Senators Want Probe of Surgeons’ Medical Device Profits from PODs

With physician-owned distributorship, or PODS, established in about 20 states—20 in California, alone—five United States senators reached out to the Inspector General of the Department of Health and Human Services, seeking an investigation into these entities, said The Wall Street Journal.

PODs are “middleman” outfits that offer profits to surgeons for the <"">medical devices they use on their patients. The investigation will look into the legalities of these entities, said the Journal. The senators included the Senate Finance Committee’s report, which was completed by Utah Senator Orrin Hatch’s office. Hatch is the top Republican on the Committee and the report discussed the rise of PODs in spine and orthopedic surgery, said the Journal. Senate Finance Committee Chairman Max Baucus (Democrat-Montana) and senators Herb Kohl (Democrat-Wisconsin), Charles Grassley (Republican-Iowa), and Bob Corker (Republican-Tennessee) joined Senator Hatch in the request. In their <"">letter, the group asked the Inspector General to submit an initial report on his findings by August 12, said the Journal.

PODs create, said the report, “financial incentives for physician investors to use those devices that give them the greatest financial return,” which can pose violations on an anti-kickback statute and other federal fraud and abuse laws, according to the report, said the Journal. With the entities working as a liaison between medical device manufacturers and hospitals, there is an exchange in marketing, stocking, and selling in which PODs receive a sales percentage, said the Journal, pointing out that in cases in which surgeons own a POD, they receive commissions for devices sold.

Of note, surgeons typically decide for the hospitals where they operate, what devices they want to use in their procedures, so POD surgeons can move business to themselves, noted the Journal.

As a matter-of-fact, this year, the Journal received national attention on a report it made concerning a neurosurgeon in Portland, Oregon, Dr. Vishal James Makker, who performed “multiple spine surgeries on the same patients” using spinal implants provided to it by the Omega Solutions POD. It turns out, said the Journal, that Omega POD data revealed it paid its investor surgeons as much as $500,000 annually to use its medical devices. Following the Journal report, the Omega Pod, shut down, said the Journal. It seems that spinal implant makers stopped working with it and Dr. Makker, who also lost his hospital privileges and is under Oregon Medical Board review.

We have long noted that the financial relationships between the drug and medical device industries and the health care industry have led to enormous controversy. Critics maintain that such relationships create conflicts of interest and could unduly influence everything from research findings to prescribing practices.

This case and the Senate report highlight those concerns. “Physician investors in PODs may perform more procedures than are medically necessary” because they can earn more money every time they are implanting one of these devices into their patients, quoted the Journal. For instance, Dr. Makker operated on some patients’ spines up to seven times, although he maintains he never performed unnecessary operations and always acted in his patients best interests, wrote the Journal, citing the report.

The report also discusses another surgeon who “provided examples to the Committee of elderly patients in a POD area who were receiving eight to 10 fusions in their back despite the serious health risks posed by these procedures”; patients who “died from multiple operations”; and an increase of over 300 percent in spinal reoperations in one hospital following a new POD being established in its area, said the Journal.

In similar news we recently cited a study that highlighted potential pitfalls when doctors maintain close financial ties with drug and medical device makers. The study, published in the Archives of Internal Medicine, said in its example, that most doctors who served on panels charged with writing heart treatment guidelines also have financial relationships with companies that market medical products.

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