When my mother was a teenager, like most teenagers, did some really dumb things with her friends. Most of the time she didn’t get hurt and everything turned out ok, but at one point she went out dirt biking with some of her friends. She injured her neck and it had been terrible all the way up until she found doctor John Steinman to fix her neck with a spine fusion. He used his own product that is owned by his physician owned distributorships, also known as PODs. He along with multiple other surgeons and a few business people created these to reduce the costs of surgeries and create a far superior medical device than the competition. Sadly because of some misguided decisions by nonaffiliated surgeons who used their POD for fraud to make more money. This lead to a large uproar and investigation into all PODs across the nation to make sure it does not happen to other people.
The surgeon that was originally caught committing fraud using his POD was a spine surgeon by the name of Aria Sabit (Carreyrou). It came to the attention of the hospital he was working at when he started to take a sudden preference for a certain brand of implants for surgeries, and the amount of surgeries he did began to increase, some with tragic outcomes. In 2010 it was found that Sabit had ownership and profited from the brand he decided to switch to. The director of surgical services at the Ventura hospital Sabit was working at, Marilyn Harris, stated in her deposition “The switch prompted speculation at the hospital that Dr. Sabit had joined a POD and was profiting from his use of Apex implants.” (Carreyrou) She was saying this to show that the hospital as a whole was taking notice to the sudden switch and began to become suspicious of why. This led to a speculation that he was completing more surgeries, most more extensive than needed, to provide more profit even at the detriment of the patients. A large quantity of his patients would encounter post-surgical complications, two of which died because of them. Infections accounted for many of the complications that arose, which corroborated with what some of the nurses said in their depositions “Sabit was cavalier about keeping the operating field sterile and would sometimes contaminate it by not scrubbing in properly or by letting his hair dangle over an open wound.” (Carreyrou) These things along with the overuse of products in patients caused many lawsuits and investigations into Sabit, causing him to resign in time and Apex implants to be shut down.
Despite this situation PODs are becoming more prevalent in the scope of surgeries. PODs started out with the focus being on spinal surgeries, it has expanded to knees and hips as well. The legitimacy of these PODs was brought into question in February of 2011. Questions of these entities had to do with the business arrangements in place for them, and specific surgeons affiliated with PODs who allegedly performed harmful surgeries performed on Medicare beneficiaries. The committee of finance from the senate concluded that with the absence of strong enforcement guidance these entities would grow rapidly (United States Senate: Finance Committee). Since the release of the committee report in 2011, they have continued to watch over the growth of PODs. Along with watching over the growth of PODs there were also three laws put into place to ensure integrity when evaluating the legality of PODs. The Anti- Kickback Statute is the first of the three, and the senate report states that it “Prohibits offering, paying, soliciting, or receiving anything of value to induce or reward referrals or generate federal health care program business.” (United States Senate: Finance Committee) meaning that the POD doctors cannot give incentives to federal health care providers to refer patients under the federal healthcare program to gain business. Then came the Physician Self-Referral Law, also known as the Stark Law, which according to the report “Prohibits a physician from referring Medicare patients for designated health services to an entity with which the physician (or an immediate family member of physician) has a financial relationship, unless an exception applies.” (United States Senate: Finance Committee). This law makes it so that a doctor cannot just suggest a patient to a service that they, or an immediate family member, would profit from that service being used. The Physician Payments Sunshine Act, or Sunshine Act, which “Requires manufacturers of pharmaceuticals, biologicals, devices, and medical supplies that participate in federal health care programs to report to the Center for Medicare &Medicaid Services, CMS, any ‘payment or other transfer of value’ to physicians and teaching hospitals.” (United States Senate: Finance Committee). This was put into place to promote transparency in PODs, but also to unveil any potential conflicts of interests that may be at play.
Pricing of health care services is something often brought up when PODs are talked about because the question of “How could physicians owning and distributing devices effect how much some of these services cost?”. This can be seen being argued both ways, with it ruining prices or with it helping prices. In the senate report Dr. Scott Lederhaus stated in his testimony that “They (PODs) adversely affect competition and distort the true price of healthcare services.” (United States Senate: Finance Committee). Lederhaus also suggested in his testimony that PODs completely eliminate competition since a physician that owns into a POD will just buy from that POD or take the case elsewhere. Lederhaus overlooks what I consider an important point, that being facts to back this statement. There was nothing to support what was being said leaving anyone reading concerned on if it is factual or not.
On this I interviewed Angelica Anselm, a medical assistant, who has been working in healthcare for 6 years. She spent 3 years in internal medicine and 3 years to currently in orthopedics. I wanted to get the opinion of someone who worked in the medical field, but not that worked with the surgeons who own the PODs for an unbiased opinion. I asked Mrs. Anselm if healthcare costs are changing and how she felt about it. Mrs. Anselm had a lot to say on the subject saying,
“Absolutely healthcare costs are changing, and not for the better! The Affordable Care Act has required every citizen to have healthcare insurance, or they face paying a tax penalty. While this has caused more employers to offer healthcare insurance to their employees and has executed federal and state assistance programs for those in lower economic classes, it has also caused a substantial increase in health insurance premium rates to middle and higher economic classes. Now, even though more people are covered by insurance, not all physicians take particular insurances, particularly “covered California” bundles. This caused patients to be covered by insurance with no access to healthcare. Moreover, with more people having health insurance, and the same amount of health care practitioners, there is a decrease in provider access and patients must wait longer to see their practitioner.
