or could find no contract providers willing to affiliate with them. Most (17) of these centers were able to serve a portion of the patients who sought care but were forced to deny care to others. Centers indicated that patients who could not be served were gener- ally given suggestions about where else they might obtain care, al- though some centers were unable to establish even informal referral arrangements with other providers. Several centers reported that they had no one to whom they could refer the patients they could not serve, either because private providers would not take the patients or because there were no alternative providers at all. One center indicated that there were no community doctors in the area who would accept Medicaid reimbursement. Another reported that patients with insurance were sent to the nearest obstetrician, 45 miles away; those without insurance were sent to the university hospital, 65 miles away. Six responding centers were unable to provide care to any pregnant patient because they could neither provide care on site nor contract with other providers.* Of these six centers, five cited the high cost of provid- ing obstetrical care, including rising medical malpractice insurance premiums, as the major reason for not offering maternity care. One * Three of these centers used informal referral networks to suggest where pregnant patients might go but had no formal contractual system; the remaining three indicated that no such networks existed.

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70 MEDICO P~FESSiON~ LAITY: VOILE ~ center put it bluntly, "We are unable to provide on-site or contract off- site prenatal care and delivery services because of the high cost of medical malpractice insurance. As a result, the center is offering none of these services." Five centers (10 percent of the 52 centers furnishing maternity care) reported that they were forced to discontinue care of women at the time of delivery because the family doctors or midwives on staff could not perfo~-~ deliveries and could not identify community physicians to whom they could refer patients for delivery care, either on a formal or informal basis. The patients were virtually on their own to locate deliv- ery care. One center reported that it was forced to send all patients nearly 700 a year to the local hospital emergency room for deliveries. Another referred patients to the county hospital for deliveries. Center providers were prohibited from delivering babies either be- cause their malpractice insurance policies prohibited it or because local hospitals allowed deliveries only by obstetricians. In turn, the fear of malpractice suits and the rising costs of malpractice insurance were cited as the primary reasons for community obstetricians' unwilling- ness to contract with the centers or to accept referrals. One center wrote, "Only one in three obstetricians in the community does obstetrics fat all] because of the high cost of malpractice. And no family doctors do obstetrics because of lack of obstetrical backup." Malpractice and Standards of Care Ironically, the malpractice insurance system itself has created the risk of claims against some health centers through two avenues. First, family doctors and nurse-midwives were forced into the medically un- sound practice of discontinuing care for patients at the time of delivery because they were unable to obtain community backup or referrals for delivery. This discontinuance of care could be characterized as abandon- ment, which constitutes grounds for liability and loss of license. Second, some centers reported that they were forced to replace experi- enced doctors with new graduates because of the escalating malpractice premium costs for experienced physicians. Insurers base this practice on the theory of "accumulated exposure," that is, that the risk of being sued increases over time. Thus, patients were deprived of the most experi- enced physicians as a means of avoiding higher malpractice insurance costs. Increased Risk for Family Doctors As a matter of economy, most health centers with maternity care providers on staff employ family doctors rather than obstetricians. One-

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OBSTETRICS CASE FOR [OW-INCOME WOMEN 71 third of the centers reported that they were staffed with family practi- tioners who furnished prenatal care. However, as indicated above, the centers also reported that the vast majority of these physicians were not permitted to deliver babies because of insurance or hospital credential- ing limitations. Family practice staff delivered babies in only 6 percent of the centers. When family doctors and other providers have strong referral net- works for delivery, this arrangement is not necessarily troublesome. Many centers in our survey, however, were unable to develop backup or referral arrangements, and the family doctors and midwives were placed in the untenable position of having to choose whether to drop the patient at the time of delivery (and hope that she could make it to the emergency room), deliver a baby without malpractice coverage, or cease furnishing prenatal care altogether. Ceasing care of the patient at the time of delivery not only places the patient in jeopardy and the physician in an ethical and liability dilemma but also creates potential liability for the physician who ultimately performs the delivery without any prior knowledge of the patient. Accumulated Exposure Data from the centers regarding the costs of malpractice insurance show that, among most of those reporting this information, rates have increased substantially in recent years (Table 6~. The cost of coverage for obstetricians increased by more than 400 percent between 1985 and 1987 at one center and for family doctors by almost 150 percent at another. These increases apparently had little or nothing to do with claims experiences because only eight ofthe responding centers had ever had a maternity-related claim made against them. One factor that did enter into the price determination, at least in some states, was provider experience. Seven centers reported that premium rates for young, newly credentialed doctors were lower than those for experienced physicians. Centers were told that this was because more experienced doctors, by virtue of their greater number of years in prac- tice, were more likely to be sued. One center reported that the cost of malpractice insurance was almost three times higher for the doctor who had worked there for more than seven years than it was for a newly recruited doctor with less than two years of experience at the center. Another center, which was ultimately unsuccessful in recruiting an obstetrician, was told by its insurance company that the premium for a first-year obstetrician would be $30,000; over the next four years that premium would increase to $60,000. At this center, as at others, costs apparently leveled off after a physician had been employed there from five to eight years.

