By Maggie Fox, Health and Science Editor Mon Dec 3, 2:07 PM ET

WASHINGTON (Reuters) - Nearly half of all U.S. doctors fail to report incompetent or unethical colleagues, even though they agree that such mistakes should be reported, researchers said on Monday.

They found that 46 percent of physicians surveyed admitted they knew of a serious medical error that had been made but did not tell authorities about it.

"There is a measurable disconnect between what physicians say they think is the right thing to do and what they actually do," said Eric Campbell of Massachusetts General Hospital and Harvard Medical School in Boston, who led the survey.

Doctors are also surprisingly willing to order unnecessary -- and often expensive -- tests such as magnetic resonance imaging or MRI scans. Just 25 percent said they were looking out to ensure they did not unintentionally treat someone differently because of their sex or race, the survey found.

In 2000, the U.S. Institute of Medicine reported that up to 98,000 people die every year because of medical errors in hospitals alone.

Campbell and colleagues surveyed more than 1,600 physicians in 2003 and 2004 for their report, published in the Annals of Internal Medicine.

Up to 96 percent of those surveyed said they should report all instances of significant incompetence or medical errors to the hospital clinic or to authorities. The exception was among cardiologists and surgeons, with just about 45 percent agreeing.

And 85 percent of most doctors said they should tell patients or relatives about significant errors.

But this did not translate into practice.

Forty percent of the doctors said they knew of a serious medical error in their hospital group or practice but 31 percent admitted they had done nothing about it at least once.

Doctors also did not always practice what they preached ethically. While 93 percent of doctors said they should provide care regardless of a patient's ability to pay, only 69 percent actually accepted uninsured patients who cannot pay.

LETTING COMPETENCE SLIDE

While most of the doctors agreed they needed to keep up with changes in the profession and have their competence reviewed, only 31 percent had undergone a competency review in the past three years.

Dr. James Thompson, chief executive officer of the Federation of State Medical Boards, said one problem may be that doctors know there is not much that can be done to help doctors who are struggling to be competent.

"There are very few places where they can send them for remediation," Thompson told a news conference.

And medical boards may not have the resources to punish errant doctors.

"There are restrictions on state medical boards that inhibit their ability to go after physicians aggressively," Thompson said.

"There are state medical boards that don't even have their own teams of investigators," he added. "There are state medical boards that are, quite frankly, underfunded and understaffed."

But he said medical boards cannot act unless someone reports a problem doctor.

"State medical boards only react to complaints -- they are not a policing agency," Thompson said.