Friday, June 19, 2009

Money, Money, Money

Recently an orthopedic website had published an article on funding for residents. The article reported that the medical device industry and the federal government were tightening their wallets and that alternative sources of funding must be found for residents. There were 149 participants from various institutions. The study demonstrated that without "book funding," a generous word, the programs surveyed would not be able to provide their residents with educational resources. If the findings in this survey demonstrate a lack of federal funding, why is it that industry and academic programs have to work together? Is it our responsibility to provide subsidies to residents and academic institutions? As most of you know, in the old days (when men were men, meaning we actually sold for a living and the market wasn't bought by companies) the sales rep usually assumed the financial burden of buying books, assisting an occasional resident with course tuition, or paying for nursing education using personal discretionary funds. There was a value system. Contingent upon how much business you were doing with a program would result in how generous the rep was with an educational grant. Let's be honest, based on the cost of a medical education it's an expensive venture to want to become a physician, let alone be married and have children all on an average of a $42,ooo salary. Today, it's the opposite way around, you have to have something to offer before anyone will do business with you. Yet, the bigger question remains how do we establish transparency and implement ethical standards at a time when our industry is under fire?

The national press has had a field day with spine, and I suspect there will be more to follow. First there was the indictment and conviction of Patrick Chan, the former Arkansas Neurosurgeon who was taking "kickbacks" for using certain companies products. Then we had Jeff Yielding LPN, another Arkansan (there's something in the water down there) who was convicted of federal charges for "kickbacks." He will serve 80% of his federal conviction in prison. Then there were Dr. Zdeblick's and Dr. Wang's indiscretions. Zdeblick and Wang ERRONEOUSLY provided information regarding consulting compensation while employees at Wisconsin and UCLA. Now, the spine community has to deal with Dr. Kuklo's faux pas which is troubling in itself since he is respected for his service to our country and the industry. Today we await the governments involvement in the qui tam whistleblower lawsuit against the infamous "Three Amigos" aka the Lyons Brothers. As the Spine Blogger has stated in the past, surgeons should be paid for their intellectual and clinical expertise. The study of human nature provides us with plenty of insight into how money or endowments (I'll use a kindler and gentler word for the younger reader) play an integral role in skewing an individual's perception of what is right, what is wrong, and am I willing to evaluate a product or company objectively.

So how have we arrived at this flashpoint in our industry? Surgeons complain that they are not making enough of money, and do not have the ability to coalesce to challenge insurance and government reimbursements since that would constitute a violation of antitrust laws. Companies have incredible margins based on the cost of goods sold and utilize their profits to buy market share in a zero-sum market. Independent distributors have become broker/agents for surgeons, rather than sales representatives, a by product of no loyalty represented by the companies, and the companies condoning this type of behavior. Organic development is a thing of the past, it's all about immediate gratification. Acquisition and mergers! This is what happens when you spend your day answering to Wall Street rather than living by those ridiculous mission statements that hang in your corporate facilities.

So where do we go from here? Unfortunately, until the Department of Justice steps in and makes an example of those that abuse their privilege our industry we will continue to "shoot 'em up" and "duke it out." The only casualty will be the patient who doesn't know whether they really need surgery or are they being used to line someone else's pocket. The Spine Blogger wants to know what you working stiffs think?

1 comment:

  1. I think it needs to get even worse before it gets better.

    Tort reform must come, even before insurance reform. For doctors, hospitals AND device makers.

    Hospital administrators making more money than doctors? Something seriously wrong there.

    CEO's making 50x what their lowest paid employees are making (wasn't the standard 10x in the 50's??) Who is making the decisions here, the CEO or Wall St?

    Yes, margins are high. But so are costs of developing new products. Get hospitals to buy the instruments, even at cost, and we can cut back on implant prices a bit.

    As far as buying surgeon business, until the 3 Amigos go down, it will remain the wild, wild west.