Is Dr. Steinmann's, aka patient zero, POD model just the tip of the ICEBERG? How many companies are utilizing this model? How many surgeons are involved in these ventures? In terms of dollars, how big are some of these entities? TSB and a colleague were discussing the rise of Physician Owned Distributorships and how it is affecting everyone's ability to earn a living. Contrary to others opinions, many industry people believe that what we are witnessing is a fundamental breakdown in competitive boundaries in business principles. Is this just the beginning of the end? Do Medtronic, Stryker, Zimmer, Synthes, K2M, DePuy, and NuVasive truly condone hinging their futures on this model? And if so, does this bode well for investors? How badly are the POD's cutting into some companies margins? Are some of these POD's really saving the hospital's money, or are they just shifting the profits from the companies into the pockets of the surgeons? Are the big boys succumbing to pressures from smaller companies? Has this industry become the poster child for an "anything goes industry?" Will there be a decline in the need for sales people, and have we evolved into a "coverboy or covergirl" model? Some will think that these observations are esoteric, yet, the by product of the spine boom in the early part of the turn of the century has made this industry look like more like teenage wasteland than ever before.
As TSB was interviewing some former Blackstone employees, those employees were reminiscing about the good old days when the Three Amigos were cutting deals with surgeons and mandating that distributor principals agree to 50/50 consulting agreements. Unbeknownst to some distributors, the Amigos would come into their territory in the dead of night, meet with the surgeon du jour, and then inform the distributor that a deal was done. The result, you pay 50% of the consulting and I pay 50% of the consulting fee. Some argue that this model still exists, the only difference is that after years of consulting with attorneys specializing in Stark, the language and compliance protocol has been refined to smooth over the edges.
How does this model really help the patient? Slowly, many layers of veneer have been peeled off the healthcare industry. What we have today, is a cross between a dystopia and a grifter society. Dysfunctional truly doesn't define the industry? Does the industry have no one to blame but itself for what we have evolved into? We behave no different than the former Mayor of Chicago, who under sold off the parking meters in the City of Chicago to a foreign entity, no different than the former Governor of Pennsylvania who attempted to sell off the Pennsylvania Turnpike to an Arab consortium.When you read stories about surgeons like Dr. Makker and research all of the lawsuits filed against him, one has to wonder, how many of these procedures were influenced by greed, or by clinical necessity? And what about the patient? So in closing, TSB wants to know who are these POD's, which companies are building their futures on this model, and will the carousel of life continue to spin round and round like the painted ponies that go up and down?