Teaching hospitals got $315 million from healthcare companies

A new era in healthcare transparency opened last week when the federal government for the first time published detailed information about the financial relationships between medical product manufacturers and physicians and teaching hospitals.

The goal of the new Open Payments website, mandated by the Physician Payments Sunshine Act, is to let the public find out about financial ties between medical providers and industry that could lead to conflicts of interest and inappropriate clinical care. The website was rolled out Sept. 30 without any major glitches, though critics said it was slow and not user-friendly for the general public.

A Modern Healthcare analysis of the data found that medical device and drug companies gave teaching hospitals more than $315 million during the last five months of 2013 in research funding and general payments including royalties, grants, gifts, and facility rentals.

Two-thirds of the funding—$209.2 million—went toward general payments, while $107.9 million was for research.

“We certainly hope that the public attention and scrutiny around these types of payments to teaching hospitals will raise questions about the appropriateness of certain types of payments,” said Wells Wilkinson, senior policy analyst at Community Catalyst, a consumer advocacy organization.

The site was mandated by the Sunshine Act, a provision of the Patient Protection and Affordable Care Act that requires disclosure of transfers of value larger than $10. The CMS organized the records submitted by manufacturers into three categories: research payments, nonresearch general payments and physician ownership or equity. The CMS has proposed requiring disclosure of payments by manufacturers to doctors providing accredited continuing medical education, but those data were not included in the first round.

In total, manufacturers made 4.4 million payments totaling at least $3.5 billion to 546,000 physicians and 1,360 teaching hospitals from Aug. 1, 2013, to Dec. 31, 2013, according to the CMS. The government withheld about 40% of the records over accuracy concerns and plans to publish them next year.

Most news organizations focused their coverage on individual physicians who received large payments from manufacturers, such as the $7.4 million received by San Antonio orthopedic surgeon Dr. Stephen Burkhart, mostly in royalty payments from Arthrex for products and techniques he developed for shoulder arthroscopy procedures, the Wall Street Journal reported.

But this is the first time that data about ties between academic medical centers and manufacturers have been made public. Some experts said the disclosures aren't likely to raise ethical questions but may be used by manufacturers and hospitals for business purposes. Most general payments are for royalties, licensing fees, grants and rental fees associated with education.

“Most academic institutions are really motivated to address research conflicts and how that reflects on the institutions,” said Danielle Sloane, a partner at law firm Bass, Berry & Sims.

City of Hope, a cancer research hospital in Duarte, Calif., received about $122 million in general payments, with 99% attributed to royalties or licensing agreements.

The hospital received more money than any other hospital in the general payments category. “City of Hope receives royalty revenue from companies that license and commercialize City of Hope's technologies,” a spokeswoman said in a written statement. Most of that comes from one licensing arrangement with Genentech, she added.

Dana-Farber Cancer Institute, a Boston cancer hospital, collected the most research payments of any academic center, garnering $14.9 million, according to the Open Payments website. It received three of the 10 largest payments by all teaching hospitals, totaling $7 million from Bristol-Myers Squibb Co. for three clinical trials.

But a Dana-Farber spokeswoman said the hospital is disputing some payment information reported by Bristol-Myers Squibb because the valuation of the drugs supplied for clinical trials is inaccurate and the total may have included drugs supplied to other hospitals. “We encourage CMS to re-evaluate whether publishing the commercial value of drugs supplied in-kind for clinical trials … is truly meaningful data in this context,” the spokeswoman said.

Despite such concerns, supporters of the Sunshine Act say the Open Payments launch is an important first step in providing transparency around industry payments to healthcare providers. The CMS said it plans to introduce new tools to make the Open Payments database easier to use. Some observers, however, question how many consumers will pay attention to the disclosures, and say the data more likely will be used by government investigators, insurers and health systems tracking doctors' practice patterns.

Follow Jaimy Lee on Twitter: @MHjlee