Dr Lal PathLabs, Malpractice Costs, Med Tech Strike in New Zealand


PATHOLOGY AND CLINICAL LABORATORY COMPANIES IN INDIA continue to attract investor interest. Last month, TA Associates, a private equity firm in Boston, Massachusetts, announced that it had purchased a minority interest in Dr Lal PathLabs of New Delhi, India.

TA Associates bought one-half of the shares held by Sequoia Capital. News reports say that Sequoia had invested $6 million in Dr Lal PathLabs in 2005 and then put in another $4 million in 2007.

One news outlet reported that TA’s stake in Dr Lal PathLabs was 16%. It also said that TA Associates paid $35 million for those shares. Assuming these numbers are accurate, it would indicate that Sequoia Capital’s five-year investment in Dr Lal PathLabs has generated substantial profits.


YOU MAY HAVE ALWAYS WONDERED how much medical malpractice costs the American healthcare system each year. Now the Harvard School of Public Health has released a report that says malpractice cost totals $55.6 billion annually.

The research team stated that most of this expense comes from “defensive” medical practices, which include such items as extra diagnostic tests and scans. It estimated that these costs were as much as $45.6 billion of the total.

The findings were published in the journal Health Affairs. Also included in the total of $55.6 billion were administrative costs, payments to plaintiffs, and fees paid to lawyers. The study excluded malpractice premiums because this represents the insurer’s actuarial estimates of malpractice indemnity costs and defense costs. Including premium costs would be double-counting.

The team, lead by Michelle Mello, Professor of Law and Public Health at Harvard’s Department of Health Policy and Management, estimated that malpractice indemnity payments were $5.72 billion annually, in 2008 dollars. This was made up of $5 billion in actual damages and only about $2 billion in punitive damages.

“Physician and insurer groups like to collapse all conversations about cost growth in healthcare to malpractice reform, while their opponents trivialize the role of defensive medicine,” stated Amitabh Chandra, who is a Professor of Public Policy at Harvard’s Kennedy School of Government and worked on the research team. “Our study demonstrates that both these simplifications are wrong—the amount of defensive medi- cine is not trivial, but it’s unlikely to be a source of significant savings.”


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