Tuesday, February 9, 2010

Seizing Control or Are We Spinning Out of Control?

On Monday, February 8th, OTW (www. ryortho. com) published an excellent article by Walter Eisner entitled; "Seizing Control." Dr. John Steinman, D.O. an orthopaedic surgeon was interviewed for this article and declared that he and his colleagues at Arrowhead Orthopaedic Group in Redlands, California decided to address the escalating cost of implants by cutting out the middleman (aka, the salesperson) in the value chain of medical devices. Citing escalating implant prices, decreasing reimbursements for physicians, and declining hospital profits, this band of physicians decided to take matters into their own hands, and "cut the fat" out of the equation by starting their own physician owned distributorship, aka POD.

Many of our readers know our position regarding POD's. POD's are a fundamental threat to our livelihood. But first let's look at Dr. Steinman's rationale for escalating implant prices, decreasing reimbursements for physicians, and declining hospital profits. To blame the escalating cost of healthcare on the salesperson is unadulterated non-sense. (For civilities sake, I'll let Steinman discern what I really mean). Anyone that has tenure within this industry will remember when doctors were doctors, and didn't want to be anything else but being a doctor. Dr. Steinman and his colleagues have probably spent tens of thousands of dollars for a legal opinion for the freedom to operate this business model on the Left Coast because of their beliefs that the decision makers over which device to use are not the purchasers, and, that there is an absence of effective price negotiation and price control. As an FYI Dr. Steinman, pricing pressures have effected every company in the device industry whether it is a reconstruction, trauma, or spine company, TSB must question if he is working in the same healthcare environment that most of us do? Frankly, Steinman thinks that distributors and product reps are overpaid.

Considering that many surgeons spend their time complaining about decreasing reimbursements, should salespeople be insulted by Dr. Steinman's comments? For Dr. Steinman's education, many of us work as hard as he does, and yes Dr. Steinman, our livelihood has been effected by what's going on in healthcare. Just like in your profession, there are people in our industry that are overpaid. Unfortunately, you and your colleagues are looking for solutions in all the wrong places. CEO's make tens of millions of dollars a year, so, why don't you pick a fight with those people? The answer is because it's easier to pick on the little guy. Let's face it, you don't have the "cohonies" to fight the big guys! Everything is relative. In today's environment companies are looking for new and innovative ways to decrease the salesperson's commissions as their margins are cut into by pricing pressures. Remember the old saying, "we have a responsibility to our shareholders."

But let's talk about decreasing reimbursement. What have you and your colleagues done about the ever rising cost of healthcare in this country and your declining reimbursements? Nothing! Have you challenged the anti-trust laws and how they affect your ability to have an equal footing in healthcare? No! Have you considered a medical strike to show the government and the insurance industry that you will not stand idle while they tear apart healthcare in this country? No! Have you marched on Washington and challenged the Congress regarding Medicare cuts? No! You talk a big game, but cower like children when it comes to standing up to the big boys. A real activist stands up for his beliefs, but TSB would not expect anything less from a generation that has a sense of entitlement. You would rather feed the beast, and hire pedigree lobbyist to fight your fight. Since when did surgeons start worrying about declining hospital profits? You honestly believe that the hospital is your ally? Did Mr. Eisner really mean that your practice is in Disneyland? Maybe, you should start by evaluating the people mismanaging your hospitals that take exorbitant salaries and stock options, and brow beat us to discount our products and still continue to run facilities into tremendous financial debt. Maybe, just maybe, you need to spend more time fighting tort reform, the insurance industry, and the federal government in your quest to address the escalating cost of implants, your inequity in reimbursements and your hospitals inability to be profitable. Using the salesperson as a means to an end is rather poor judgement on your part. Besides, you're just looking for another avenue to make more money.

The next time TSB hears some spine surgeon complaining about the anesthesiologist or the interventional radiologist doing a case that you believe they should not be doing, I'm just going to stand back and laugh at you. TSB wants to know what our readers think?


  1. MM, as usual, very well put. I personally am growing very tired of these "holier than thou" surgeons calling out escalating costs and trimming the fat by starting up their own surgeon-owned distributorship. They can call it what they want, but we all know that a good portion of those profits are going straight into their pockets.

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  3. Yes, distributors are grossly overpaid. Evidence: When a 24 year old girl with a degree in communications makes $500K a year to smile to a few surgeons, I consider that overpayment. Sorry.

  4. SpineDoc1, you might want to look at your peers if they are seemingly giving their business to some 24-year old girl for simply smiling. The work that goes into accessing an account, selling into that account, securing that account and then servicing that account can take a long period of time.....and then can be lost in a heartbeat (when the surgeon all of sudden has a niece or nephew working for company "X"). The number of good reps out there that fully assist in a case and facilitate a smoother running OR are invaluable. This "24-year old" you mention speaks to the surgeon choice and their personality and personal make-up moreso than the products.

    Possibly you should practice in the UK or Canada and take the personal paycut that goes with it......and a rep making 120k than the level you mention

  5. Very well said,

    Device makers are not the problem... how about this; in 2005 the total market for hip and knee implants was 4.4B, compare that with ONE DRUG Lipitor 6.3B. One drug outsells an entire orthopedic market segment.

    Baptist Hospital, FL 2008 profit 54.1m
    Northwestern Univ. Chicago, CEO bonus 16.4m

  6. spinedoc1 - no one has a gun to your head to do what you're doing. You obviously have huge distaste for the current system in that your "advanced degree" does not position you financially as far ahead of a "lowly" bachelor degree in communications. As the previous post mentioned, its your peers that are giving their business to this "smiling 24 year old". You can always leave your post and go get a sales job.

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  8. Anyone else heard of the free market?? SpineDoc1, if you don't want that woman with a Communications degree to make $500K, perhaps you shouldn't use her or her distributorship. Unless her smile is too intoxicating for you too.

  9. In the Midwest, we are getting roughly 35% to 50% of list prices on screws. We've addressed pricing on our ends, I'm sure the rest of the country is either in that pricing structure or not far behind. I've seeen surgeon owned companies and distribution come in and maintain those high prices, even able to bill at list price. When I'm selling a screw in Nebraska for $650, please tell me SpineDoc, why is CS, K2M, Globus, Alphatec able to come in at $1100-$1800 under the hospital price caps, especially when we all know the docs have ownership, hefty consulting agreements or some additional kickback? You're job is to treat the patient! Ours is to make sure you have what you need to do the procedure and do it correctly. Maybe back to hooks or wires would be more benificial for you.

  10. Does anyone that follows this blog have the intestinal fortitude to actually report any of these Iniquitous Surgeons and Nefarious Manufactures and degenerate distributors in?
    If so check out Office Of the Inspector General
    oig.hhs.gov or email HHSTips@oig.hhs.gov 1-800-HHS-TIPS

    Make a difference

  11. You ask why K2M, Globus, Alphatec are able to come in at $1100-$1800 under the hospital price caps?

    Who says these companies are profitable? Alphatec is the only public one, and they're not profitable. These companies are giving product away just to gain market share. They are floatng on debt and can't sustain it. Thats why the industry as a whole is looking to cut costs somewhere. The distribution channel is one such area.

    I fully believe in the free market, and yes the free market has supported big money being diverted to distributors. That's fine. But the free market will ultimatley move to the most efficient and cheapest way to get a service performed.

    If I want to buy screws from a company directly and take the financial risk of doing so, including buying and managing my own inventory for my own use, that's a far more efficient system, in my opinion. And it is perfectly legal.

  12. I for one feel that the system as a whole is a bit broken. I watch reps paying PAs and docs almost everyday like it is a norm. When a hospital asks for 25% off list the rep raises their price book by 25%...As for docs, they want to be paid 100K for chosing which color the screw driver handle should be... A rep is not a features and benefits man anymore he/she is a financial planner for physicians or at least that is how it feels in this great western state.

  13. I think it's interesting when doctors cite the "24 year old blond with a communications degree making 500K." Does this person actually exist, or is it a creation of the doc's imagination, shaped by some sort of frustration and resentment?
    If this person does in fact exist, my experience is that he/she is the extreme exception, and certainly not the rule.
    Additionally, I know of reps all around the country who make less than half that amount and work significantly longer days than many surgeons.
    So is this a "who works harder" argument? If so, it's ridiculous, and docs are simply picking on the easiest targets, knowing that no local rep is going to throw it back in the face of a potential customer.

  14. MM, you make some valid points about the responsibility of all surgeons to play a more active role in reducing healthcare costs and that the distributor is not solely responsibible. You are wrong, however, in your depiction of surgeons and I must point out that you, yourself, might display all the characteristics that you condemn. What have you done to reduce costs? When did you march on Washington or address tort reform? How have you made the system more efficient and cost effective? If you would identify yourself, I would like to invite you to come and see what we are doing in all the areas that you indicate we are ignoring.

