October 26, 2013

162017_132140396847214_292624_nIn a report issued earlier this week by the U.S. Department of Health and Human Services, Office of the Inspector General, entitled, “Spinal Devices Supplied by Physician-Owned Distributors: Overview of Prevalence and Use,” the Inspector General sought to determine the extent to which spinal fusion surgeries used spinal devices provided by physician-owned distributors (PODs), whether the cost and quantity of spinal devices used in spinal fusion surgeries differed when spinal devices were supplied by PODs, the extent to which hospitals associated with a sample of spinal fusion surgeries purchased spinal devices from PODs, and whether the rates and complexities of spinal surgeries differed when hospitals associated with a sample of spinal fusion surgeries purchased spinal devices from PODs.

The underlying concern is that PODs, which include the surgeons who implant the spinal devices, profit from using the spinal devices that creates a conflict of interest affecting their decision-making (PODs respond that their spinal devices cost less than devices provided by other spinal device companies).

The Inspector General reviewed a sample of 1,000 claims billed to Medicare in fiscal year 2011 that included spinal fusion surgery. The Inspector General found POD-supplied devices were used in 19% of the spinal fusion surgeries billed to Medicare; about two-thirds of the surgeries that used POD devices used a mix of POD-supplied devices and devices that were not from PODs; about one-third of the surgeries used only POD devices; and, that spinal surgeries that used POD devices used fewer devices but did not have lower per surgery device costs than surgeries that did not use POD devices.

Surgeries that used POD devices implanted an average of 12.3 spinal devices compared to an average of 14.2 spinal devices for surgeries that did not implant POD devices (complex spinal fusion surgeries that used POD devices implanted an average of 16.5 devices compared to an average of 23 devices for complex spinal fusion surgeries that did not implant POD devices). However, the Inspector General determined that there was not a statistically significant difference between the average total device cost for spinal surgeries that used POD devices and those that that did not use POD devices, and that none of the six types of spinal devices examined was less costly per unit when provided by PODs (one was more costly when provided by PODs — hospitals paid $845 more for spinal plates from PODs).

Thirty-four percent of the hospitals reported buying spinal devices from PODs. About two-thirds of hospitals reported that they purchased from PODs owned by physicians practicing in their hospitals. About 40% of hospitals that purchased from PODs were uncertain whether one or more of their other suppliers were PODs. Hospitals began purchasing from PODs as early as 1997 but 88% began purchasing from PODs after 2005 — 41% began purchasing from PODs between 2010 and 2012. Ninety-four percent of hospitals that purchased from PODs reported that surgeon preference influenced their decision to purchase from PODs (surgeons often develop a preference for a company’s devices after they gain familiarity and experience with that company’s devices).

The Inspector General found that when hospitals began buying spinal devices from PODs, their rates of spinal surgery grew faster than the rate for hospitals overall: before these hospitals started purchasing from PODs, they performed 95 spinal surgeries per 1,000 surgical discharges. This rate grew to 110 spinal surgeries per 1,000 surgical discharges after these hospitals began purchasing from PODs, an increase of 16%. Over matched time periods, the rate for hospitals overall grew by only 5%, from 57 to 60 spinal surgeries per 1,000 surgical discharges.

The rate of spinal fusions, in which the use of spinal devices is more likely, grew more than twice as fast among hospitals that used PODs compared to the rate for hospitals overall. The Inspector General found that in fiscal year 2012, surgeons performed more spinal surgeries and had slightly more complex spinal surgery caseloads at hospitals that purchased spinal devices from PODs than at hospitals that did not purchase from PODs.

The Inspector General’s report concluded that these factors may increase the cost of spinal surgery to Medicare over time and found that the policies of hospitals regarding PODs varied in whether they required physicians to disclose ownership interests in PODs to either the hospital or their patients (65% of hospitals had policies requiring them to do so; 8% required physicians to disclose to their patients whether they have an ownership stake in the device companies they use), which reduces the ability of hospitals and patients to identify potential conflicts of interest among PODs.


We look at PODs this way: either PODs are similar to restaurants that select the ingredients for their offerings and then earn a profit when their customers consume their products or PODs are like politicians whose decisions are influenced, to some extent, on the bribes they pocket from those most affected by their efforts.

If you or someone you know may have been injured or suffered other serious harms as a result of a defective spinal device or other defective medical device, you should promptly consult with a medical device lawyer (medical malpractice lawyer) in your state who may assist you with your medical device claim.

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