A study published in September 2010 says that medical malpractice cases and the associated risk management involved cost the US healthcare system more than $55 billion per year. That’s nearly three percent of the total spent on healthcare annually.

Amitabh Chandra, professor of public policy at Harvard’s Kennedy Medical School, co-authored the study. Though a majority of healthcare professionals think that medical liability costs are one of the principal reasons that overall healthcare costs continues to increase, Chandra and the study’s other co-authors believe that, until now, there has been little evidence to support or disprove that argument.

“Physician and insurer groups like to collapse all conversations about cost growth in health care to malpractice reform, while their opponents trivialize the role of defensive medicine,” Chandra said in a Harvard press release.

The study demonstrates that both arguments are incorrect—the amount of defensive medicine is not in fact trivial, and it’s unlikely to save the healthcare industry a significant amount of money. He said that medical liability reform only shows “modest potential for bending the healthcare cost curve down,” while other reforms, like changing the FFS reimbursement system, are more promising.

The study found that the United States spends more than $4 billion each year on administrative costs related to malpractice litigation, including legal expenses, overhead insurance expenses and other related costs. Chandra said that this should be considered in current debates about medical malpractice cases.

“We’re spending too much and getting too little in return,” he said.

Malpractice costs can be reduced simply by emphasizing dispute resolution outside the trial setting, the study authors said, and some of their ideas for out-of-court resolutions are being tested in the recently funded federal demonstration projects within state-based liability reforms.

“For example, through ‘disclosure-and-offer’ programs that expedite investigation and settlement of incidents and more aggressive pursuit of pretrial settlement negotiations by judges,” Chandra said.

Other study authors include Michelle Mello, professor of law and public health at the Harvard School of Public Health, Atul Gawande, associate professor of surgery at Harvard Medical School and Brigham and Women’s Hospital and an associate professor of Health Policy and Management at the Harvard school of Public Health; and David Studdert, professor at the University of Melbourne School of Law and School of Population Health, in Carlton, Victoria, Australia.