Feds Eyeing Docs Over Device Consulting Fees
3 CommentsBy Ed Silverman // March 24th, 2008 // 10:43 am
The federal investigation into kickbacks paid by device makers to hip and knee surgeons is now shifting to the docs themselves. After reaching settlements with five hip and knee implant makers last year over payments, the HHS Office of Inspector General is focusing on doc who receive money as paid consultants, The New York Times reports.
“We are going to be looking at those soliciting kickbacks,” Lewis Morris, the OIG chief counsel told an audience of docs, device execs and investors earlier this month in San Francisco at a meeting of the American Academy of Orthopedic Surgeons. The same message has gone out to health care lawyers attending legal education seminars and, directly from Christopher Christie Jr., the US Attorney in Newark, who is overseeing the investigation.
Execs say Christie addressed sales meetings of the five device makers. He said, ” ‘I’ve dealt with the supply issue, now I need to deal with the demand issue,’ ” Ed Lipes, executive vp in charge of surgeon relationships at Stryker, told the Times. Although industry execs say they heard some docs have received subpoenas, none have been publicly identified. A spokesman for Christie’s office declined to whether any docs had become targets of the investigation.
You may recall that the HHS OIG is likely to start requiring disclosure of consulting relationships with doctors as part of settlement agreements with drugmakers in the coming year (back story). The arrangement will likely mirror what several device makers are now doing.
THEHCC.TV
The significance of these kickbacks is not just that some surgeons pocket some extra cash, millions of dollars at times. The significance is that is causes the doctors to be corruptly loyal to a particular brand of implant and allows the makers to jack up prices each year in price inflation. When the hospital administrators try to push back, the powerful surgeons just threaten to jump over to the hospital across the street. Price inflation, and not unit growth, is the main growth for these implant companies. Orthopedic surgery overall is one of the largest budget expenses for Medicare.
Fact, orthopedic implants comprise 4% of the total inpatient expenditure for Medicare CMS. It ranks at the top, ties with coronary stenting, as the costliest procedure category. Fact, the price inflation on implants is the largest driver of growth for the implant companies, not increase in implants used. Translation, the stent companies are ripping off taxpayers for billions using a corrupted surgeon scheme of rewarding them with kickbacks.
Paul
It was time.
Nobody had addressed the ethics of doctors who demand and expect payments.
After a few years of this, the next frontier will be plaintiff lawyers who manufacture cases.
AV Block
THEHCC.TV, you are wrong. Orthopedic implants comprise a small portion of the total cost of an individual patient’s length of stay at a hospital.
Another point… Physicians are the innovators, and if you regulate this industry further, there is a trade-off: you lose innovation.
And you, like so many other well-intentioned liberals, are simply creating another problem by resorting to regulation… i.e. at the end of the day you are simply allowing bribery of lawyers - witness the astounding payments made to Ashcroft’s firm for compliance. We don’t want to create another growth industry for greedy lawyers.
Can’t believe the continued assault on free markets. You attack doctors, who clearly contribute more to society than corporate lawyers and investment bankers, and invite device companies to outsource their R&D, innovate abroad, and introduce innovative products outside the U.S. By regulating the device industry (no matter what, information asymmetry between physician and patient is a reality), you are simply creating more jobs for lawyers. Defensive medicine as a result of greedy lawyers is a pernicious contributor of healthcare costs, and ask anyone outside of the US, and they will certainly say the legal landscape in the US makes it incredibly hard to do business. Take an unrelated industry, finance, as an example. Witness Hong Kong and London leading NYC in finance as a consequence of many factors, including over-regulation and the awful legal business climate in the uS.