In the wake of Monday's (4/11/11) Wall Street Journal article, TSB has been deluged with information regarding nefarious business models that have been potentially designed to shift profits that threaten the industry's future. Some readers have accused the Journal of sensational tabloid journalism. Many people in the industry couldn't be any happier that people like John Carreyrou and Tom McGinty of the WSJ, and Barry Meier of the NY Times continue to shine a light on spine companies and spine surgeons in the news. Those individuals and companies that are directly, or indirectly involved, will argue that this business model is legitimate, based on various legal opinions. Some bloggers question whether it is politically correct and financially beneficial to attack our customers? In all likelihood, individuals involved in these schemes rationalize their existence by calling themselves "stronger," "bigger," and "smarter," than those that attempt to earn an honest living. Based on various complaints in public records, Dr. Makker probably believed that he was smarter, stronger, bigger, and beating the system. Dr. Makker will be afforded due process under the U.S. judicial system. Unfortunately, the only people that have suffered are those that put their faith and health in a system that has countlessly failed at policing their own. Where was the hospital administration and hospital board the entire time? If TSB was counsel for the plaintiffs, not only would Dr. Makker be sued, but Providence Portland Medical Center would be sued for failing to provide oversight . NASS, AANS, AAOS and AdvaMed are lame duck organization. Rarely if ever has the industry disciplined one of its own. Even the OIG and the DOJ have failed the public. To this day, industry people ask, will the FBI and the DOJ ever prosecute the former Blackstone Medical executives? Answering that question is the equivalent to answering the meaning of life.
Surgeons rationalize the POD model by saying that this model does not lead to over utilization. Maybe some are sincere with their intent. Yet, when one looks at the 25% dividend that was supposedly paid to an L.A. Spine surgeon totaling over $500,000, one must admit that this lends a new definition to paying dividends on investment. If surgeons are "disenchanted" with the amount of money spent on sales, marketing and distribution of product, maybe some introspective due diligence should be paid to what corporations pay in surgeon consulting fees. TSB would argue that general administrative costs are dwarfed by consulting agreements. All one has to do is take a tour of Medtronic's, Stryker's, Zimmer's, Biomet's and DePuy's websites. TSB guarantees that this information is incomplete since full disclosure is not mandated for a few more years. How do small companies rise like a meteor, claiming 20%, 30%, 40%, 50% growth at a time that the market is essentially flat? Is it their innovation? Is it their technology? Most of us know that we continue to compete in a zero-sum market, so what's the incentive?
Surgeons are quoted as saying, "that they feel that they could do this much better, if afforded the opportunity to be the intermediary with the hospital." Have any of us ever met a surgeon that didn't think he could do something better? If the intent is to save the hospital money, and drive down the cost of delivering healthcare, then why not just open the process to closed bidding? Modern technology and product saturation has leveled the playing field. If surgeons know design preferences, have an ability to forecast volume, and understand product quality then let's eliminate the preferred vendor list that minimize free market competition.
But the bigger question that must be asked is, if the rationale for physician owned distributorships is to drive down the cost of delivering quality care, then physicians shouldn't complain when the government or the insurance industry looks to decrease their reimbursements. Isn't this just another avenue to driving down the cost of delivering healthcare. POD's, POC's, POH's are nothing more than an attempt at manipulating the system to increase one's own profits. In closing, Dr. Makker may have done the industry a favor. If found guilty will the legal system punish him? Or, will they slap him on the wrist only to find out he surfaced in another state practicing medicine?