    Healthcare is too expensive. Change is necessary.

    John Steinmann, DO

  15. Your assesment of physician-owned distributorships is clearly biased by your role. Not to mention that it's almost laughable that you think physicians would have the luxury to protest as you would. It only further demonstrates your lack of understanding. Physicians are actually in the trenches involved for the care and patient outcome.
    In the end, I've seen some compelling factual evidence that some ARE doing something about the rising cost of healthcare. As seen in a scientific exhibit at AAOS they saved a considerable amount for the contracted hospitals. In the end, it's easy to see that your blog is slanted toward your profession of choice but you simply can not argue facts!
    See link to AAOS below:

  16. Dr Steinmann,

    What percentage do you, the "distributor", make off the sale of implants? Cutting out the middle man, or just shifting to a different one?

  17. Let's get the emotions out of this and look simply at the economic facts. The support role (not the sales role) of the rep is to stay apprised of the products characteristics, help ensure availability and proper use in the OR, manage inventory, facilitate the invoicing / purchasing process, etc. For this, they receive payment by the companies. Dr. Steinmann, some hospitals, and others, are now saying to the companies that they are willing to do this function (or have it done) for less money.

    Let's not forget, that years ago these functions were ALL split between the doc, the scrub and circulating nurses, and the hospital. Reps simply had a sales role, perhaps went to a case or two, and then were only called upon when needed. The change to having the rep do all of these "modern" support functions only came about in the last 20 years when the companies began to realize that if they took over the support services and made life easier for the docs and hospitals, they could charge a huge premium for their product and it would still be used. The hospital didn't object as they passed the cost along to the insurers (at a markup no less). But now that that passing implant costs along is coming to an end, so is the rationale for the rep as support person role.

    The bottom line is that when we as a society began paying a $200k per year rep to do the job of an $80k per year circulating nurse, we were making a bad trade. So like it or not, paying less money to have the same services performed is simply good capitalism.

  18. Isnt it amazing that a fair amount of the surgeons who now are involved with PODs were first "shareholders" in Lanx or Allez? Where was the concern about costs then? The comments made by surgeons that they are saving the Hospitals money may have made sense three years ago, but we all know that the majority of Hospitals are now on some form of capitated pricing structure. How many of the PODs are offering their products at a price point significantly lower then the hospital negotiated pricing? If they are not then they have the option to use any product that meets the hospital price. If they elect to use the product that they distribute then one must consider that their motivation is not cost savings but rather making a profit on the side.

    As far as SpineDocs' comment about assuming the risk. What risk? You control your own market. You are you own market. What risk do you have other then ensuring that you continue to book surgeries so you protect your revenue stream

  19. The AAOS link doesn't provide enough details to draw any serious conclusions. This is not about any cost savings benefit to society. The question is, how much did the physician group net on approximately $1 million in sales over two years?

  20. Buying the implants does indeed constitute a business risk. You must buy enough stock to support a potentially unknown number and type of procedures. You also have to buy rarely used screw sizes that will most likely collect dust but may be needed. You need to pay for a designated person to deliver, ensure sterilization, and re-order the items. There is a significant investment.

    On the other hand, most reps/distributors get their products for free on consignment and take little if any financial risk. That makes the pay they receive that much more inappropriate.

    There should be no difference between this and distributing soft goods like TLSOs which has been done by surgeons for years.

    As far as preserving a revenue stream is concerned, that's always been decided by surgeon judgement - implants or not. In fact, if the surgeon is receiving fair compensation, there should be no need to do more than necessary.

  21. Regardless of what surgeon participants of PODs say so they can look themselves in the mirror, lets see this for what it is. An attempt for surgeons to have a secondary source of revenue

    To those surgeons who say they offer their products at a lower cost to the hospitals to justify their behavior let me ask you this. If your goal is to lower costs, and another vendor were to match the price that you sell your implants would you use that product or would you lower your price to protect your market share and again be able to look yourself in the mirror?

  22. To SpineDoc.

    I think you made my point. In your last paragraph you state that "As far as preserving a revenue stream is concerned, thats always been decided by surgeon judgement-implants or not".

    In the past a surgeon's judgement on whether to instrument or not has always been based presumably on the best interests of the patient.

    When you tie in a financial benefit for the surgeon to not just instrument but also on the implants used you cannot defend that this presents an appearance that the decision is now tainted.

    And for those surgeons who will say that there has always been a conflict of interest because they recommend a surgery that they themselves will be performing. Cmon!!!! Thats weak

  23. Dr. Steinman: I have always been an advocate for the surgeon. I don't need to justify my actions because I live by my principles. I have always been a fair and equitable businessman and have earned a great living because just like you, I worked extremely hard. Never have I gouged a facility on price and in my peak years I always was honest in my dealings. Never have I paid for a surgeon's business, and I would rather walk away from a deal than get sucked into another consulting scam. Some would call me a dinosaur, but that's okay because I rise and go to bed with a clear conscience. For your information I am an activist and advocate for tort and healthcare reform, but to blatantly attack sales people is irresponsible for someone as educated as you are. To the surgeon that questions my understanding, you have the same opportunity to be an activist as I do, to hide behind your medical shield is nothing more than an excuse on your part. If you have a bone to pick go after the people making millions of dollars per year that have bastardized this industry, this does include many of your own peers and the people that run the companies within this industry. Remember, the its a free market and if the market dictates that you take a cut in reimbursement, you too will live with it. Or as one of our commentators stated, "paying less money to have the same services performed is good capitalism." As a student of economics and history remember the most important lesson, "united we stand, divided we fall."

  24. Yes, we could indeed remove all financial incentives for surgeons, including any alternative revenue streams, and simply institute a flat salary. That way there can be no "conflict of interest." That's what you guys are advocating, right?

    Well then prepare to find another line of work, because the number of elective spine procedures will go to nothing. It will be like most of Europe, where only cases with documented neurological dysfunction will get operated. Back pain? DDD? Forget it.

    Speaking of free enterprise, there is probably plenty of opportunity in assisting surgeons in setting up self-distributorship and taking a small percentage while they run it themselves. Its not that there isn't opportunity - you just need to evolve to the new paradigm.

  25. Some great comments!

    I will refer to the lasted economic mess caused by the greed of Wall Street. The banks and mortgate brokers (thanks to the relaxed regulations) allowed everyone idiot to get a mortgage they could not afford. These loans generated fees (income) to the banks and mortgage brokers. The bigger the loan the higher the fees. The mortgage industry did not care about the long term results and repayment of the loans, they just wanted income generated by making the loan.Since the industry were not being properly regulated. They were not minding the store. They were looting it!

    I see the same problem with POD's. When surgeons and surgeon groups, can earn additional profits on the sale of implants, that they represent, long term something bad will happen. More surgeries, longer constructs, etc. Of course the manufacturers will of course do anything the can to make a buck and will support this new distribution model. It would be refreshing if there were honor, integrity, morals and ethics in the medical device industry. But, that is the exception vs. the rule.

    I can not believe that legally these POD's will be around long.

  26. When I hear "best interest of the patient" relayed by certain surgeons I deal with I want to toss my cookies. In the same conversation they are also asking me how they can additionally code or bill for certain aspects of a simple procedure and make the most money possible. If only the patients knew.

  27. I would love to see a POD move into my area. Imagine who the doc would have to yell at when the screw didn't drive correctly or the caps didn't lock right, his partner? We would have these egomaniacs over the barrel in a month.

  28. These surgeons have a definite conflict of interest. Do they disclose to patients that they make commissions for the products they implant? What is the hospital's price reduction? There is none because the surgeons take the cash that was previously provided by a capitalist system. Under this model, there is no free enterprise as they alway get the deal with their hospitals.

    It is morally bankrupt for surgeons to profit as distributors of the products they implant.

    Don't they teach the Hippocratic code in medical school anymore? Try practicing medicine. You probably know less about business then the 24 year-old communications grad.

    Surgeons have been for some time, are increasingly becoming, absolute dirtballs! Come out of the sewer and clean yourselves up!

  29. In response to the last posting -

    The hospital price reduction was 34% below their current lowest contracted prices in our first year. We have never increased prices in the subsequent 4 years and actually lowered prices this year as our inventory purchases have been paid. We provide complete disclosure to our hospitals, colleagues and to our patients. We have tracked utilization from before ownership and after and have that data available. There has been no increase utilization, but actually a slight decrease since inception.

