Senators want more transparency, regulation for physician-owned distributorships

By Shannon Muchmore
November 17, 2015

Washington - Lawmakers and healthcare experts had harsh words during a Senate hearing Tuesday for physician-owned medical device distributorships, a controversial business model that critics say allows doctors to profit inappropriately from the devices they implant.

PODs have been the target of lawsuits and news stories about doctors accused of conflicts of interest. The practice and the controversy surrounding it have continued despite regulations in the Affordable Care Act meant to mitigate conflicts of interest by requiring disclosure.

Kevin Reynolds, whose mother was bedridden and later died after back surgery conducted by a doctor in a POD, said in emotional testimony that the distributorships are a “serious threat to the nation's health and must be stopped immediately.”

The surgeon who operated on Reynolds' mother did not disclose his relationship in the ownership of the rods and screws used in the spinal fusion surgery. If he had, Reynolds said they would have sought another opinion.

The doctor then performed more surgery, using more devices, than his patient had agreed to. She suffered from multiple infections and died from complications of the surgery, Reynolds said. “I ask and demand this committee to stop these doctors,” he said. “Please do whatever is necessary.”

Sen. Ron Wyden (D-Ore.), the ranking member of the committee, said he was eager to work with Republican colleges to shine more light on the business model. Doctors in these distributorships are “double-dipping” by receiving insurance payments and also getting a cut from device manufacturers, Wyden said. “I think this is some of the most egregious and offensive behavior I've seen in a long, long time.”

Dr. Scott Lederhaus, president of the Association for Medical Ethics, said PODs are in “stealth, secret mode” and produce questionable quality without reducing costs.

“In my mind, this is not a question to ignore,” he said.

The main defender of PODs at Tuesday's hearing was Dr. John Steinmann, board adviser to the American Association of Surgical Distributors. He said the committee had valid concerns but countered that doctors have always had a financial stake in the treatment they suggest or perform.

“I believe that an ethical surgeon will not be changed to an unethical surgeon by this model,” Steinmann said.

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