The Justice Department has filed a lawsuit alleging that three surgeons performed unnecessary spinal surgeries, a distribution company they invested in encouraged them to pressure hospitals to buy its medical implants, and the company and one of the surgeons denied the physician investments even as the surgeons received hundreds of thousands of dollars. Only one of those surgeons was named as a defendant.
Those details, brought to light in a False Claims Act lawsuit filed earlier this month, highlight the potential risks for patients and hospitals when hospitals contract with physician-owned distributorships, which are known as PODs.
PODs are companies that sell medical implants to hospitals and usually have physicians as their owners or investors. Proponents say PODs lower costs by stripping out expenses associated with device sales and also allow physicians who invest in the distributorships to collaborate with manufacturers to foster innovation. The distributors are most prevalent in California and are often associated with the spine implant market.
But enforcement actions taken over the last two years allege some PODs are driving up healthcare costs by charging above-average rates for implants. They also allege that PODs may be encouraging physician-investors to increase their surgical volumes and perform medically unnecessary procedures, which can lead to avoidable patient harm.