    "Dirtballs" - amazing what you will say behind the cover of "anonymous."

  30. Again John, since the good Dr deffered, what was your cut of the sales? Dancing around the centerpiece of the issue, the good old American greenback, with quotes of "price reduction", "complete disclosure", etc., how much did you pocket? I've seen these "business models" many times. Greed is an amazing animal, it is expected from businessmen/women. Not from the people we trust with our healthcare decisions.

  31. Does he really need to answer. We all know as sales people the minimum is at least 20%.

    disclosure, data, etc, It is all well and good. It is trying to sell a basic conflict of interest. But the bottomline is that the surgeon is now directly profiting from the implants that he is implanting in a patient. I do not think Dr. Steinman can dispute that fact. What is the % of implants Dr. Steinman's group are using that are outside their representation over the last 4 years? Is it 10%, 25% etc. I would like to see that data. That would tell you what really is the motivation. I do applaud his posting under his name. However, he answers to himself and we to a corporate entity. Who can and would fire us at a drop of a hat for voicing our true opinion on this blog

  32. Unbelievable that two sides of this equation are trying to blame the other.
    1. The system is indeed broken and needs to be fixed
    2. Individuals on both sides are guilty of greed
    3. Individuals on both sides are hard-working, talented people who add value to the system and to patient care

    A number of posts indicate that the majority of individuals on one side or the other are the same...all reps make too much money...all surgeons are money-driven. We've all seen reps and distributors with little talent, poor work habits and questionable ethical fiber make too much money. We've all seen surgeons who chase the $$ and don't focus on patient care as much as they should. How many surgeons won't move to MIS procedures because they don't want to go through the learning curve and "slow" their revenue stream?

    Individuals make their own decisions no matter what side their on. Let's not try to decide who's to blame because it varies depending on the decisions of individuals in each situation, each market, each hospital, each practice, etc.

  33. Spoken like a true politician, "Big wheels keep on turnin' Proud Mary keeps on burnin' Rollin', Rollin;' Rollin' down the River.

  34. Dr. John may be an honest exception, but he is certainly not the rule. If he truly believes that every other surgeon involved in POD's is doing so for the greater good of the healthcare system then he's completely disillusioned, but we know he is smarter than that.

    Like someone said, we are headed back to wire and hooks. Im selling screws today for less than i sold them in 1998.

  35. Perception vs. Reality:

    Perception: Surgeons are paid to treat patients, not to profit off the implants they are inserting into patients.

    Reality: Even if it is legal, will POD's pass the litmus test if the story ends up on the front page of NY Times or WS Journal? (It's legal to use pre-1990 PING Eye 2 wedges, but how did it make Phil Mickelson feel when he was called a "cheater"?

    Perception: Some spine companies and reps (not all) make too much money.

    Reality: Spine companies and spine reps are in business to make money. That is generally accepted by the population as a result of free market capitalism. Again, will the public "buy" this notion that a surgeon is profiting off the screws put inside their patients' bodies? Also, to what extent is a surgeon "disclosing" this potential conflict of interest to the patient? I would love to be a fly on the wall listening to this disclosure.

    Perception: It's an easy job to sell spine devices. Just show up and keep track of what is used.

    Reality: Most surgeons do not understand the scope of what goes on in order to make their lives easy. The "Behind the Scenes" of what good reps do to help make surgeries go smoothly. CPD debacles, extra implants on hand for long constructs, schmoozing the key O.R. people on their behalf, helping a scrub tech who's out to sabotage the case. When each and every person in the O.R. works for the hospital, the rep becomes the surgeon's only advocate in the O.R. Are the surgeons' ready to lose their only ally?

  36. Is the POD legal?? It makes no sense if it is.
    How are they getting away with it? What States are they in now and what is their website? Could someone please fill me in on these questions
    As for spinedoc1, you really must be ignorant. It is sad that you are a surgeon. What a disservice to you patients.
    Let your patients see your thoughts, and you'll even be making less than that 24 year old gal you are so envious of.

  37. Check out Stab'l Spine in Salt Lake City. I'm told the name is purposefully misspelled to make tracking tougher. They pay their surgeons 30% and no, they don't offer price discounts in my hospitals.

  38. Once upon a time, one of my largest customers started his own spine company. I remember talking to him one day after i had made the decision to quit my job and he had already put his POD plan in motion. He was asking if I was interested in joining him. I respectfully declined the proposition and wished him luck and we went our separate ways after a long working relationship.

    Around this same time, he was quizzing me on how much money spine reps made. I wouldnt give him specifics, but did concede that reps consistently made six figures. He was absolutely appalled, stating that $60k was more appropriate. Did he really think I would do that job for $60k a year? Running to the airport in the middle of the night to get a special instrument. Taking the verbal abuse from some surgeons? Canceling family plans because a Dr. changed his schedule or took forever on a case, etc...we all know whats required.

    Anyway, its my understanding that as long as a "X" percentage(not sure how much) of the POD's business/sales come from surgeons who do not have a vested interest in the company its legal.

    Whether or not this is true, i dont know, but this particular POD is still up and operating. Ive heard they have a number of customers with no interest in the company, but i dont know any of them.

  39. I think that a surgeon owned distributorship is perfectly legal and ethical unless they are implanting their purchased implants into their own patients. If they are implanting their own implants, who knows if the system is the best one for the patient? If they have to purchase all of the sizes, what if they skimp a little and put in a slightly smaller size because they did not purchase ALL the sizes. Some of the spine companies who sell to these surgeon owned distributorship have only 4 sizes of PLIF, but the 15 or more sizes that full service implant companies carry. The inventory costs on 4 sizes is much less than 15 sizes. Clearly, patient care is compromised in the area of whether the brand is ideal for the patient, sizes, and even whether the surgery is needed. Now, if the surgeons are selling based upon another surgeon's prescription for the implants than that should be allowed and is free of ethical or legal concerns.

  40. This is a great post with great commentary, especially 2/10@7.34am. The issue to me is that most surgeons, and doctors generally, never feel they are making enough money. Yes, they went to school for a long time and yes, they picked up a lot of debt along the way. But according to a 2008 Physician Comp Survey in Modern Healthcare, the average orthopod makes $440,000. Most people would say that is a lot of money. I'm sure a lot of orthopods are angry because during college they ran circles around the guys who partied and took easy classes and ended up in ibanking making 2x-10x as much. Surgeons don't focus on the benefits of being in medicine. If having a socially meaningful career weren't enough, they are also guaranteed employment since medschool/residencies are limited and people will always need healthcare.
    I wish surgeons would just go back to being surgeons, and not focus on who's getting more than them.

  41. As many have noted, I too believe this is a great topic and obviously a hot one depending upon which side of the coin you find yourself on. Just like in any vocation, you will find individuals that are in various professions for a number of different reasons. In a perfect world, I would like to think that most physicians have chosen their respective professions for the 'greater good', yet my experience tells me that is not the case a decent amount of the time. Having worked in 4 countries, three of which practice what is routinely called 'socialized medicine', I can definitely state that the issue is far greater a problem in the USA. Whether it is complacency, quality of life, culture, or whatever personal reason, it seems that a number of surgeons I've dealt with outside the USA are not as 'greedy'. This is one man's opinion, but one I may add that is vested in over 20 years experience around the globe.

    As previously stated within the blog, I don't think that many surgeons understand all that goes into "being a rep". As a number of us on here can tell people, it is very challenging job with a lot of "behind the scenes" functions that most surgeons have no clue about. The remuneration can be quite good, but it can also vanish in the blink of an eye for various reasons not tied to the rep. It confounds me when some of the docs out there pulling in excess of a million dollars are constantly whining about some decent rep making 150-250k.....busting their butt and making sure that things go as smoothly as possible.

    As mentioned previously, if you think that reps have it so good, quit your job and try your hands at it. I think that most surgeons couldn't put up with the various tasks and bs for more than a week

  42. Its interesting that Stabl Spine's Principle, John Rose, is by coincidence, a principle in "Archus Medical". Another group that solicits surgeon groups to buy in and thus "own" their own distributorship. If this practice is leagl, why the different names? Archus Medical, previously known as "Mesa Medical" hung their legitimacy based on their single "opinion letter" from a Washington, DC, based attorney.

  43. In case you have forgotten:

    The Hippocratic Oath (Modern Version)"The Hippocratic Oath: Modern Version". Doctors' Diaries.

