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Should surgeons profit from using medical devices they create

on October 27, 2011 Source: Healing Innovation

No physician inventor should apologize for making money off an innovation that improves medicine. Certain orthopedic surgeons, however, have pushed a tenuous ethical line in how they distribute their own devices.

Entrepreneurial surgeons have formed medical device companies to develop, manufacture and distribute implantable plates, rods and screws used to fix maladies such as spine fractures.

The perception of conflict of interest can be raised when surgeons purchase devices from their own company. If a surgeon developed a new device due to their strong belief in the device’s improved performance, however, it only makes sense to want to use that new device.

Utah Sen. Orrin Hatch, the senior Republican on the Senate Finance Committee, identified at least 20 states where surgeon-owned implant companies are present, and warned that they were spreading from spine surgery to other areas of medicine such as hip, knee and cardiac surgery. It smacks of physician owned MRI facilities and the fear that financial inducement leads to performing more procedures than medically necessary.

What’s more troubling is that some entrepreneurial surgeons have taken this proverbial gray line and vaporized it by recruiting other surgeons to be investors in their orthopedic device companies. According to John Carreyrou and Tom McGinty of the Wall Street Journal, these investors are not brought on board to fund further product ideas, but actually to add customers.

Basically, the surgeons have created a new sales strategy of having their fellow surgeons invest in the company with the benefit of sharing the profits on devices they implant in patients. Instead of paying Medtronic, each investing surgeon in essence pays themselves a commission. Some of these surgeon investors are making over $25,000 per month based on a percentage of the purchase costs on devices that they implant.

I believe in innovation, and surgeons are amongst the best suited for inventing new solutions to medical challenges. The extreme greed, however, of surgeons participating in the orthopedic device investment/purchase scheme, is disturbing. I predict these surgeons are on a short road to retribution.

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