A recent exposé by NY Times reporter Reed Abelson documents payments from Medtronic Sofamor Danek to physicians that can only be described as obscene. One physician, a spine surgeon, was receiving $400,000 a year for 8 days of “consulting.” Others are identified as receiving annual sums ranging from $75,000 to $700,000. The company, in response to a lawsuit brought by a former employee, admits paying physicians at least $50 million over 4 years through June or later 2005.
Let’s assume that Dr. $400,000 did all of his work at a single hospital. Do you believe that hospital made $400,000 on all of his cases? How many hospitals make any money on spine surgery? This is one of the worst procedures from a hospital reimbursement perspective, with some, but not all, hospitals accepting it as a loss leader/community service. Would $50 million dollars in the hands of America’s hospitals made that big of difference over the past four years? Maybe not, but it would have helped those willing to allow this procedure. Few hospitals schedule high end spinal procedures due to poor reimbursement relative to the cost of the procedure. How many patients have had to wait or travel long distances to get a needed medical procedure whose cost we now learn is artificially inflated due to the practice of legal bribery? We only know that Medtronic spent $50 million. How much is the total from all companies? Would that have made a difference? I suspect it would.
What happened to the AdvaMed Code of Ethics - the 16 page industry document that stresses the term bona fide when addressing the matter of consultants? And those bona fide consultants must be compensated consistent with a fair market value of their services? Is $50,000 a day fair market value? On the subject of gifts the code calls for “modest gifts” only if they “serve a genuine education function.” Well since the article also reports that Medtronic’s people were taking surgeons to strip clubs I guess they tied these visits to anatomy lessons. Some time ago a Medtronic sales rep proudly handed me a copy of the code and announced that Medtronic was the driving force behind its adoption. He took me to the AdvaMed website where I could see that Medtronic was a full supporting member of this group, and how every member had to adopt the code. I still remember that first reading of the code - how refreshing! At last, I thought, the industry is cleaning itself up. I was mistaken. The industry was simply throwing another smokescreen at those of us charged with making it work the way it’s supposed to in an ideal world. I now know that was a set up, that the AdvaMed Code of Ethics is a shill, raised to quiet people like me and to get us to stop asking questions. I was duped. I will never give it credence again. This is part of the price Medtronic’s practices exposed extracts from the entire industry. I have no choice but to be skeptical of everyone. Burn me once, shame on you. Burn me twice…..
Unfortunately, I would bet the ranch that Medtronic is not out of step with its competitors. They should not be singled out for scorn or punishment. The NY Times was able to get the goods on this firm only because of a lawsuit resulting in legal discovery procedures that were made public. The books of their competitors are closed. But, do you believe that Medtronic was paying $50 million while their competitors were paying nothing?
A group of physicians recently published an article in JAMA entitled “Health Industry Practices That Create Conflicts of Interests.” In it they advocate that academic centers take the lead in eliminating many of the conditions (bribery) that create these conflicts. The authors represent a who’s who of prestigious academic centers. This should bring hope to the industry. It’s too bad they are naïve and should be totally ignored. Their solution is simply more self regulation. Better yet, regulation by the same profession that is being bribed to the tune of millions. How credible is that? Is this more smokescreen from the other side of the transaction? There are legitimate, bona fide, needs for physicians to serve as industry consultants. The rapid growth of technology in medical science is a result of this dynamic. But, who is to set the definition separating legitimate, bona fide, consulting from outright bribery? Who can establish fair market value? I am reminded of a definition of insanity - doing the same things over and over again while expecting different results. More self regulation of the potential bribers by the potentially bribed - how long are we going to take it?
Attempting to delineate the necessary from the obscene will only lead to more confusion and further abuse. The only answer that makes any sense is simple full public disclosure of the dollar amounts and to whom they are paid. Hospital administrators need to lobby the heck out of Congress and the Senate to make disclosure of these payments public information, including notification to all patients. Make failure-to-disclose a criminal act punishable by high fines and jail time if necessary for company officers and physicians alike. Let’s face it - the dynamic of selecting products to use in surgery will completely change when everyone knows that a physician is a highly paid representative of the firm for whose products they are advocating. Likewise patients have a right to know that “their” doctor is a paid representative of the company that makes the implant that they are recommending for use in their case. Demands couched in “best quality” and “best interest of the patient” will sound a little shallow coming from someone with this large of a financial stake.