    "I swear to fulfill, to the best of my ability and judgment, this covenant:
    I will respect the hard-won scientific gains of those physicians in whose steps I walk, and gladly share such knowledge as is mine with those who are to follow.
    I will apply, for the benefit of the sick, all measures [that] are required, avoiding those twin traps of overtreatment and therapeutic nihilism.
    I will remember that there is art to medicine as well as science, and that warmth, sympathy, and understanding may outweigh the surgeon's knife or the chemist's drug.
    I will not be ashamed to say "I know not," nor will I fail to call in my colleagues when the skills of another are needed for a patient's recovery.
    I will respect the privacy of my patients, for their problems are not disclosed to me that the world may know. Most especially must I tread with care in matters of life and death. If it is given me to save a life, all thanks. But it may also be within my power to take a life; this awesome responsibility must be faced with great humbleness and awareness of my own frailty. Above all, I must not play at God.
    I will remember that I do not treat a fever chart, a cancerous growth, but a sick human being, whose illness may affect the person's family and economic stability. My responsibility includes these related problems, if I am to care adequately for the sick.
    I will prevent disease whenever I can, for prevention is preferable to cure.
    I will remember that I remain a member of society, with special obligations to all my fellow human beings, those sound of mind and body as well as the infirm.
    If I do not violate this oath, may I enjoy life and art, respected while I live and remembered with affection thereafter. May I always act so as to preserve the finest traditions of my calling and may I long experience the joy of healing those who seek my help."

    US Naval Corpsman

  44. It seems to me that the emotion behind many of these posts come from fear. Fear of change. Dr. John actually said it simply but profoundly.
    Healthcare is too Expensive and Change is Necessary.

  45. No, not fear of change. We have lived with that in this industry for decades. Its the fear that one day a family member will not get the best care, but simply the best ROI for the surgeon. This has nothing to do with cost savings for society and everything to do with doctors wading into ethically murky waters to find an extra buck.

  46. Perhaps it could be changed to the Hypocritic Oath?

  47. If you are saying that it is ethically murking you are automatically assuming that all surgeons would act unjust. If that's the case, why trust them so blindly for care of your loved ones in the first place.

  48. I believe the poster's assumption is based on the act itself - a complete disregard for a very real conflict of interest, and subsequent justification that makes the reps and their companies a scapegoat.
    Better for a surgeon to not have to worry about his inventory and management; most surgeons are busy enough. The time spent managing a distributorship is taking time away from what? Patients? Education? Family? Last time I checked, there's still only 24 hours in a day. Money makes men to strange things.

  49. Best blog ever:

    To read Dr. Steinmans comments on this blog as well as his article for the AAOS it is clear he's looking to justify the risk he's choosing to take, "Come on in the waters fine". It appears that his non anonymous participation in this blog as well as his submitting an article to the AAOS are carefully placed attempts at validating that his pod is not in violation of civil or criminal regulations. I mean who in there right mind would do such things if they knew they were illegal. Thereby when feds come a calling, not if but when, he feels he's created a firewall between himself and the critical intent component of a criminal charge. After all if what he's doing is illegal why did it take x number of years for the government to investigate since he's made extensive public disclosure as to his activities.
    Dr. Steinman I offer you or any physician these words of advise. "You may be the wrap, but you won't beat the ride". The liberty you may be currently experiencing with your pod is likely regulators letting you and many others take the bait so that you'll be good and fat for a culling in years to come. Sleep tight.

    If I'm all wet about your pod. Do you think you could describe how your in compliance with all the current regulations as described by attorney Immelt in his AAOS article "Psst have I got a deal for you"

  50. FEBRUARY 9, 2010 7:11 PM Post - I have to totally agree. At least 70% of surgeons I deal with are always asking for ways to code better or more with various new technologies. One doc even said straight to my face that he is in the OR too long for what he is making and anything to increase his pay for a procedure (whether it works or not) is welcome by him. Yikes

  51. Let's face it, there are good and bad all over. There are the distributors that will offer a "partnership" to surgeons to gain their business, and surgeons that actually charge reps to see them. Yes, believe it or not, there is an office in Phoenix that will charge a rep to see the surgeons. Wouldn't it be great if we all had to compete on an even field. Earning business based on the merits of our service and product, not what we will or can slip under the table?

  52. Facts are annoying things . So here they are:
    -The cost of orthopaedic implants has risen 171% from 1991 to 2006
    -Orthopaedic programs accounted for 25% of hospital profits in 1997. That decreased to 2% in 2001, primarily from increased implant costs
    -The POD company I participate in with Dr. Steinmann has saved nearly 1 million dollars in implant costs for 3 hospitals; a local community hospital (RCH), a large hospital chain (St. Bernardines Med. Center) and a county hospital (ARMC). We have not increased implant prices over 4 years and are actually decreasing them this year. Feel free to contact the CEO's at these entities to see how they feel about our POD company.
    We use only FDA approved high quality implants and almost every week I still use implants from other implant companies including Biomet, Zimmer and Depuy as I select what is needed to give my paient an optimum result. We have tracked our utilization for all participating surgeons to ensure there has not been a change in use.
    -Our model is legal, tranparent and has provided a clear benefit for our hospitals and community

  53. Until Surgeons actually go to jail, on a broad scale, the improprieties will unfortunately continue. Greed is a horrible thing, and poor decisions are, unfortunately, often times a direct result of Greed. At the end of the day we will all be customers of this HC system(Reps and Surgeons alike); which is significantly compromised by Surgeon involvement in Implant distribution. OIG needs to 'throw the book' at PODS and begin protecting patients!

  54. To Dr. Burton:
    Of course implant prices have gone up over a 15 YEAR PERIOD; would you rather use the devices considered "high tech" in 1991? Go for it - I'm sure you're patients will be thrilled to hear your rationale.
    Make hay while the sun shines. I would love to speak with your Depuy, Zimmer and Biomet reps.

  55. Dr. Burton:

    TSB takes pride in the fact that our blog allows everyone the forum to express their opinions and address the challenges and issues that affect our livelihoods on a day-to-day basis. The Truth as I call it is not my or your perception, it is the aggregate perception of "the people."

    As was stated in the Blog, regardless of the facts, laying the blame on a salesperson's earnings is a diagnosis that your group has made to justify ownership in a POD. I believe that you are sincere, and that you are an anomaly. I would be willing to evaluate your metric validating that the escalating cost of implants by 171% over a fifteen year period was caused solely by the salesperson. Unfortunately, I believe that the reasons are a bit more sophisticated than that. Since I don't know how old you are, let me remind you and our readers that in 1991 milk wasn't $4.39 per half gallon, gasoline was not $4.11 per gallon, tuition to attend college was not $45 -55K per year and a fully loaded BMW 300 series wasn't $50K. But free markets, capitalism and improvements in technology have a way of working itself out.

    Today, we have over one hundred spinal implant companies, many of the so called "Others" exist because of surgeon investors and surgeon inventors. In order to compete, these organizations need to recruit distributors and sales people to generate non-investor revenue. So how do they do it with "me too" products? By offering distributors compensation as high as 40-50%, unlike the legacy companies, that offer a comprehensive portfolio but lower commissions.

    You and your partners are correct when you state that "changes need to be made to our healthcare system." And maybe you feel that you are doing your part, unfortunately, I would argue that many of your peers have different intentions and objectives in POD's. This is not only my opinion, but the opinion of many of our readers, based on the comments in response to this blog. Until we work to collectively eliminate this type of behavior, not only by surgeons, but also distributors, the fight goes on.

    Good luck in your endeavors, and maybe one day we will stand side by side in a battle that is looms larger than the both of us.

  56. Look at Dr Burton's last line: "Our model is legal, transparent and has provided a clear benefit for our hospital and community."

    What it should read is: The lawyers we hire say its legal, it's transparent but we won't tell you how much money we make from it, and its provided a clear benefit for my personal bank account.

    There is a reason the NFL doesn't let referees bet on football games.

  57. Propaganda is an annoying thing:

    Dr. Burton please get a grip. implant prices have gone up 171% between 1991 and 2006? That puts a 1991 tka or single level construct around $1800.00, which for those of us who have been around since then know that prices have basically remained in the 3.5-5k range this entire time for both of the procedures mentioned above. Their may have been a spiking of prices in 96 but they have softened since then. Furthermore it has been my experience that surgeons have always enjoyed a line item veto as to what is a fair price to be charged for any given implant at their facility. Any rep in the business has price flexibility to accomodate a price sensitive doctor to get the business. How much negototiating on behalf of your hospitals did you do before your pod, and more importantly how much since. Probably very little since a price competitive alternative to your pod sabotages your hat rack.

    I find it downright entertaining that both you and Dr. Steinman both remained focus on the justification for what your involved in, however really cannot speak to the nuts and bolts of its legality other than to say its legal and transparent. If your so transparent and your not only selecting investors which have a referal basis to join I'd very much like a prospectus to become a shareholder, who would I contact to acquire that information? Oh, your not open to outside investors, how surprising.

