Monday, October 10, 2011

Huntsville Neurosurgeons Identified in WSJ article: Taking a Double Cut, Surgeons Implanting Their Own Devices

Source:  WSJ

In the weekend edition of The Wall Street Journal, John Carreyrou and Tom McGinty investigate the ownership of medical device companies whose products the surgeons implant in their patients.

A federal antikickback law prohibits medical device makers from paying surgeons to use their products.  Mindful of the law, big device makers entered into partnerships with spinal surgeons, paying them consulting fees and royalties for help designing their products. In some cases, surgeons receiving payments would use that company's devices exclusively and would author research favorable to those products, company documents obtained by congressional investigators show. 

Critics of such arrangements say they give surgeons an incentive to do
more operations, and that the conflict of interest has led to unnecessary back surgeries that waste health-care dollars and often do patients more harm than good. "Patients are having huge operations that are un-indicated because of this," says Scott Lederhaus, a neurosurgeon in Pomona, Calif., and member of the Association for Medical Ethics, an organization of doctors that focuses on conflicts of interest. 

The inherent conflict of interest is fueling concern. In June, five U.S. senators asked the Inspector General of the Department of Health and Human Services to open an investigation into physician-owned device companies, citing concerns that the surgeons involved have a financial incentive to "perform more procedures than are medically necessary." 

Many of the products at issue are approved by the FDA pursuant to the 501(k) process. Under this process, surgeons only have to submit mechanical-testing data attesting that their implants are "substantially equivalent" to existing ones. The FDA
usually gives its green light within 90 days. This process has been under increasing criticism as abuses continue to mount and virtually everything has become substantially equivalent.

The article highlights Spinal USA. 

In the spring of 2007, FDA inspectors paid a surprise visit to Spinal  USA's offices. They assessed the company with 14 violations, ranging from failing to maintain master records for its devices to having no system in place to track and label them, according to a warning letter the agency issued to the company. The violations were "symptomatic of serious problems," the warning letter stated.

A spokesman for Spinal USA said its rapid growth caused it to run afoul of FDA procedures. He said the company hired an experienced manager to oversee quality control in February 2008, and a second FDA inspection that September cleared the company of the violations.  During a third visit in December 2010, FDA inspectors found problems with the way Spinal USA was storing bone products, which the company also addressed.

So why would surgeons use Spinal USA product and why is it that so many neurosurgeons in Huntsville, Alabama would jump on the product bandwagon?
According to the article, in 2007, four spine surgeons in Huntsville, Ala. to invested in the company. Those surgeons, Gilbert Aust, Cyrus Ghavam, Morris Seymour and Larry Parker, switched to using Spinal USA implants in most of their surgeries, according to a local representative for a big medical-device maker.

Four more Huntsville spine surgeons subsequently joined Spinal USA, giving the company a relationship with eight of Huntsville's current 15 spine surgeons. Spinal USA also expanded to Mobile, Ala., where it recruited two surgeons.

Dr. Aust, who is chairman of Spinal USA, confirmed that he and Drs. Ghavam, Seymour and Parker are investors. The company declined to comment on its other surgeon investors.

At Huntsville Hospital, one of the city's two hospitals, 351 spinal-fusion surgeries were performed on Medicare patients in 2009, up from 333 in 2006, before Spinal USA came to town, a Wall Street Journal analysis of Medicare claims data shows. At Crestwood Medical Center, the city's other hospital, there were 187 such operations on Medicare patients in 2009, up from 107 in 2006, the analysis shows. Huntsville Hospital says it spent $5.6 million on Spinal USA products in its most recent fiscal year. 

Dr. Aust is quoted as saying that he performs such hardware replacements for medical reasons, not financial ones. He says he doesn't see anything wrong with the fact that they benefit him financially by contributing to Spinal USA's sales. "I know some people in the profession don't think it's ethical,but I just don't see it," he says. 

The federal antikickback law doesn't specifically address the issue of surgeons using medical devices made by companies they co-own, but HHS's Office of the Inspector General has issued regulatory guidance for complying with the statute: Among other things, it advises that no more than 40% of a company be owned "by investors who are in a position" to "generate business" for it. 

Dr. Aust says he and Spinal USA's other surgeon investors own "the majority of the company," but are working on lining up outside investors. The Spinal USA spokesman says its surgeon owners are in compliance with federal laws because their shares of profits are proportional to their ownership stakes, not to how much business they generate through their surgeries. He adds that more than 60% of the company's business is generated by surgeons who aren't owners. 

Spinal USA declines to say how much its surgeon owners earn from the company. But a filing in the personal bankruptcy case of spine surgeon Michael Molleston, one of its investors, says Dr. Molleston received $26,000 a month from Spinal USA as of Nov. 19, 2008, when the filing was made. Dr. Molleston couldn't be reached for comment. 

Medicare data showed that a doctor in Jackson, Mississippi  with a similar agreement performed spinal fusions more frequently than many of his peers. In 2008 and 2009, he performed 278 spinal fusions on Medicare patients, tenth most in the nation, according to the Journal's analysis of Medicare claims data. In 150 of those cases, or 54%, the patients' diagnosis was degenerative disks. 

Considering the catastrophes we are seeing in medical devices and the murky relationships between physicians and pharmaceutical and medical device companies, everyone should consider asking their surgeon to disclose these type of arrangements and Congress should mandate it. 
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