An insurance company wants to know more about the amount of claims it pays out for medical malpractice lawsuits. The data table, taken from recently adjudicated or settled lawsuits, shows claim payment amounts, the specialty of the presiding physician, and information about the claimant or patient. Summarize the data. What factors influence payments for medical malpractice?
The data table contains a random sample of 118 claim payments. The variables in the data table are:
Payment: Amount of the payment in thousands of dollars
Severity: An estimate of the severity of damage to the patient:
1 = emotional trauma
2 = insignificant damage
3 = minor temporary damage
4 = major temporary damage
5 = minor permanent damage
6 = significant permanent damage
7 = major permanent damage
8 = grave damage
9 = death
Age: Age of the patient in years
Private Attorney: Whether the claimant was represented by a private attorney (1 = private attorney, 0 = not a private attorney)
Marital Status: Marital status of the claimant (0 = divorced, 1 = single, 2 = married, 3 = widowed, 4 = unknown)
Specialty: Specialty of the physician involved in the lawsuit
Insurance: Type of medical insurance carried by the patient
Gender: Gender of the patient
• The average payment with private attorney is more than the average payment without private attorney by approximately $686,000 (see Exhibit A).
• Private insurance has the highest payment with an average of $975,000 (see Exhibit B).
• 64% of the total payment is attributed to severity 6 to severity 9 (see Exhibit C).
• Higher severity is found in upper age groups (40 and above) and most of the high severity cases (6-9) are carried by private attorney which leads to high payments (see Exhibit D).
• In specialty, specialties like surgery (General surgery, Orthopedic surgery, Thoracic surgery and Urological surgery) have higher payment (average payment $734)( while specialties like medicine (Emergency medicine, Internal medicine, Physical medicine, Occupational medicine) have lowest payment(average payment $595) (see Exhibit E).
• Insurance company should try to settle with private attorneys to lower the payments as payments with private attorneys are much higher than without private attorney.
• As payment are high for surgery, insurance company should increase the insurance cost for doctors practicing surgery.
• Insurance company should try to settle with patients with severity 6-9 and for lower payments.