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72 MEDiC~ P~FESSiONAL CITY: VOILE ~ TABS 6 Malpractice Insurance Costs per Practitioner at Responding Health Centers, 1985-1987a 1985 Costs 1987 Costs Percent ($) ($) Increase Obstetricians 7,000 35,265 403 4,570 16,750 266 7,007 24,607 251 28,450 72,097 153 6,000 15,000 150 20,000 45,000 125 18,124 39,984 121 25,000 48,000 92 22,886 35,780 56 23,521 36,046 53 24,000 32,000 33 Family Practitioners 3,251 8,042 147 1,700 4,200 147 4,200 8,600 105 5,500 11,000 100 2,000 3,731 87 574 1,066 86 3,900 7,100 82 7,194 12,132 69 4,869 6,908 42 6,700 8,400 25 8,000 9,000 13 2,500 2,800 12 Midwives 585 4,088 599 1,498 1,605 7 a Includes all centers reporting these data. b These practitioners provided prenatal care only. None was allowed to deliver babies under the insurance policy. Per Se Risk Some centers were unable to obtain insurance for any doctors deliver- ing babies, even at an elevated price. One center was turned down by a company because, according to the insurance carrier, "center patients posed an inherent risk." In such cases, centers are placed in an impossi- ble bind: they are unable to obtain insurance for either seasoned, experi- enced doctors or for young, inexperienced doctors.

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OBSTETRICAL CARE FOR LOW-INCOME WOMEN 73 CONCLUSIONS Our survey of health centers confirms that, in addition to conse- quences documented elsewhere, the rapid escalation of medical mal- practice premiums has taken a terrible toll on the number of medical care providers who are willing or able to serve low-income pregnant women. The vast majority of centers surveyed felt the impact of malprac- tice costs on the health services they offered. Nearly every center fur- nishing maternity care experienced a reduction in its ability to provide or purchase necessary health services for pregnant women. Many cen- ters with adequate staff to furnish at least low-risk maternity care have been forced to curtail or eliminate services because insurers refuse to provide delivery coverage except at exorbitant costs that clinics cannot afford. Still other health centers have seen the disintegration of their referral arrangements to specialists as more and more obstetricians either leave the practice of obstetrics altogether or else refuse to treat those they perceive to be high-risk patients. Several observations are in order. First, it is evident that, given the need for services and the scarcity of financial resources, the federal government cannot afford to have vast sums of public health money diverted into malpractice insurance. The U.S. Department of Health and Human Services estimates that in fiscal year 1988 approximately $30 million of the $445 million appropriation for health centers will be spent on malpractice insurance for health center staff. Much of this cost will be attributable to obstetrics-related activities. This $30 million expenditure on malpractice insurance represents 7 percent of the cen- ters' total budgetsufficient funding to build about 60 health centers in medically underserved areas or to increase by one-third the funds now being spent by health centers on maternity care. Second, this expenditure is particularly disturbing given the fact that there appears to be no relationship between the rapid escalation of costs and the centers' malpractice claims profiles. Only eight (14 percent) of the centers in our study had ever had a claim filed against them far fewer than the average 73 percent of obstetrician-gynecologists in pri- vate practice who have been sued.23 Although centers with more claims might not have responded to our survey, other studies confirm that physicians practicing in health centers have modest (16 percent) claims profiles.24 Thus, for health centers, the adverse effects generated by malpractice premiums are particularly unwarranted. Third, some insurers appear to be engaging in practices that we consider to be unconscionable. Physicians and midwives who are capa- ble of attending at least low-risk pregnant women have been effectively disinsured for delivery services unless they pay astronomical rates. As

