State Medical Boards (SMBs) regulate the medical profession. They issue licenses, standardize the medical field, and discipline physicians who abuse their power or perform poorly. Since SMBs work on behalf of state governments, they are subject to the Principal-Agent Model, a relationship where an agent represents the interests of a principal. In this instance, SMBs are the agent working for the state government; thus, there is the possibility that SMBs will act differently based on the changing preferences of state governments. Nonetheless, there seems to be an increased capacity of SMBs in healthcare, which may be related to the higher number of disciplinary actions. While there is research that discusses the factors that lead to disciplinary actions by SMBs, there is less research on the effects of disciplinary action. This thesis investigates if there is a correlation between SMB disciplinary action and a higher quality of healthcare.

         The author analyzes data from organizations such as the National Practioner’s Databank to study the relationship between disciplinary action and healthcare quality. The independent variables are Total Primary SMB Disciplinary Action and Total Associate SMB Disciplinary Action. Disciplinary action includes revoking or restricting license privileges as well as prejudicial actions that reprimand or penalize the physician. Furthermore, the author highlights the distinction between “primary” and “associate” SMB disciplinary action. Many states have separate medical boards for MDs and DOs, primary boards generally have jurisdiction over MDs, and associate boards are typically osteopathic boards and have jurisdiction over DOs. However, New York is the exception: rather than creating a dichotomy between MDs and DOs, New York uses its primary board for discipline and the associate board for licensure. Therefore, the groups “primary” and “associate” distinguish between the two types of SMBs. The dependent variables (Medical Malpractice Reports and Medical Malpractice Payments) measure healthcare quality. Since the malpractice reports and payments look at healthcare quality two years after disciplinary action, the independent variables are lagged two years.

         The author discusses the concept of prospect theory to develop a hypothesis. Prospect theory posits that people will avoid behaving in a manner that leads to negative consequences and punishment, especially if there is an increased chance of these consequences. Since 1986, SMB disciplinary action and malpractice suits are growing in severity. The author hypothesizes that as primary and associate SMB disciplinary actions increase, the number of malpractice incidents will decrease—and healthcare quality will increase—because physicians will improve their practices to avoid disciplinary action.

         The author considers confounding variables that would impact the relationship between the independent and dependent variables, such as the number of physicians, state population, real GDP of the state, and Democratic Unitary Government. The author expects that more physicians would increase disciplinary action because more physicians could be neglectful. Furthermore, the author expects a higher state population would lead to higher levels of medical malpractice because physicians would be in demand more, and the stress of this may lead to physicians underperforming. The author also believes that the higher real GDP the state has, the more medical malpractice suits there will be because the state can pay for more suits. Finally, the Democratic Unitary Government variable looks at how the state legislature’s political, demographic influences the SMB and its disciplinary action. The author expects that liberal unitary government will increase SMB regulation, and healthcare quality will increase.

         The author highlights that medical malpractice laws and claims differ in every state. Patients can sue for economic damages (such as medical bills) and non-economic damages (such as emotional distress and suffering). To defend themselves against malpractice lawsuits, physicians can have malpractice liability insurance that hires lawyers to represent them in a malpractice suit. However, the author highlights that this is potentially the source of another principal-agent problem: insurers favor settling lawsuits to decrease the damages they will cover, while physicians favor proceeding with a lawsuit to protect their reputation. Ultimately, the author does not include malpractice laws in their analysis; however, they stress the importance of these laws.

         State real GDP was statistically significant in both 2006 and 2010. There was a positive association between GDP and malpractice complaints; as state GDP increased, the number of malpractice complaints increased. Total Associate SMB Disciplinary Action was statistically significant only in 2010, as there were more malpractice reports after an increased amount of disciplinary action.  Primary SMB disciplinary action was not statistically significant. In 2006 and 2010, the number of physicians and the state population were statistically significant. Interestingly, while more physicians in the state increased malpractice payments, a higher state population decreased malpractice payments.

         The author highlights the disparity between the number of malpractice incidents and the number of victims who report or litigate the incident. The author suggests that malpractice cases may increase because physicians are making more mistakes or because victims are more willing to report malpractice (which could explain why SMB disciplinary action was not consistently statistically significant). The author suggests two reasons for victims being more willing to report: increased awareness of disciplinary action and more support for malpractice suits. If victims are aware of SMBs punishing malpractice, they may believe that their claims will be taken seriously. When victims are unaware of SMBs disciplining physicians, they may not understand the process of reporting or may feel their case will be ignored. Furthermore, victims may use prior SMB disciplinary actions in their case to demonstrate a pattern of malpractice by their treating physician. Having this evidence may make victims more willing to engage in a malpractice suit. While these associations are intriguing, the author emphasizes this does not explain SMBs’ impact on healthcare quality.

         Ultimately the author does not find sufficient evidence for the claim that SMB disciplinary action improves healthcare quality, as primary and associate SMB disciplinary actions were only occasionally statistically significant. Prospect theory may provide a reason for this: if SMB disciplinary action produces mild and uncommon punishments, physicians do not have enough incentive to improve their performance. Furthermore, the findings of this analysis could suggest that state governments (who oversee the SMBs) are not using SMBs to improve healthcare quality and might be using these boards for improved public perception or alternative motivations. The author points to limitations of the analysis, such as a small observation set and other confounding variables, that could explain why there were no consistent associations between disciplinary action and healthcare quality. Future studies can delve into research topics such as victims’ willingness to report malpractice and distinctions between primary and associate medical boards. Nonetheless, this thesis provides interesting insight into associations between SMB disciplinary action and healthcare quality.

Nicholas Javier Ordieres is a graduate from the College of Social Science and Public Policy at Florida State University. This post was based on Nicholas’ honors thesis, written by COSSPP Blog Intern Jacqueline Rao. You can learn more about Nicholas here. You can learn more about this project here.

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