AME President Scott Lederhaus Testifies before the Senate Finance Committee on Physician Owned Distributorships

By Association for Medical Ethics
November 20, 2015

AME President Scott Lederhaus Testifies before the Senate Finance Committee on Physician Owned Distributorships

Association for Medical Ethics President Scott Lederhaus, M.D., testified at the Senate Finance Committee’s hearing on physician owned distributorships titled “Physician Owned Distributors: Are They Harmful to Patients and Payers?” held on Tuesday, November 17, in Room 215 of the Dirksen Senate Office Building.

Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) held the meeting to explore how through physician owned distributorships (POD) physicians receive revenue from the sale of medical devices they prescribe to patients.

Dr. Lederhaus’ written testimony and a video of the hearing is available online at

Dr. Lederhaus has long been a vocal critic of PODs and their pervasive effect on patients, physicians and the medical community.

“The corruption surrounding physician owned distributors and the idea that every patient with any level of low back pain is a surgical candidate is nothing short of unbelievable,” Dr. Lederhaus said. “The financial incentive is leading doctors to perform unnecessary surgeries as they put profits before patients.”

“Patients are blindly willing to accept whatever implant the surgeon would decide to use regardless of the quality of those implants or where they are made,” Lederhaus said during the Senate hearing. “A patient has no idea what a POD is or how a POD might affect their treatment or outcome. So a disclosure by the physician of the POD implants to be used is nothing more than the physician telling their patients what they will be inserting into their spines.”

A POD is an entity whereby the physician purchases an ownership in a medical device or implant company. The POD buys the implants wholesale and then sells those implants to the hospital at retail. The physician then inserts the POD implants into their patients, and the physician and POD organizers pocket the difference. The physician, in effect, becomes a salesman. It also has been found that a physician is more apt to implant excessive hardware for the sake of enhancing income when using implants the surgeon owns. The Office of Inspector General estimated 20 percent of all spinal fusion operations done in 2011 used POD implants.