    If your pod is all about a community benefit, why not set it up as a non-profit and remove any question as to its legality. Even if you had set it up as a non-profit it would still have to be careful not to provide any inducement to any referring physicians. That means no relatives working in the office, no junkets, no cookies for the office staff of customers, no logo pins etc. etc. etc.

    You Docs associated with these pods are delusional if you think these "models" are legal and vetted. Are you going to get called out? maybe, maybe not but is it really worth the loss of peace of mind in the back of your head that exist as to whether your going to shaken down, it would'nt be to me. Be sure to put your dividends in a safe legal defense fund, you might need em.

  58. The commenters, many of the salespeople in this industry, sound downright put out and mad by the fact that somebody has joined them in their game. You sound a tad ignorant to use the argument that your legal underpinnings and moral fiber should be regarded above all others. How many distributors have tried the immoral end game by setting up business arrangements outside the view of your companies and your local markets (e.g. building lease LLC's, and others ideas too rank to mention), in order to secure a doctors business. In the last 5 years, thats all I hear when a rep calls; the innuendo of "scratch my back, I'll scratch yours". Don't put yourself in a corner you can't remove yourself from. We see rejiggering of markets in our capitalistic structure all the time, and sometimes that affects the way that market is delivered; be it by the number of jobs and the compensation scale. We will see it in the doctors ranks as well, but to say this Group has done something improper. Well, change is hard. And the beat goes on as TSB might eulogize...........

  59. "If your pod is all about a community benefit, why not set it up as a non-profit and remove any question as to its legality"

    This truly would mitigate a number of questions that arise about "what they are in it for". The challenge has been presented Dr. Burton, care to rise to it??

  60. To 2/11/10 @ 9:00am, why must Dr. Burton's group do what you propose? Would you as a company or distributor or salesman do this? The hippocratic oath didn't remove the doctors ability to be businessman also. We live with our actions and if we step over the line, the community will reign us in. Same goes for you. However, to say that I became a doctor and I must relinquish my ability to think outside the box so the likes of you can run rough shod in my backyard, lets play ball.

  61. I agree, as a sales rep for the last 10 years I have seen a big decline in the behavior of consultants. For reps to be pointing the fingers at docs for making money on the side is crazy; for sure there are crooked docs out there but the percentage of reps playing these games is far greater.

  62. any inducement is illegal whether from the rep, company or from ones own POD. Saying its legal doesn't make it any more legal than saying everyone else does it.

  63. Dr. Burton,

    Isn't the real reason you keep Zimmer, Biomet, etc.,, around is to take care of your Medicare Cases? Why would you use other sources if your POD saves the community so much money?

  64. Dear TSB,
    Reading these posts has given me a whole new appreciation of the feelings some reps have for their surgeon customers and their employers. Thanks for having this forum.
    Walter Eisner

  65. This comment has been removed by a blog administrator.

  66. First of all, TSB, thanks for this great forum - this must be your most successful post yet as it really strikes some nerves!

    It is interesting to see distributors and reps complaning about the perceived ethical questionability of PODs. At the same time, we all know many reps and distributors who themselves bend the rules as a daily course of business. This is hypocracy - we only believe in the rules when they work in our favor.

    PODs must by definition have more transparency and honesty because physicians will always be held to a higher standard than reps. Physicans take the heat because we are the most visible part of the system. Distributors often have the luxury of operating in the shadows with under the table deals - we don't.

  67. Med-Surg makes up 6% of healthcare spending, its been 6% since the mid 80's.

    The sales rep makes roughly 10%, that 10% equals roughly 2/5 of 1% of all healthcare spending is spent on commission. So, for every 100 dollars spent on healthcare, 6 dollars is spent on surgical implants and medical equipment, 60 cents is spent on sales rep. commission.

    On the other hand, 11-14% is spent on "administrative cost". That doesn't include non-medical essential staff salary.

    You can cut sales reps. out of the equation, its still will not reduce the cost of healthcare.

  68. If PODs are going to be the new trend. Can you imagine the controversy if they manufacture there own products and will health care reform be impacted? The Big 3 are in for a surprise.

  69. I must chuckle at SpineDoc1 and the ego on this guy. Last time I checked, the majority of us on this blog are residing and working within the USA. Why does the level of degree that the rep possesses have anything to do with your comment? If he or she is working hard and servicing the account so that things run smoothly, why does it matter? Or do you possibly fall in the "god complex" that so many physicians are maligned in the public eye. Would you feel better about her earnings if she had a PhD in english lit in her back pocket?

  70. Manufacture their own product? HA! That will be a rude wake-up call for them with the engineering aspects, QC, regulatory and various other components. Maybe they will want engineers who make ten dollars an hour to work on their projects.

  71. hehehe 69 comments hehehehe

  72. Why not give the doc the option to have a rep or not? If they opt out of rep, then they get a cheaper implant price. This model has been considered but it was always felt that the doc wanted the rep. The rep was a resource (or really HoT) or they would'nt be in the room. But what is the motivation for the doc to give up their rep when the hospital realizes the benefit from a less expensive implant. Things are different now that docs own hospitals.

    Let the doc chose to have a rep or not and pay accordingly. Hospitals would have to manage inventory- and bear the cost of their own barebones support function. Wouldn't that model eliminate the need for a POD and the associated ethical questions?

    More likely, hospitals would then be called into question for chosing based soley on price. There will always be a bad guy somewhere along this chain.

    Cost does need to come down. We need less expensive, more effective treatments. That's all. Easy, right?

  73. well said Duke....
    Spinedoc1 is sore of his choice in life. He probably isnt a good surgeon..... SpineDoc1, I'll interview for a job in my distributorship.. Mind you, I dont think you'll make it on this end of the table either.

  74. I am not sore of my choice in life. I have worked hard to make everything I have and I'm pretty good at what I do.

    In case you haven't noticed, a surgical practice is a business. We have employees, insurance, overhead, taxes, profit and loss like any other business. Just like you distributors running your business. This is the American system, and we all derive our living from it.

    Physicians have always augmented their income from multiple streams - bringing in PT/OT, imaging, soft goods, selling pharmaceuticals, doing diagnostic tests in the office, etc. As the pie shrinks, we must look to broaden our scope of services. A POD is just a natural extension of what has always gone on. The fact that it threatens the livelihood of certain people does not make it wrong/illegal/unethical.

  75. For all you physicians wondering how anyone could question your choices, I mean have you ever heard of the Sunshine Act?

    If the DOJ puts Agents on the ground at meetings like the AAOS and NASS because they are essentially scared that a basket of chicken wings may influence your implant preferences ........ but you don't think that they will question the optics in a situation where collecting commissions may influence you implant choices? Yeah, you're right what could go wrong there? Sleep Well.

  76. Why don't you POD surgeons donate your ill-gotten commissions to charities like Children's Hospital?
    Because you are pathetic, that's why.

  77. Spinedoc... what state do you practice in>?

  78. A POD, just like a surgeon owned specialty hospital, creates a financial conflict of interest. That's a fact.

    Doctors are the decision makers about how our public funds are spent, just like politicians. Whether such a financial conflict of interest is in the social interest can be debated, but politicians have been losing that battle for years. And they've made the same arguments that their having a financial incentive helps ensure they spend the public's money properly. The problem is that while that may be true on many occasions, it becomes impossible to distinguish whether decisions are being made in the public or personal interest. Thus we've banned such conflicts entirely, preferring to have the reassurance that all decisions are being made for the right reasons.

    We've come to the conclusion that if you're spending our public money, whether you're a schoolteacher or the President, you should have a professional incentive to spend it right, and no personal financial stake in the process either way. That's the way it is, and I highly doubt a bunch of financially motivated doctors are going to change it. When you're spending my money, you're welcome to be either the decision maker, or the one who profits from the decision, but you can't be both.

    And if the POD is actually saving the public money, then it's a public admission that the surgeon either was wasting our money before, or he's shortchanging his patients now, with his product choices. Either way, he should be ashamed of himself.

    We don't tolerate financial conflicts of interest with our politicians who work with public funds, and we shouldn't tolerate them with doctors who also do either.

  79. My only hope is that if you are taking kickbacks, doing additional unecessary levels of fusion for additional profit for your POD, or just dirty is that you remember the rap song, "Back dat ass up" when your new celly meets you. Please also when you are stamping license plates for 50 cents an hour, and the wslblwr plate is ordered, you could have chosen a different path. You will suddenly realize that 2 letters MD behind your name aren't really the 3 letters God.