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74 MEDICAL PROFESSIONAL LIABILITY: VOLUME 1:1 referral providers simultaneously disappear, health centers are being forced to make inadequate, uncontrolled delivery arrangements for their patientsin some instances simply referring them to hospitals for delivery by house staff rather than following patients through deliv- ery themselves or through a carefully arranged network. Other practices seriously compromise high-quality care. For example, the practice of penalizing experienced physicians constitutes a "your- number-is-up" approach to malpractice coverage. This policy means simply that health centers will be able to afford only relatively young, . - nexperlencec ~ p. Scans. It is evident that such insurer practices do not promote comprehen- sive, high-quality care. Rates do not depend on adherence to carefully designed standards of quality, nor are they tied to experience, creden- tials, or continuing education. Instead, they constitute, in our opinion, a blatant attempt to shield companies from risk by discouraging or pro- hibiting physicians from engaging in the practice of obstetrics alto- gether. In short, malpractice insurers, by denying coverage to qualified center physicians, by discriminating against more experienced physi- cians, and by contributing to an overall reduction in the financial re- sources clinics have at their disposal, have succeeded in reducing the quality and availability of care received by center patients. RECOMMENDATIONS Based on our findings, we recommend two immediate, short-term reforms. First, all health center staff end contract providers engaged in obstetrical work should be brought under the protection of the Federal Tort Claims Act (FTCA). This move would save millions of dollars and provide immediate no-cost malpractice coverage. The FTCA currently insures both commissioned officers ofthe National Health Service Corps and National Health Service Corps scholarship graduates who work as civilian employees of the Public Health Service. Since 1984, health centers that employ corps physicians have paid some or all of their salaries with funds transferred to the centers by the service from the corps account. This fund transfer arrangement has cost corps members FTCA coverage simply because the name ofthe payer has been changed. Because the health center payer is a federal grantee and because the corps member compensated by the center is performing tasks identical to those performed by health service counterparts, there is no reason to discriminate between civilian and commissioned corps members em- ployed by the health service and those employed by federal grantees. Moreover, there is no reason to distinguish among medical staff hired by federal granteesindeed, legislation enacted as part of the fiscal year

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OBSTETRICAL CARE FOR LOW-INCOME WOMEN 75 1988 appropriations act eliminated the distinction between civilian contract physicians and physicians employed by the Indian Health Service and extended FTCA coverage to the former.25 By extending FTCA coverage to all medical and health staff working at health centers, the federal government would! save tens of millions of dollars that could be reinvested in patient care. In an era of scarce financial resources, the government simply cannot afford to waste these funds. We recommend that the act cover not only National Health Service Corps assignees but also other medical and health staff em- ployed by centers on a part- or full-time basis. Second, we believe that a substantial expansion of the National Health Service Corps is warranted. Even if the immediate financial burden of malpractice insurance were lifted, clinics would continue to experience enormous difficulties in recruiting and retaining qualified personnel, given the areas and populations they serve. Moreover, al- though the most recent malpractice crisis has decreased the number of physicians willing to treat publicly insured or uninsured patients (the vast majority of health centers' patient populations), in fact the problem of nonparticipation in Medicaid and other public health programs by obstetricians may be only slightly greater than it was roughly a decade ago. Thus, the current crisis may be the result of continued high rates of nonparticipation accompanied by a shrinking pool of obstetricians. In sum, there continues to be a major need for corps personnel, particularly in the field of obstetrics. We recommend adding at least 500 physicians and another 250-500 midwives and other midIeve] professionals. The savings generated by improved access to maternity care would more than pay for the outlay for personnel. We believe that two long-term reforms are also required if the crisis in access to maternity care is to be remedied. First, we recommend the establishment of a national task force to draw up the elements of a no- fault system for obstetrics. The system would include not only a means for compensating patients but a means for overseeing and enforcing the quality of obstetrical care practiced in the United States. Whatever compensation poor women derive from the current malpractice system (and evidence suggests that they draw little in proportion to the inci- dents of substandard practice they suffer), both they and their children would benefit infinitely more from a well-regulated obstetrical system in which patient compensation was paid in the event of an unintended nJury. Second, we feel that no change of this magnitude can occur without significant reforms in the way physicians are licensed, credentialed, and monitored, and without uniform rules regarding the content of care and appropriate practice standards. As Law and Polan have observed inPain