In the meanwhile hospitals should:
1. Since the firms sell to the hospitals and not the physicians it is fair for all hospitals to require, via contract, that all payments to consultants or others doing business on the hospital premises be disclosed by any company selling to the hospital. This should be a part of every hospital’s supplier certification program.
2. Implement a requirement that all members of their medical staff disclose all payments made from third parties, other than insurers, for any services performed on their premises. This should be part of credentialing.
3. Here’s a novel idea: require that all payments made to consultants be matched as price reductions for product purchases. The physician gets $400K – the hospital, and ultimately the payors, gets a $400K break.
4. Not do business with any company refusing to agree to this. After all, if the company is adhering to THE CODE, then this should not be an issue.
The AdvaMed Code of Ethics: What a joke!
Download this article
Let’s assume that Dr. $400,000 did all of his work at a single hospital. Do you believe that hospital made $400,000 on all of his cases? How many hospitals make any money on spine surgery? This is one of the worst procedures from a hospital reimbursement perspective, with some, but not all, hospitals accepting it as a loss leader/community service. Would $50 million dollars in the hands of America’s hospitals made that big of difference over the past four years? Maybe not, but it would have helped those willing to allow this procedure. Few hospitals schedule high end spinal procedures due to poor reimbursement relative to the cost of the procedure. How many patients have had to wait or travel long distances to get a needed medical procedure whose cost we now learn is artificially inflated due to the practice of legal bribery? We only know that Medtronic spent $50 million. How much is the total from all companies? Would that have made a difference? I suspect it would.
What happened to the AdvaMed Code of Ethics - the 16 page industry document that stresses the term bona fide when addressing the matter of consultants? And those bona fide consultants must be compensated consistent with a fair market value of their services? Is $50,000 a day fair market value? On the subject of gifts the code calls for “modest gifts” only if they “serve a genuine education function.” Well since the article also reports that Medtronic’s people were taking surgeons to strip clubs I guess they tied these visits to anatomy lessons. Some time ago a Medtronic sales rep proudly handed me a copy of the code and announced that Medtronic was the driving force behind its adoption. He took me to the AdvaMed website where I could see that Medtronic was a full supporting member of this group, and how every member had to adopt the code. I still remember that first reading of the code - how refreshing! At last, I thought, the industry is cleaning itself up. I was mistaken. The industry was simply throwing another smokescreen at those of us charged with making it work the way it’s supposed to in an ideal world. I now know that was a set up, that the AdvaMed Code of Ethics is a shill, raised to quiet people like me and to get us to stop asking questions. I was duped. I will never give it credence again. This is part of the price Medtronic’s practices exposed extracts from the entire industry. I have no choice but to be skeptical of everyone. Burn me once, shame on you. Burn me twice…..
Unfortunately, I would bet the ranch that Medtronic is not out of step with its competitors. They should not be singled out for scorn or punishment. The NY Times was able to get the goods on this firm only because of a lawsuit resulting in legal discovery procedures that were made public. The books of their competitors are closed. But, do you believe that Medtronic was paying $50 million while their competitors were paying nothing?
A group of physicians recently published an article in JAMA entitled “Health Industry Practices That Create Conflicts of Interests.” In it they advocate that academic centers take the lead in eliminating many of the conditions (bribery) that create these conflicts. The authors represent a who’s who of prestigious academic centers. This should bring hope to the industry. It’s too bad they are naïve and should be totally ignored. Their solution is simply more self regulation. Better yet, regulation by the same profession that is being bribed to the tune of millions. How credible is that? Is this more smokescreen from the other side of the transaction? There are legitimate, bona fide, needs for physicians to serve as industry consultants. The rapid growth of technology in medical science is a result of this dynamic. But, who is to set the definition separating legitimate, bona fide, consulting from outright bribery? Who can establish fair market value? I am reminded of a definition of insanity - doing the same things over and over again while expecting different results. More self regulation of the potential bribers by the potentially bribed - how long are we going to take it?