This change in the healthcare field seems to have taken the patient care experience away from healthcare professionals, as we are overrun with a patient load we cannot keep up with and a large increase in paperwork. I am currently finishing my B.S. in Public Health with all my pre-requisites for Physician Assistant school complete, however I am seeking a career change to law enforcement.” (Anselm)
Mrs. Anselm points out that the healthcare field, mainly with insurance, is having some big issues in the way of costs and coverage. I proceeded to ask her if she believed in her experience if the PODs are a benefit to healthcare economically as well as a benefit to the patients. She responded with,
“Who knows what physicians need better than physicians? Working in Orthopedics, I have met a ton of equipment distributors who work for companies with great ideas, but that are difficult to use in the operating room due to issues that arise with the hardware not foreseen by engineers that do not perform surgery. For instance, not all patients can have the same total knee replacement implant. This is due to bone structure and quality, stature and deformity. Therefore, a standard knee implant made by an engineer actually only fits a select amount of patients. If this implant is placed by a surgeon and is not perfect, the patient will likely require a revision surgery with a second implant somewhere down the line. This caused insurances to pay double fees all around: implant, surgeon, anesthesiologist, operating room and hospital fees. Not to mention the patient is required to undergo anesthesia twice instead of once. Physician owned distributors control the equipment they use, therefore they are more likely to be perfect for their patients the first time, thus saving money, time and the patient an additional surgery.” (Anselm)
Here she is able to point out the benefits that having physicians own the distributorships for the patients that they perform surgery on. It also aids the insurance companies in not having to pay double the costs to fix a problem someone might need fixed.
This issue was attempted to be fought by a physician who works extremely hard to help every patient that he has, Dr. John Steinman a spine surgeon, based on his own POD along with multiple other surgeons. A point that he brought up is that “It is an unfortunate fact that throughout the medical profession there will always be a few ‘bad apples’ who can do serious damage to peoples’ lives.”. The implication here was that because of some physicians who did unethical actions, the rest of the PODs owned by other doctors were now guilty by association. Steinman explains that in his company’s case, “…creating a system of effective competition reduces cost by 35-50% — all while giving patients the information they need to make informed decisions, and using accountability tools to ensure patients are not exposed to unnecessary procedures.” He explains this because the point of the PODs he and his fellow doctors created were for the intention of helping the patients that were in need of having these medical devices, and not for the point of making as much profit as possible. The other reason is to prove that with having these PODs there can be a decrease in the cost of medical care. Doctor Steinman’s company from the beginning was losing money, and still is, resulting in them attempting to sell so that the investors can make their money back. (Stienman)
I decided that I wanted to interview someone who works with these PODs everyday so I interviewed Angela Carlson. She is the president of Alliance Surgical Distributors and the executive vice president of Renovis Surgical. I asked her many questions but we will focus on the most important portions. I started with asking about where the push to get rid of PODs was coming from. She said that when PODs first started the bad statements about them was coming mainly from the bigger distributorships that owned 80% of the manufacturing and distributing of medical devices. Now though the main push is coming from hospitals. Mrs. Carlson says that the reason hospitals are doing this is because physicians are a sort of “road block” keeping the hospitals from doing whatever they want. I asked her what could help PODs out and she said that if hospitals would get behind the PODs and request affirmative action from the federal government to know what exactly they should do rather than just what they shouldn’t. I decided to move on and ask in her experience whether the PODs she works with have been beneficial to the patients, she said that though the patients don’t pay directly for the devices they get benefit in terms of health because the physicians do more due diligence on the devices that they use more now than they ever did before the POD model was in place. Which means that they work out any imperfections much faster than before improving its ability to perform. In the way of cost the physicians that use their POD save the hospital a substantial amount of money, which would in turn allow the hospital to purchase better equipment for the hospital and pay some of the fees for someone getting a surgery in the hospital. I also asked if it is worth the physicians to keep fighting to keep the PODs alive. She said that it is worth the effort because physicians can act autonomously which has a good balance with a hospital to keep thing in check and vice versa. Though she added that with all the other things that they have to deal with having one more battle becomes less tolerable making them not want to fight for it as much as in the beginning. (Carlson)
Based on all the information that I gathered and learned through studying this subject I agree that PODs are a benefit to healthcare as a whole if they are run in an ethical and responsible way. Yes, there should be some regulation on how things happen like there is now, but hospitals should be more willing to work with them as normal because it can bring benefit for all parties involved.
Anselm, Angelica. Interview. Bryce Krohn. 9 March 2018.
This source is an interview of Angelica Anselm on the cost of healthcare. This is being used to get another opinion on PODs that was unbiased. Mrs. Anselm is a medical assistant who has
been working in healthcare for 6 years making it reliable.
Carlson, Angela. Interview. Bryce Krohn. 12 March 2018.
This is an interview of Angela Carlson on PODs in many aspects. This was being used to portray the POD side of the argument on multiple things. Mrs. Carlson is in charge of multiple POD companies making her input reliable.
Carreyrou, John. “Surgeons Eyed Over Deals With Medical-Device Makers.” The Wall Street Journal 26 July 2013. Electonic.
This source is an article from a periodical talking about PODs. More specifically the fraud that was committed by Dr. Sabit. This source is used to see why there became an issue with PODs on the federal level. This was provided to me by Angela Carlson and is from a mostly reputable news source.
Stienman, John. “Statement before the Committee of Finance United States Senate Hearing on Physician Owned Distributorships.” 17 November 2015.
This is the testimony from Dr. John Steinman to the Committee of Finance in the US Senate. This was used to get a voice from one of the physician that owns into one of the PODs. This source if release by the Senate and is the statements of a reliable physician.
United States Senate: Finance Committee. “Physician Owned Distrubutorships: An Update on Key Issues and Areas of Congressional Concern.” Majority Staff Report. 2016. Document.
This is the update report from the Committee of Finance of the Senate on physician owned distributorships. It is used here to see what the federal government has in place to regulate and watch over PODs. This is a complete report from the Senate making it reliable.