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76 MEDiC~ P~FESSiONAL CITY: VOICE ~ and Profit, the medical care education system is national in scope, as are the standards of practice to which the public expects physicians to adhere.26 Medical care no longer stops at state borders but is a vital national industry. It is essential, therefore, to call a halt to state-by- state regulation of the accreditation, content, and scope of obstetrical practice. By permitting individual states (and even individual hospi- tals) to establish their own qualifying and regulatory standards for physicians and midIeve] professionals, the federal government has per- mitted an astonishing array of standards and practices to govern the scope and quality of obstetrical care. The "locality rule," which held physicians to community rather than national standards of reasonable practice, died long ago in the nation's courtrooms, as Law and Polan have pointed out. It is essential that we lay to rest as well the locality system for regulating the practice of obstetrics. We believe the medical profession's failure to recognize the significance of the demise of the locality rule and its persistence in treating the regulation of medical practice as a local activity has caused part of the public mistrust that results in malpractice litigation. Thus, we recommend the development of national standards for obstetrical practice and for accreditation of physicians and midIeve] professionals, as well as uniform monitoring and enforcement mechanisms. Other- wise, the stage simply cannot be set for the removal of obstetrics from the current malpractice system. REFERENCES AND NOTES 1. American College of Obstetricians and Gynecologists (ACOG). 1985. Professional Liability Insurance and Its Effect: Report of a Survey of ACOG's Membership. Wash- ington, D.C. 2. Health Care in Rural America: The Crisis Unfolds. 1988. Report to the Joint Task Force of the National Association of Community Health Centers and the National Rural Health Association. Washington, D.C., pp. 1-12. 3. ACOG. 1985; see note 1. 4. Sulvetta, M., and K. Swartz. 1986. The Uninsured and Uncompensated Care. Wash- ington, D.C.: Urban Institute. 5. Gold, R., and A. Kenney. 1985. Paying for maternity care. Fam. Plan. Perspect. 17 (May/June) :103 -111 . 6. General Accounting Office (GAO), U.S. Congress. 1987. Prenatal Care: Medicaid Recipients and Uninsured Women Obtain Insufficient Care. GAO/HRD-87-137. Gai- thersburg, Md. 7. Hill, I. 1988. Reaching Women Who Need Prenatal Care. Washington, D.C.: Center for Policy Research, National Governors' Association, p. 5. 8. American College of Obstetricians and Gynecologists (ACOG), Committee on Health Care for Underserved Women. 1988. OB/GYN Services for Indigent Women: Issues Raised by an ACOG Survey. Washington, D.C.

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OBSTETRICAL CARE FOR LOW-INCOME WOMEN 77 9. Mitchell, J., and J. Cromwell. 1983. Access to private physicians for public patients: Participation in Medicaid and Medicare. Pp. 105-129 in Securing Access to Health Care: The Ethical Implications of Differences in the Availability of Health Services. Washington, D.C.: President's Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research. 10. GAO. 1987. Prenatal Care; see note 6. 11. Bureau of the Census, U.S. Department of Commerce. Issued annually. Fertility of American Women. Washington, D.C.: Government Printing Office. 12. Hughes, D., and S. Rosenbaum. 1987. Personal communication. 13. Ibid. 14. ACOG. 1988; see note 8. 15. Ibid. 16. General Accounting Office (GAO), U.S. Congress.1987. Medical Malpractice: Charac- teristics of Claims Closed in 1984. GAO/HRD- 87-55. Gaithersburg, Md. 17. See, for example, Lazarus, W., and J. Tirengel. 1988. Back to Basics, 1988. Los Angeles: Southern California Child Health Network; Hoogesteger, J.1987. Obstetri- cians extend time for indigents. Springfield News-Leader. June 23; Obstetricians' strike threat uses patients as pawns (editorial). 1987. Providence Journal. Feb. 10; County's delivery of babies almost extinct say doctors.1987. Sequoyah County [Okla- homa]. April 12. .8. Peterson, J., Director of Policy, Washington State Medicaid Agency. 1988. Personal communication. Children's Defense Fund. 1988. A Children's Defense Budget. Washington, D.C. Of rice of Technology Assessment, U.S. Congress.1988. Healthy Children: Investing in the Future. OTA-t-345. Washington, D.C.: Government Printing Office. 21. Gapen, P. 1988. The Health Service Corps: Endangered species? Med. Health Per- spect. July 4. 22. The sample was selected from the membership list of the National Association of Community Health Centers, which includes all federally funded health centers plus a small proportion of nonproviders, such as individual members and state associations. Some nonproviders were selected in the initial random sample but were eliminated from the evaluation. 23. ACOG. 1985; see note 1. 24. National Association of Community Health Centers. 1986. The Medical Malpractice Claims Experience of Community and Migrant Health Centers. Washington, D.C. 25. Pub. L. 100-102, 103(c). 26. Law, S., and S. Polan. 1978. Pain and Profit: The Politics of Malpractice. New York: Harper and Row.