  80. Hey Wally Eisner, thats all you got to say is "thanks for the forum and Boy, my perspective has been heightened". You indirectly started this 'Seizing Control...." blog via your OTW article and your muse, TSB. Are you just the paparazzi that now just sticks around to take pictures and embellish the cannon fodder we have been reading the last couple of days. Are you going to come out in next weeks OTW like the Vatican making a decree? Come on.......you guys are as pathetic as the companies and reps that fill this drivel. Come out of your hole and enter the conversation. We are trying to save this industry from the demise of others. There are good companies and reps out here. Work with us or you fail also.

  81. To Mr. Anonymous.

    As I have stated on numerous occasions, you as a reader are entitled to your opinion whether you agree or disagree with what has been written on our blog. You also have the power not to read our blog, the same way that you do not have to listen or watch any of the media talking heads. Maybe, Mr. Eisner's article and TSB's blog has heightened your perspective, considering your comment that, "we are trying to save this industry from the demise of others." Who are the "we?" What you really are attempting to say is that you are no different than the many people that have commented on this blog, that we are an industry, let alone a country, that is out of control. The avarice that is exhibited in our industry is unconscionable. The industry has become Machiavellian, characterized by expediency, deceit and cunning tactics.

    Mr. Eisner, a reporter, wrote an article about POD's, and TSB, a blogger, blogged about Dr.Steinman's inference that the escalating cost of implants can be attributed to "distributors and reps being overpaid." Steinman's conclusion is not logically derivable from his assumed premise. Contrary to your opinion, neither one of us personally attacked the hard working people in this industry that wake up every morning and allow corporations to turn their lights and computers on, CEO's to drink $500 bottles of wine at dinner, manipulate the rules, or pay themselves exorbitant salaries and bonuses. Somewhere along the way companies, physicians, and distributors stopped behaving like medical device professionals, and started behaving like Wall Street. Next thing you know some CEO will be quoted as saying that they are doing God's work.

    As for entering the conversation, all you have to do this scroll up this page and you will see that I entered this conversation long before you posted anything. Once again, thanks for your comments and keep the faith.

  82. I know a plan is being developed by a large spine company to target several of these POD's. They are going in with 500 cervical and 1500 lumbar constucts to the CEO. Goal take all the profit away from them and make it not worthwhile to continue. Interesting idea. If it goes the way of a total price war the POD are done.

  83. Just remember, in order for a POD to buy and "resell" their inventory to the hospital, they must purchase it first. They buy it from the manufacturers and resell it to the hospital. I would like to hear more on this topic. We all know that the surgeons are not making this stuff in a garage somewhere. Any comments?

  84. To 7:31am, is that like throwing gasoline on the fire? This action might be just what the POD's want us to do? Be careful what we ask for? Its a slippery slope when you go down this path. The sales reps may just be caught in the cross-fire. To these companies, don't we sell highly innovative technology; don't help them commoditize us?

    To 7:34am, who says they aren't making this stuff in their garage (so to speak)? We know its happening and is rampant?

  85. Surgeons have no place telling the market how much a rep should make. If surgeons were exposed to the same kind of pressure a rep is exposed to 95% would fold! Physicians went to school to learn to care for people and this affords them a very nice lifestyle that they will most likely be able to keep for most of their lives. A rep could be out of a job tomorrow and completly lose the ability to put food on the table for their family. I know, I've had this happen to me! Do me a favor, stop whinning and take care of your patients! Leave the risk and reward of the free markets to the reps...


  86. The results are in!

    Winners: POD's, Manufacturers and the$75K rep.

    Losers: Distributors and great sales reps

    Talk about change......

  87. I know of several distributorships that are trying to get ahead of the curve and get into manufacturing their own implants, cutting out all the corporate structure and expense associated with the large spine companies. Current surgeon customers of the distributorship are closely involved as investors and users. When the distributorship flips all the business to their own "garage-manufactured" flavor of screws and plates, they stand to make margins on the order of 60-80%, offering a lower price to the hospital than anyone else can currently compete with, and still able to afford to have a rep present.
    Anyone else see this happening in your localities?

  88. Yes it is happening in our market and will succeed!!!! A rep in the OR making more than the surgeon, on a medicare case is obscene!!! With the use of cages, screws and rods and sometimes BMP, it is a frequent occurence in our hosptial. But not for long!!!!!!

  89. Except they are not making the implants in a garage. They are buying them from reputable manufacturers.

  90. Easy answer to all of this is make companies prove new designs and implants are equivalent or better CLINICALLY! Goverment should up the standard for new products above the level of a 510K. This works in cardiovacular market and limits the entry for fly-by-night and shady enterprises.

  91. The majority of reps that make more than surgeons is probably <1%. Just as the average surgeon makes 440K, the top 1% are well into the millions. The reps that I know making more than the average surgeon are managing 8 million dollar + organizations that take a tremendous amount of experience and business knowledge to be successful. Something I might add many surgeons lack! The majority of spine reps that cover cases are managing <2 million dollar territories and after paying expenses are not even close to what the lowest paid spine surgeon makes. I agree that the majority of reps should not make as much as surgeons, however it's not the place for anyone to tell a compnay how much they pay their employees. Most of the reps you are referring to are in some kind of shady deal that allows them to make excess commissions for cases. Lets keep this argument in perspective and not stereotype all reps make more than surgeons. Thats not even close to the truth!

  92. I think many of you are missing the idea behind some of these PODs. There are "groups" such as Archus Medical and Mesa Medical (both led by John Rose) that get surgeons to "buy" in their first batch of implants for $50K. They then receive 40% of the commissions earned. That's what they're hanging their legal safe hats on. The "Safe Harbor Rule". They use the instruments for free. Archus/Mesa target groups of 5-8 surgeons. I suppose they feel they will get enough business for the group to be financially attractive.

  93. I think what ticks reps off more than anything, is the fact that the one person that bends over backwards more that any other individual for surgeons, is the one the surgeon is throwing under the bus with this POD situation. Throwing instruments; cussing out reps; verbally trashing companies; we've all experienced it multiple times and understand this comes with the job. The opportunity to make a good living is what brings talented individuals to our industry. It's definitely not the interest in being a 24/7 serf to a OR monarch.
    There are some reps that make a great living, but what about the five years they worked for 40K and no benefits as a runner, just to get in the industry. What about the many reps that come in and get fired in 2 years because they can't cut it. A good rep can make $250K this year, and very easily make $100K the next because a surgeon moved out of their territory, or a competing company hired the docs brother, etc. To make it sound as if "the rep" doesn't do much and just collects a fat check is absurd!

  94. Surgeons and Agents/Reps should stand together and protect one another; as it has always been. The enemy is the hospital!

    One party really does need, and should rely upon, the other. 19 yrs in this industry allows me to know such things. I have seen the good, bad, and very ugly. What I have read in this blog is very ugly, but a very good starting point for addressing the many wrongs(human and otherwise) in our industry. I am concerned for the legal well-being of Surgeons given fact I honestly believe these PODS are compromising patient care and must be eliminated. It is my hope that anyone associated with these PODS pays a dear price for their greed.

    I am concerned for Reps; knowing that they are the backbone of the entire industry and that good Patient care involves having them in the O.R.. I am also concerned for the patient; which is not getting all they can get in regards to appropriate care under PODS. The many reasons have been cited in this ongoing blog; and they are a fact.

    At the onset of our respective careers, I like to think it was solely about impacting patient care in a positive manner. I know this is not the case today; with both Surgeons and Reps doing things for all of the wrong reasons. Not to mention the many 'back-handed' and questionable tactics utilized today by hospitals in trying to convince Surgeons that Reps make too much(a joke) and the hospital is struggling(a bigger joke). Keep in mind, Docs, that a great finance person is like a great attorney;creating the picture they wish to have you see. This applies to Hospitals and POD attorneys as well!

    The picture is clear: "The hospital wishes to control each Party; Surgeon and Rep/Company alike." They wish to eliminate a free market economy and control patient care 100%; owning Docs and Companies alike. When Docs stopped supporting company price increases and started aligning with hospitals they brought forth their own eventual demise; remember signing up for HMO's/PPO's because you could not develop your own market share based on surgical skill or business skills? What was the outcome of this?

    Hospitals do incredibly well on spine surgery; this is a fact. To think anything differently shows extreme ignorance. WAKE UP DOCS! The Rep in the room makes very little compared to the grand scheme of things. Plus, he/she is your ally in this war; not your enemy.

