Malpractice Reform and the Sorting of New Physicians by Medical Human Capital

We test whether state malpractice reforms differentially attract physicians whose human capital attributes may predispose them towards higher-than-average malpractice risk and lower quality patient care. Using an exit survey of physicians completing residencies between 1998 and 2017, we estimate willingness-to-pay to locate their first practice in a malpractice-reformed state. We find physicians are willing to forego on average about $11 in hourly wages to locate in a reform state. Training in a high vs. low-risk specialty, graduating from a less vs. more selective medical school, and training at a low vs. higher-ranked teaching hospital increases willingness-to-pay to locate in a reform state by $18 to $24 per hour. We argue that the generally strong human capital-bias in physician sorting responses to litigation reform may play a role in the geographic variation in patient care documented in the health literature.