The Squeeze on Surgeons: When Malpractice Costs Meet Shrinking Reimbursements
A decade of financial shifts highlights growing challenges in surgical practice across the US.
Ever wondered what it's like to be a surgeon in America today, beyond the operating room? A recent study published in the Journal of the American College of Surgeons1 pulls back the curtain on a decade of evolving financial pressures, revealing a challenging landscape where the cost of protecting oneself against lawsuits often outweighs the income from performing common procedures. The study, titled "Comparison of Laparoscopic Cholecystectomy Reimbursement Rate and Medical Malpractice Insurance Premium Cost Across the US from 2013 to 2023," dives deep into the state-by-state variability of these crucial financial factors.
The Shifting Sands of Surgical Finance
From 2013 to 2023, the study found a stark trend: overall, there's been an increase in malpractice insurance costs for surgeons, coupled with a decrease in federal reimbursement for surgical work. To understand this dynamic, the researchers used laparoscopic cholecystectomy (LC) — the most commonly performed general surgery procedure — as their benchmark. They calculated a fascinating metric: the number of LCs a surgeon would need to perform just to cover their malpractice insurance premium. The findings are quite eye-opening:
Reimbursement Decline: Inflation-adjusted reimbursement for LC dropped by an average of 24% across all states.
Malpractice Volatility: While there was an overall inflation-adjusted decrease in malpractice premium costs, some states saw increases of up to 22% (Rhode Island), while others experienced significant decreases of up to 62% (Oregon).
The "LC Burden": In 2023, the number of LCs needed to cover malpractice insurance varied wildly, from a manageable 21 in Minnesota to a staggering 163 in Illinois. Rhode Island saw the greatest increase in this burden (63%), while Oregon experienced the greatest decrease (50%).
The nationwide average number of LCs required to cover malpractice premiums increased from 73 in 2013 to 78 in 2023. Let's put that into perspective. As the authors highlight:
"Based on our approach and the analysis of public data sources, >40% of a surgeon’s work could be required to cover these premiums in states like Illinois or Florida. Meanwhile, only 5% of a surgeon’s work could be needed to cover premiums in Minnesota."
A Closer Look at the Numbers
The study provides detailed tables illustrating the changes in malpractice premiums and LC reimbursements across states.
Change in Mean Medical Malpractice Premium Cost from 2013 to 2023
The first table reveals the raw and inflation-adjusted changes in malpractice premiums. For instance, Florida had the highest raw malpractice premium rate in 2023 at $120,853, while Minnesota had the lowest at $12,655.33. Nationally, 68% of states saw an increase in unadjusted malpractice premiums.
Change in Mean Reimbursement from 2013 to 2023
The second table shows how LC reimbursement rates have shifted. In 2023, Alaska had the highest mean reimbursement at $835, and Nebraska had the lowest at $586. Crucially, all states experienced an inflation-adjusted decrease in reimbursement, ranging from 21% to 28%, with a national average decrease of 24%.
Why the Discrepancy?
The study points to a complex interplay of factors. Medical liability insurance is a significant expense for physician practices, and while intended to compensate injured patients and prevent unsafe practices, its costs are often high due to litigation. Even though the Centers for Medicare and Medicaid Services (CMS) do factor malpractice costs into reimbursement calculations, the system isn't keeping pace with the financial realities faced by surgeons.
The authors also discuss tort reform measures, such as caps on non-economic damages, and how their presence or absence in different states might influence malpractice premiums. However, they conclude that:
"Because of the great variability with incorporating liability reforms and the complexity of litigation, it is difficult to determine the true contribution of each reform on medical malpractice cost. Ultimately, the variation in medical malpractice cost is multifactororial, and more investigation needs to be conducted."
Interestingly, while the number of malpractice claims has decreased (possibly due to factors like the COVID-19 pandemic leading to fewer surgical procedures), this hasn't always translated into lower insurance costs. The study cites that only about $0.40 of every dollar paid in malpractice insurance premiums actually goes to the injured party; the remaining 60% covers administrative and legal expenses.
A Call for Balance
This study by Sioda et al. powerfully illustrates the financial tightrope surgeons walk in the US. The consistent decline in inflation-adjusted Medicare reimbursement, combined with the unpredictable and often high costs of malpractice insurance, creates a system that can threaten the sustainability of surgical practices. The authors rightly call for a more uniform system that balances litigation, quality patient care, and the sustainability of a surgeon's value. Their work serves as a vital "stepping-stone" toward addressing these disparities.
While the study provides a critical and much-needed analysis, it also acknowledges its limitations. As a cross-sectional descriptive study, it cannot establish causal relationships. A deeper dive into the specific state-level policies and legislation driving these changes would be incredibly valuable. Additionally, focusing solely on laparoscopic cholecystectomy, while a good benchmark, may not fully generalize to the entire spectrum of surgical practice. Future research would benefit from incorporating factors like average surgeon salary, the number of liability claims, and cost of living to provide an even more holistic picture of surgeons' financial well-being. The lack of self-insured institutional data is also a point for future consideration.
Nevertheless, this paper is a crucial contribution to understanding the economic realities facing surgeons. It highlights that the financial health of surgical practices is not just an administrative concern but a significant factor influencing access to care, particularly for uninsured patients who might rely on elective procedures to avoid emergent, higher-risk operations.
Relevant Article Paper:
Haglin, J. M., Eltorai, A. E., Richter, K. R., et al. (2020). Medicare reimbursement for general surgery procedures: 2000 to 2018. Annals of Surgery, 271(1), 17-22.
This article, cited within the paper itself, supports the broader trend of declining general surgery Medicare reimbursement, underscoring the long-term nature of this financial pressure on surgeons.
Sioda, N. A., Etzioni, D., Shawwaf, K., Fong, Z. V., Brady, J. T., Haydon, K. L., Han, G., Thompson, E., & Jorge, I. (2025). Comparison of Laparoscopic Cholecystectomy Reimbursement Rate and Medical Malpractice Insurance Premium Cost Across the US from 2013 to 2023. Journal of the American College of Surgeons, 241(1), 77-86.