    A thought for Docs: "At the end of the day, you helping hospitals drive down pricing will do nothing but get you a small salary, working for that CEO making multi-millions; with zero say in patient care even though you will be the one treating said patient. Good for you in helping the enemy create this wonderful opportunity for them. When you stopped supporting your local Rep you started down the pathway to becoming a salaried employee with zero say in how you practice medicine. SMART MOVE! Perhaps you should have supported your local Rep and saved your own 'butt.' For later the hospital will own it! And to think, Docs, some of you have started PODS and are risking your entire career and freedom in order to make a buck and help hospitals eliminate your only true ally in the world of spine; YOUR REP!

    Big companies simply can't let PODS continue; and it is not in order to protect the Reps. Anyone know why? As Agents/Reps well know, the companies they represent could care less about the people who actually pay the bills(Reps); nor do they really care about Surgeons. It is all about the mighty dollar. Docs, stop using product from the company you think loves you and see how many times they come in and see you or are sincerely interested in your 'me too' opinions relative to product development. Your Rep would still be there for you; as a friend that has shared the same field of battle over and over again.

  95. Please upgrade/improve your website so people can respond to specific comments. It is very difficult to follow this long thread when people refer back to previous comments.

  96. TSB, you pine for the days when doctors were just interested in being doctors (whatever that means...perhaps you're implying that in the good old days doctors somehow did not have any self-interest?) and at the same time chastise doctors for not "having the 'cohonies'" to do things that have nothing to do with being a doctor--like "fighting the big guys" or "challenging the anti-trust laws" or "a medical strike" or a "march on Washington" or being an "activist." Which is it that you prefer? My view of the doctors of old is not as romantic as your's. Maybe they seemed to spend more time just being doctors because there was little to no assualt on reimbursements and autonomy or crushing/unfunded government regulations/mandates or the threat of frivilous lawsuits or stratospheric medical education costs....

  97. Anonymous: As you would put it, " I do not "long" for the good old days, if I did, I would build a time machine out of a DeLorean and you could come for the ride wearing your radiation suit. I'm not a romantic, I'm a realist. Years ago, when the healthcare industry was starting to exhibit tremors, physicians had the opportunity to take the lead and be pro-active rather than reactive. But considering that they are a fragmented profession witnessed by the many different organizations i.e. NASS, CNS, AMA, etc, it's easier to point your finger at someone else, than accept responsibility for contributing to the failures of our healthcare system. And they are not the only group since I would include the government, the insurance industry, medical malpractice attorneys and hospital administrators. Today, the U.S. Healthcare system is experiencing a Code Red, a disaster has occurred and casualties are inbound. That casualty is a fundamental breakdown of the system. To state that there has never been an assault on physician reimbursement must be a sign of your youth, or, just plain naivete. Doctors have always complained about reimbursement and how hard they work. And they do work hard. But let's face facts, no one ever went into medicine because you were going to put your feet up on a desk. Medicine always was, and always will be an honorable profession where the average physician can make a great living compared to the other 95% of Americans. To assault the sales rep for the escalating cost of implants is self-indulging one's rationale for a POD. Like I said, it''s easier to blame someone else than take responsibility for your own actions.

    The most gratifying aspect of this blog is that regardless of your opinion each and every commentator really cares about our industry and what is going to happen to the US healthcare system. The problem is that we are going about it the wrong way. As some stated we can work together or work against one another. "United we stand, divided we fall."

  98. Well said MM! Greed of self-absorbed individuals that do not focus on the end goal "the patient" will be the death neal of us all!! If that offends some of you then maybe it should. If you have to think twice about that statement, THEN YOU ARE THE PROBLEM!

  99. POD's mfg their own product is already a reality. I know of one in particular. They were shut down by the FDA for a period of time due to some mismanagement, which isnt surprising considering the challenges for mfg companies. The shutdown was temporary and they are back in business.

  100. To the one who made the comments about patients in Europe only undergoing surgery when they have neurological symptoms, and not for just back pain, DDD or black discs. As a European my comment is: That is how it should be! How many of you surgeons see plenty failures of your colleagues, but never have one yourself? The point is, your colleagues see yours... The success rate of fusions and discs for back pain over 5 years still is not much above 70 to 80% (if one is honest), which result could also achieved with PT and for some a little psychological counceling, all at a much lower price and without life threatening complications. But, the big big but, a consultation ending in a referral to the PT yields only a few hundred, a surgery many thousands, and they keep coming back for more. The patients with back pain in Europe are not worse off, in fact, I think for the most part they are better off. And don't start that 'social medicine' scare nonsense, I have noticed that Americans truly have no clue how it really works in countries like Sweden, Germany, Netherlands, France, Switzerland..


  101. Dear EuroDoc:

    Thank you for sharing your insights from a clinical, political and sociological point of view. I completely agree with your analysis, Americans have no clue to how socialized medicine works in Europe. Big Business and politicians love to scare Americans that the bogeyman is coming. Cheers and keep reading! TSB

  102. As a Spine Rep in the NEast, I have seen a few PODs. The pricing offered is not to save Hosp $$...$6500 lumbar+ cage, so let's take that off the table. It's to line their pockets, which is OK. Just don't get sanctimonious. That's the reason I carry ancillary lines.
    The way I see it is that I'm paid primarily to get new business, not to take care of existing. 5-10% to cover cases is reasonable if there aren't any growth expectations. That's why the avg coverage rep makes 50kish.
    I'd take $75k to cover a 1mil doc, and another 75k for another. Minimal responsibility?
    If a Surgeon sees no value in a Rep, he's probably never had a good one but, that's his choice. I do believe it's a mistake but, his to make.
    I did like the afore mentioned comment regarding a Surgeon not liking IR's and PM's doing procedures. Don't like someone else in your sand box?
    I try to make myself valuable by film study, product knowledge, johnny on the spot and referral lunches etc.
    Ultimatly I see a POD as exposure to unnecassary risk but again, it's yours to take.

  103. The absolute best line of the continuing commentary on POD's.............. It occurred way back at the beginning. TSB penned the Paul Revere-like line if ever there was one, "POD's are a fundamental threat to our livelihood." The POD's are coming, the POD's are coming. Doesn't that sum it all up? With the lasting comments that have given this issue a body, where are we now? We are concerned for our livelihood. Isn't everybody? The end is here, or we stand up and make ourselves heard!! We are part of what they are. We deserve whatever get because we are arrogant, blowhards. Hey, I can read films, I work real hard on my product knowledge, johnny on the spot......oh come on. How long can we play the same tune? TSB?

  104. All I can say is that it's going to take a fundamental change in everyone's behavior. That includes greedy and unrealistic CEO's, Shareholders, Surgeons, Distributors, Patients and most of all corporatist politicians. Somewhere along our journey we lost ourselves. TSB cannot stop a physician from starting a POD, especially when an attorney has provided them with a freedom to operate, and God only knows that attorneys are never wrong. But I can guarantee our readers that not only will we pay a price, but so will surgeons. Eventually, the government will step in and set a precedent as to the illegalities of POD's especially as they relate to anything having to do with Medicare or Medicaid patients, TSB is no different than anyone of our readers, I'm just trying to take one day at a time.

  105. It is in the best interests of the spine distributors/companies to keep the hospital and the surgeon at odds--or at least not working together. I do not include the reps in the trenches...these people have the toughest jobs, getting hit from both sides (FYI: I am a surgeon, not a rep). I don't blame the distributors/companies...it's in their best interest. There is no reason for them to be looking out for the hospitals (or vice versa). But it allows them more ways to make money, sell product, introduce new product, raise prices, etc.

    I'm not judging, just observing. This works especially well in the big academic centers as opposed to the smaller hospitals/specialty hospitals. The big centers seem to have little to no clue what's going on--the actual decision makers have little to no stake in the costs and the surgeons are rarely if ever involved in the process (although admittedly this is changing everywhere). It gets interesting when the surgeon's relationship with the hospital is downright adversarial and the surgeon wants to use this or that new implant or product by god! Then the distributor/company can negotiate with the hospital from a more powerful position. And it gets REALLY interesting when the surgeon happens to be a "consultant" with that company--and again, remember, I am a surgeon. At my hospital, it got to the point that reps would walk into the OR with the latest and greatest after calling his surgeon the day before and saying "Hey, I got this new widget!", and the surgeon would say, "Cool, let's use it for tomorrow's case!" and the hospital didn't know what hit them until the invoice arrived.

    Time for new rules! No new implants will be paid for by the hospital unless prior approval given. And then it would have to come from a committee so that one surgeon couldn't browbeat the hospital CEO or purchasing direct, etc.

    Not judging, just observing.

  106. "Surgeon consultants" were widely used throughout the ortho industry for legitimate and illegitimate purposes. The collusional intent of an agreement remains hidden between the conjoined parties.

