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Physician-Owned Distributors Linked to Increased Rate of Spinal Fusion Surgeries

Oct 25, 2013

A new federal report reveals that surgeons who have financial stakes in medical device companies that distribute spinal fusion products are more likely to perform the procedure and, ultimately, profit from their use.

The U.S. Dept. of Health and Human Services Office of Inspector General notes that spinal fusion surgery rates are higher among surgeons who are part of a physician-owned distributorship (POD).

We have reported several times in the past on the impact PODs are having in the clinical setting and the worries that some have over whether surgeons who have financial stakes in these companies would be more inclined to recommend a spinal fusion surgery if they know they'll profit from the procedure.

HHS-OIG found that the increased rate of spinal fusion surgeries among surgeons who are part of a POD is putting many more patients at risk of serious injuries and forcing them to undergo many more unnecessary surgeries. The bi-partisan report this week from Sens. Orrin Hatch, Max Baucus, and Charles Grassley shows that one in five spinal fusion surgeries are performed in the U.S. with devices that are purchased from a POD.

PODs, based on our reports, are companies that are part-owned by surgeons. Surgeons are then financially encouraged to use the devices from their own companies because it will mean more business for them. Worries are growing that surgeons are recommending spinal fusion surgeries that may not be needed because the attending surgeon can gain financially if the surgery is scheduled and his or her hospital purchases the devices needed from the surgeon's POD.

Hatch said in a release accompanying the report from HHS-OIG, "My deep-seated skepticism that physician-owned distributors operate in the best interest of patients and save taxpayers money has been confirmed by this non-partisan report. Seniors on Medicare deserve a surgeon who makes these life-changing health care decisions based on what is best for the patient, not what is best for the surgeon’s bottom line. The HHS Inspector General’s finding that hospitals conduct a greater number of high-risk spinal surgeries when they purchase products from physician-owned distributors shows why vigorous oversight is necessary to protect the health and safety of patients."

To counter the rise in PODs and their impact on healthcare nationwide, Grassley said, "As a start, hospitals should take a closer look at whether their physicians are participating in and benefiting from these arrangements and what that means for patients." He added that including PODs as part of the Physician Payments Sunshine Act will help inform the public of a surgeon's potential financial ties to a medical device manufacturer or supplier.

The report, released this week from HHS-OIG, found that using PODs did not reduce medical costs either.

The report found that spinal fusion surgeries that make use of POD-purchased devices actually used less devices, on average, but cost the patient more. The report also found that hospitals that purchase their spinal fusion devices from a POD were performing more spinal fusion surgeries than hospitals that bought the devices elsewhere.

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