Your Doctor’s Financial Interest Shouldn’t Determine Your Medical Care

Now there’s a headline we should never have to write. But consider this: If you think kickbacks are the sleazy kind of financial reward more commonly associated with organized crime than medicine, you’re probably not aware of PODs-physician-owned distributors. Last month, the Department of Health and Human Services’ Office of the Inspector General (OIG) issued a fraud alert about this worrisome commerce.

Doctor-owned medical devices or services-such as scanning equipment, laboratories or the sale/manufacture of implantable devices, which is the particular focus of this alert-are ripe for abuse and conflicts of interest. As described on, the alert focused on PODs that sell medical devices that were ordered by the practitioners themselves for use in procedures they perform on their own patients at hospitals.

“We are particularly concerned about the presence of such financial incentives in the implantable medical device context,” the alert reads, “because such devices typically are ‘physician preference items,’ meaning that both the choice of brand and the type of device may be made or strongly influenced by the physician, rather than being controlled by the [facility] where the procedure is performed.”

According to the OIG, PODs are “inherently suspect under the anti-kickback statute.” That’s because you can’t be certain that the decision to refer a patient for testing was made with complete medical objectivity if part of the cost paid for it is returned to the person who made the referral.

Violation of the statute, by the way, is a felony punishable by a maximum fine of $25,000, imprisonment for as long as five years, or both. Conviction gets you excluded from Federal health-care programs. That’s serious, but it pales in comparison to the damage a patient can suffer because someone’s priority was self-enrichment instead of patient safety.

As AboutLawsuits explains, the additional profits for the doctors often are shared with the hospitals or ambulatory surgical centers where the procedures are performed.

In addition to corrupting medical judgment, the PODs can contribute to the overuse of medical devices. The harm of that, as we’ve noted, is a higher incidence of false positives, leading to unnecessary worry and additional tests that might be invasive, painful and pose risks of their own, such as radiation or infections. Overuse also increases costs for patients, insurers and public health-care programs. The OIG also says it promotes unfair competition.

The OIG says a disclosure statement of financial interest, which often occurs in doctor testimonials that a patient should choose a certain facility, is not sufficient to overcome the whiff of conflict of interest. The only interest a doctor should have in referring a patient for a particular test at a particular facility is the best, most appropriate medical care. That usually doesn’t come with a side order of line-my-pocket.

As AboutLawsuits points out, kickback warnings have concerned the OIG in the past. In 1989, a special Fraud Alert on Joint Venture Arrangements was issued that discourages hospitals from using PODs and doctors from joining them.

According to an OIG letter in 2006 about doctors’ financial interests in PODs, “The strong potential for improper inducements between and among the physician investors, the entities, device vendors and device purchasers should be closely scrutinized under the fraud and abuse laws.”

Whenever your doctor recommends a procedure, or if you are having surgery to implant a medical device, not only are you well within your rights to ask the following questions, as a matter of self-protection, you should.

  • What is the purpose of this procedure/device, what results can I expect, and how soon?
  • Are there alternatives?
  • Why am I having the procedure at this particular facility?
  • What is your financial interest in the equipment used or the facility where it’s performed?

If you are having a device implanted, find out the name, model and manufacturer. Then check the FDA’s MedWatch site to find out if there are adverse event reports about it.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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