    These arrangements became a necessary cost of industry marketing as more and more surgeons demanded something in return for their script.
    Ultimately these additional costs are passed on through price increases. I am certain that industry would have preferred marketing within a level playing field and keeping their costs down.

    Our illustrious government became interested in these agreements and was compelled to attack via the "evil empires" industry. This was/is the politcally expedient method as attacking industry gains populous political points; attacking greedy surgeons effects zero populous points.

    When industry was put under the microscope and heavily fined, government received the loud public applause they sought. This put industry on notice and unscrupulous business practices finally began to diminish.

    Who could have predicted the response from the surgeon community. They are entitled to renumeration for their business. They are the decision makers(Damn-It); HENCE, POD (et al) proliferation.

    Will our illustrious government ever inforce the currrent laws which should preclude this abuse??

    Personally, I doubt it. The song remains the same.

  107. Fascinating tete' a tete'. In the end, would any of this hold up if the patient was paying directly?
    Imagine paying your Jeep Mechanic to put in a part that the dealership had marked up by 200% after it was delivered from some outside source - regardless of what the part cost or the delivery method might personally recover. "You" and I would not pay the high fees charged by the hospital to the insurer in a direct pay scenario. All of this heat will melt to nothing in a "basket of care" scenario (one payment for diagnosis - ALL INCLUSIVE --- the system figures out the splits). This is happening in Minnesota and many of us think it will be useful for scaling back costs to achieve same level of overall health.
    Certainly, it could allow us all to find our value story as it relates to health in an open format. The above arguments seem somewhat juvenile and certainly non-sectarian. But, I am just a Hand Surgeon, so my implant costs are "Plebian" by comparison. (Surgeryworks.blogspot.com)

  108. Sorry boys... Reps are the modern day equivalent of door to door salesman. Most of you are undertrained and suffer from ADHD. Your goal is profit. You know nothing of the meaning of the oath that M.D.'s take. You want to be considered professionals but you whine like little girls.
    Health care delivery will be far more efficient and ethical when you have been eliminated from the process.
    Again... sorry fellas... the clock is ticking on your ridiculous profits. Think I'm wrong? Go spend a month in Haiti and get a life.

  109. Was referred to this blog by surgeon friends that are looking at starting a POD. I'm an Ortho surgeon on the outside of the argument, but I'd like to point out the fact that Matt eluded to above. The days of global payment are coming and quicker than we'd like. In the near future(Obama or not), the government and then private insurers following will pay a global fee for a Total Knee/Hip etc. This will cover the implant, hospital cost, and surgeon's fee. This will have to be divided between the rep/joint company, the hospital, and the surgeon. This will by definition pit us all against one another as we fight for our share of the pie. I hate to point it out to the reps, but they'll get the short end of the stick. To the rep that blogged that if the docs don't like it we should become reps, maybe you should apply to Med school. Just look around the country, middle men are being cut out of most industries. Be glad your ride's lasted this long.

  110. I have a question that I believe will not be honestly answered by Dr John Steinmann or Dr Paul Barton: If Medtronic, DePuy or Zimmer created an implant pricing program which offered lower implant pricing, more tenured representation, and a much greater implant offering to their hospitals and patients, would they switch, and use the lower priced, more widely tested and accepted implant offerings used by their peers?

  111. I still want to know the answer to "how much did the investors profit"? With so much emphasis on "hospital implant cost savings" why do they continue to avoid this question? Since "Our model is legal, tranparent and has provided a clear benefit for our hospitals and community," what's the problem? I find it hard to believe that the is no inticement as a surgery, with the profits of distributing your own products, can add $1-3K on top of their reimbursement. In some cases, doubling what they would have normally collected through insurance/medicare. While I'm a proponent of capitalism and commend the entrepreneurial spirit, it just doesn't make sense.....

  112. We are all still waiting to hear from John Steinmann or Paul Barton with an honest and committed response as to whether they would switch to using a larger manufacturer with an enormous portfolio, greater patient safety from a more widely tested implant line, a more tenured representative, greater intraoperative latitude, etc. etc., if that company would provide a lower price to their facility.

    These large companies would respond to any "legitimate" competitor, which provided pricing that was so attractive that a hospital chose to contract solely with them, by providing a new pricing agreement that met this business challenge.

    There is a reason that we do not see hospitals across the US embracing this Steinmann Model in exchange for lower pricing. The traditional mechanism for reductions in pricing that the industry sees as a result of new legitimate competitors, maintains the inherent need for these legitimate manufacturers to provide the highest level of clinical relevance, in order to garner the physician utilization.

    With this model, the investor/doctor will use whatever small manufacturer will contract with them in exchange for guaranteed utilization.

    This model of shifting the implant decision from that of clinical history, intraoperative latitude and patient needs, to a decision based solely on implants that provide financial rewards, has Risk Management attorneys running the other direction.

    The question is of course rhetorical in that we all know that if their hospital contracted with one of the larger vendors at lower pricing, that Steinmann and the like would move their business to St Elsewhere to maintain their income stream.

    Their "distributorship" would be dead in the water, as only surgeons in that geographic area that receive money from the Distributorship, will use them. Therefore, they would be forced to participate in the "traditional model of distribution" currently utilized by all of the large manufaturers, in which surgeons do not get shareholder distributions. With their current product lines they would have no chance of competing, based solely upon selling clinical efficacy.

    We would like to see if Steinmann or Barton could provide a well spun response as to their implant decision being based upon clinical rational as opposed to simply financial.

    Keep in mind that these surgeons used the largest manufacturers for their implant selection, right up until their investments.

  113. There are a lot of good points on both sides of this argument, but most evident is a lack of understanding of the value each side brings to the table. Docs have to understand that the spinal implant industry is extremely competitive. There are literally hundreds of companies and product choices out there. In the grand scheme of things, the predominant factor in a surgeon choosing 1 product over the other hundred is the rep. This, hopefully, is because they have a rep that is knowledgeable, conscientious, punctual, etc, etc, etc. It may also be because the rep is a 24 year old blond with a nice smile. Whatever the reason, companies have to pay a handsome fee to any rep that can bring business in such a competitive environment. If it makes a doc mad that a rep earns $200K or $1M, and he uses another company because of that, he most likely will be getting a lower level of service and experience, all due to his jealousy. Somebody will be getting paid because he "chose" them and that is what companies pay for.

    And don't forget doc, nowhere is it written that you should make more than the rep. If you are a low volume surgeon in the lower end of the quality spectrum in your market, you may earn less than the top rep in your area. He may just be better at what he does than you are. He certainly has more competition.

    I agree also that the cost savings argument justifying the POD's is bogus. If your complaint, as a surgeon, is that reps earn too much for what they do, how can you justify making those commissions while you are doing even less?

    A simple lesson is "Follow the Money". We are all in this business because it pays well. Most docs are still good people doing good work. They need to separated from this debate from the profiteers. I would be willing to bet that all of the POD owners also own an imaging center, Outpatient surgery center and anything else they can get their hands into. And all of that is fine as long as it is legal and ethical and your treatment plans are not affected by your retirement plans. Thats the tough challenge, many would say the impossible challenge.

    It is true that the docs have the most leverage in this power struggle right now, but it seems that Obamacare will have something to say about "entrepreneurial docs" and what they will and won't be able to do. So, all you reps out there, don't quit your job just yet.

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  115. I find it interesting how defensive the reps are on this blog. If you're confident that you're presence adds something to the health care system that can't be replaced you should rest easy. Your concern about surgeons starting PODs and infringing on your turf is unnecessary. I agree that the government will restrict these, but they'll also be cutting costs and you'll be the first to be cut. Your fundamental problem is that you can be replaced at a lower cost and can't control what's going to happen to you. When the smaller Obamacare pie is divided up, there's going to be little left for you.

  116. Radiology Schools in Florida have a bunch of Seizing Control. I went in for an operation and came out fairly quickly.

    Thanks for this nice post and I really appreciate you.

  117. I like chips, cracker jacks and cherry coke! This statement is about as important (and as exciting) as the foregoing stream of nonsense.

  118. Doc D, you conveniently are failing to address the point.
    What you surgeons are buying we don't offer any longer; Passive income, Royalties, Consulting Agreements, etc call it what you like. The times have changed and we can't provide those things any longer. We are not being "replaced", we simply can't pay you guys to use our stuff and therefore you are creating your own mechanism to derive passive income.
    We are still much bigger than your POD will ever be, due to the fact that there are still surgeons who make their implant selection on criteria other than passive income. However, this blog is about the loss of your business, as we can not provide you with what you are using for your implant selection.