Why is this business model picking up momentum at a time when the government is scrutinizing healthcare, let alone the spine industry? The reader can only surmise that the old adage applies; when one door closes, another door opens up. Ten plus years ago as surgeon consulting agreement were picking up momentum, law firms started sending promotional flyers on legal seminars that addressed how to comply with Stark I and II in managing your agreements. These seminars do exist, run by the same profession that surgeons love to complain about, the legal profession. Today consulting agreements have become so rampant that it has become commonplace to broker a surgeon before they have even tried a new product. As sham consulting agreements have become prevalent, ever so more scrutinized by the DOJ's microscope, a different business model is starting to emerge. The surgeon owned distributorship.
Rumors have surfaced that this model has picked up momentum, especially on the West Coast. One of the most important aspects of starting a surgeon run distributorship is to receive legal clearance that what you intend on doing, and how you intend on doing it is within the law. The surgeon investor is looking for a legal opinion to assure that there is no inherent conflict of interest. In all likelihood, the surgeon's role in this business model is usually as a silent partner funding the distributorship, that is run by a non-surgeon. It helps if you have a three to six man group that has a high volume surgical practice because that would produce immediate volume. So the question must be posed, how desperate have some of these surgeons become?
Over the last ten to fifteen years, the medical device industry has used every legal advantage to stretch the rule of law and get an advantage on the competition. This behavior threatens the core of free-market enterprise. Starting around 1991, the evolution of the surgeon has gone through multiple phases, those include; surgeon educator (let's have them teach our sales reps and the residents about surgical technique at company sponsored meetings), surgeon marketeer (let's fund a controlled study to emphasize the efficacy of our product), surgeon consultant (let's hire the surgeon as consultant based on volume), surgeon designer (let's buy their IP), surgeon owner (let's invest in a start-up company and maybe we'll hit the lottery), surgeon owned specialty hospitals (let's profile our patient selection and we'll show the government on how to run healthcare), surgeon investment banker (let's go work for a private equity firm), and last but not least, surgeon owned distributorships. It's a wonder that some surgeons even know how to operate? Could it be that all that is left for spine surgeons is to become salespeople. But doesn't that already exist?
It is debatable as to whether Stark I and II are truly an unwarranted intrusion into the practice of medicine when we deal with the above stated scenarios on a daily basis in our business. Many surgeons including NASS respond to these concerns by stating that while these problems exist, they are not widespread. Of course every parent wants to believe that their children are behaving. If you have invested or own a hospital, company, or distributorship and are a surgeon could this not constitute a potential conflict of interest? Sometimes you have to wonder whether some people would just focus on what they were trained best to do and let others do their job. TSB wants to know what our readers have heard?