The Press and An Equitable Marketplace for Medical Devices
An article appeared in the reputable journal Forbes on Friday, September 19, 2018, titled “Restrictive Innovation: How Medical Device Manufacturers Confound Clinical Excellence”. It addressed a serious problem familiar to anybody who knows healthcare: While manufacturer reps in pharma were called out ten years ago for exerting undue influence over treatment decisions to bolster their own profits, the same practice is alive and well in medical devices today. Sheltered behind a myth of industry dependency, medical device reps dictate everything from clinical approach to medical device spend and effectively govern the device utilization of operating rooms in a variety of clinical areas. The consequences go far, and they may include delaying the adoption of new treatment methodologies because devices and equipment are released to optimize profits, not patient care results.
Hospital tactical decision makers are kept hostage to the manufacturer's profit objectives and, in reality, have chosen to "live with the situation"...
This is an anomaly and a market failure. Hospital tactical decision makers are kept hostage to the manufacturer’s profit objectives and, in reality, have chosen to “live with the situation”, but the consequences to patient care are far beyond pragmatic: It is important what procedure the patient undergoes and what devices are used, and to optimize healthcare, we need to make sure that an equitable marketplace exists, so that clinicians and healthcare administrators have the power of choice. Well, in most labs and operating rooms, this power of choice has been abandoned. In an electrophysiology lab today, most decision makers decide to embrace the compelling gift of an inexpensive ultrasound or mapping system and, as a result, buy all disposable devices from the generous manufacturer that made the capital equipment available. The manufacturer then employs and places reps and technical operators in the operating room to ensure the orders keep flowing (one source told me that as much as 50% of the compensation for a tech is made up of commission). Because of this market failure, device manufacturers are successful in launching ever-more expensive devices into the labs and operating rooms – with no questions asked. The now-gone Forbes article reads:
“Under the guise of innovation, the industry's medical device manufacturers have become so brazen about introducing meaningless product changes that noted Princeton economist Uwe Reinhardt openly called them out, saying, “unnecessary innovation is one of the industry’s biggest cost drivers —a tax on the system that protects OEM profits and confounds customer [hospital] strategies to save money.” With device costs already running 60% of the total reimbursement tied to many procedures, the economics are unsustainable.
... as much as 50% of the compensation for a [OEM] tech is made up of commission.
It is a great thing that a venue for investigative journalism pushes this angle, and those of us who are hopeful on behalf of American healthcare saw this as a veritable break-through in the general press silence about the medical device space.
However, the article is no longer available, I cannot provide a link. I just happened to snap a copy of the article on Friday, so I still have it, and I still think it is a compelling story. Why did the article disappear? I don’t know, but I DO know that the bullying of the hospital operator by the device manufacturer does not stop in the operating room, and it might have made its way into the world of the press.
The article leveraged a quote from my boss, Rick Ferreira. He is a 30-year medical device industry veteran, and an insightful as well as a credible source for any discussion about the medical device space. In the article, he said;
"Technology innovation in AF Ablation has opened up the opportunity for us to revolutionize the treatment of heart disease, but its impact is confounded by commercial practices that effectively restrict rather than expand access.”
My point is this: Technology supplier governance over clinical decisions is a weak spot in healthcare; it is reflected in the un-equitable market place of the operating room, and it hurts us all when we are undergoing a procedure. Forbes did their job as a journalism watch-dog when posting the article, which was fact-checked and unbiased. However, it’s a bad day for investigative journalism when this story disappears without any substantial explanation (I have asked); it’s a bad day for healthcare when the press doesn’t uphold its part of the bargain and removes expositions of systemic healthcare issues; and it’s a bad day for healthcare managers, whose attempts to fix the healthcare system is thwarted. The equitable device marketplace became one step closer on Friday, then took two steps backward.