Thursday, October 1, 2009

Whistle While You Work!

As the Federal Government works to resolve fraudulent practices in the spine industry, the Spine Blogger is wondering, where the mighty DOJ will strike again? On Thursday, October 1st, 2009 it was reported in various news outlets that six hospitals in Alabama and Indiana settled for $8 million dollars for overcharging Medicare every time they performed a Kyphoplasty procedure. No wonder Medtronic has been on the Grassley-Radar, not only has the "Evil Empire" been accused of buying surgeons (what a surprise in our industry) but they also were penalized for counseling hospitals to perform kyphoplasty procedures on an in-patient basis back in June.

Here's the $75 million dollar question; Have any of these GREEDY organizations learned to treat their employees respectfully, or, is it better to "screw" the little guy and have him or her come back and "screw you?" You know my granddaddy taught me an important lesson in life, "it takes less energy to be nice, than it does to be nasty." But here's the bigger question, "When is the DOJ and the FBI going to stop behaving like the PAPER LION, and start acting like the KING OF THE JUNGLE? Here is how we evolved to this point.

First companies started buying business by providing educational and research grants to teaching institutions in the late 80's. Some people see this as free market enterprise, unfortunately, many people in the industry view this as an inducement. Today, some companies subsidize fellowship programs, along with funding start-up practices for residents and fellows going into private practice. So, what are the odds that you can beat the house when you are selling?

Next, the industry decided to stretch the rules and opted to create consulting agreements. But let's face facts, unless a surgeon owns the IP, most products are developed in house, and are then taken to a surgeon-consultant for validation. In the beginning these consulting agreements were $2,500 per day plus expenses, today, they average $4,000 per day plus expenses. The outcome was companies like Blackstone Medical buying as much business as they could based on surgeon volume. Is this really an industry secret anymore? As the DOJ and FBI started to scrutinize this behavior, companies attempted to distance themselves only to come up with the next phase of buying physician business, the distributor. Legal eagles started educating the industry as how to beat the system.

As the industry evolved, more and more companies surfaced with surgeon investors some justifiably, some just looking for a windfall. Maybe its time that some of these smaller companies have their books audited by the DOJ. Without investing surgeon business, these companies would not stand a chance of surviving because the surgeons as well as the inventors keep holding on to the dream, that one day they will all hit the lottery.

So the next time you walk by Craig Patrick and Charles Bates, acknowledge them for their courage to stand up to a company that has exhibited that it is not possible to rehabilitate your habitual behavior, the inability to play by the rules. As I have stated before, until the DOJ and the FBI prosecute surgeons and distributors for their complicit behavior, the party goes on! The Spine Blogger wants to know what its readers think?


  1. While I am sure they are not squeaky clean, could this be why companies like Depuy Spine are losing marketshare. Their Credo dictates that they play by the rules while those run by greed will do what it takes to capture a surgeon's business. When the Fed's start looking up the docs and those offering the bribes (and let's not beat around the bush, they are bribes to use product), maybe, MAYBE, we will see business based on product and service performance.

  2. I agree with Ortho Engineer, in my experience it seems that smaller companies tend to bend the rules more than the larger companies. This is by no means the rule but it exists to a degree. Smaller companies are more willing to take more risk and, real or not, the risk doesn't seem to be as near. From the standpoint of gaining vs. buying surgeon loyalty, this is not exactly a level playing field. Perhaps the DOJ doesn't have the resources to go after everyone so they chose to go after the industry leaders. There are plenty of ankle-biters out there that are hungry, so the Depuys and the Medtronics will only continue to see more and more smaller 'me too' competitors and inevitably hand over market share.

  3. I really appreciate your commentary. It is so refreshing! Its as if you are saying what so many of us wish we could say... Kudos!

    Good thing you have your anonymity!

  4. Come on!! How small is Danek??? The biggest and most brazen bender of the rules and briber in the field. Always attempting to meet the letter of the laws while raping their intent. Danek taught everyone else how to do this, either indirectly or through the export of their managers (Nuvasive, rings a bell?)

  5. As a 20 year vet of the spinal implant industry I've seen and heard of many bizare situations. I remember attempting to sell products to a surgeon and in closing I asked for the business. He then looked me straight in the eye and asked "what's the going rate"? We have created this situation due to greed. Greed within the surgeons ranks and greed with the reps and companies.
    Until the DOJ or FBI starts prosecuting surgeons, reps and company owners and execs bribes will continue.
    AdvaMed is truly a paper tiger.

  6. While there are a lot of abusers in the field, pleas for more government involvement aren't beds of roses and bowls of cherries. The DOJ is already discussing price controls on IP and setting hourly and daily rates. I don't want anyone but the free market telling me what my legitimate good idea is worth. Greed is bad but if incentive is completely removed there will be no innovation. I love the comment about $4000/day as if that were outrageous. Sit down and really look at your numbers for your practice. If you subtract weekends and 6 major holidays and take 3 weeks vacation, that leaves 240 workdays per year. I realize we put in added hours on call etc. but the bulk of revenue happens during the elective hours of our practice. Most spine surgeons generate over $1 mil in gross revenue per year. It does cost you $4-5000 to close your office for a day. I think the system has flaws as do most systems. I don't accept lunches or cookies or whatever the hell else the rep brings by much less padded consulting agreements. I do however, beleive I should be paid for my time and my patentable ideas. No other profession beleives in less.

  7. Mister Bates, the former hotdog salesman...what a slime. If anyone was advising how to "code" it was he and not a directive from upper management.

    A good question would be to ask is "why did he leave/forced to leave the company" and then in retaliation filed the suite...just sayin'