Attempting to delineate the necessary from the obscene will only lead to more confusion and further abuse. The only answer that makes any sense is simple full public disclosure of the dollar amounts and to whom they are paid. Hospital administrators need to lobby the heck out of Congress and the Senate to make disclosure of these payments public information, including notification to all patients. Make failure-to-disclose a criminal act punishable by high fines and jail time if necessary for company officers and physicians alike. Let’s face it - the dynamic of selecting products to use in surgery will completely change when everyone knows that a physician is a highly paid representative of the firm for whose products they are advocating. Likewise patients have a right to know that “their” doctor is a paid representative of the company that makes the implant that they are recommending for use in their case. Demands couched in “best quality” and “best interest of the patient” will sound a little shallow coming from someone with this large of a financial stake.
In the meanwhile hospitals should:
1. Since the firms sell to the hospitals and not the physicians it is fair for all hospitals to require, via contract, that all payments to consultants or others doing business on the hospital premises be disclosed by any company selling to the hospital. This should be a part of every hospital’s supplier certification program.
2. Implement a requirement that all members of their medical staff disclose all payments made from third parties, other than insurers, for any services performed on their premises. This should be part of credentialing.
3. Here’s a novel idea: require that all payments made to consultants be matched as price reductions for product purchases. The physician gets $400K – the hospital, and ultimately the payors, gets a $400K break.
4. Not do business with any company refusing to agree to this. After all, if the company is adhering to THE CODE, then this should not be an issue.
The AdvaMed Code of Ethics: What a joke!
Download this article
9 comments:
Hey Dad - wow, interesting article!
Steve, if AdvaMed is a joke, The joke is on the Medical Supply Industry. They have created the standard to which they will ultimately be held. Good article.
Great commentary.
It is sad however to realize that this only the latest hand that is being slapped for reaching too far into the cookie jar. This practice of disproportionate compensation for promotion and/or "development" has been going on in the medical devise industry since Lister was a baby! Revelations about such practices have hit several segments of the industry over the decades - orthopedics, plastic surgery, interoccular lens, general surgery, cardiology, etc. etc. et. al. And lets not even talk about the influence peddling of the pharmaceutical firms
Sobering and unsettling
Ugh! It is worse than I thought. Thanks for the good suggestions.
I especially like the fact that you're not piling on one company, but bringing forth an indusrty-wide problem.
Interesting viewpoint and one that has been shared by many over the years. You might also want to include Novation and maybe Premier in your review. Novation has a history of forcing health systems into supporting higher priced contracts as the rebates back to Novation are greater. Consider too years ago the Novation reps were awarded compensation points for getting hospitals to sign particular contracts or bundled agreement which brought higher rebates to Novation. As stated above, just one more hand in the cookie jar
Good article. Regrettable this conduct continues and is subsidized by the industry. Good observation about VHA as well. They too were featured in a NY Times expose and have been targeted by Congressional investigators for kickbacks. Now that I think about it, VHA was an aggressive proponent of my system signing an agreement with Sofamor Danek...wonder why?
Great article, Steve. My sentiments exactly. It's makes competing on the true values of delivery, patient compassion, quality and education difficult for a small company when you go up against hundreds of thousands being handed over from the big guys. We recently lost a referring doctor to a company that supplies an inferior product but gave the doc $50K for his pet project. That's more than we ever made off that doc! If we continually put the patient first and NOT the doctor, NOT the hospital - we will all win because the odds of being the PATIENT someday are great. If those companies want to truly be of service to the patient, they should take that 400K and put it into their on R&D to come up with amazing products, procedures, education, etc. Unfortunately that is not always the case.
Steve,
I'm truly happy to be out of the medical supply industry and working with such mundane products as wooden pallets. Thanks for reinforcing my decision to jump ship!
Garry
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