FDA: Software Failures Responsible for 24% Of All Medical Device Recalls

At "FDA: Software Failures Responsible for 24% Of All Medical Device Recalls" via Kapersky Labs, a software security company, it is observed (emphases mine):

Software failures were behind 24 percent of all the medical device recalls in 2011, according to data from the U.S. Food and Drug Administration, which said it is gearing up its labs to spend more time analyzing the quality and security of software-based medical instruments and equipment.

The FDA's Office of Science and Engineering Laboratories (OSEL) released the data in its 2011 Annual Report on June 15, amid reports of a compromise of a Web site used to distribute software updates for hospital respirators. The absence of solid architecture and "principled engineering practices" in software development affects a wide range of medical devices, with potentially life-threatening consequences, the Agency said. In response, FDA told Threatpost that it is developing tools to disassemble and test medical device software and locate security problems and weak design.

... "Manufacturers are responsible for identifying risks and hazards associated with medical device software (or) firmware, including risks related to security, and are responsible for putting appropriate mitigations in place to address patient safety," the agency said in an e-mail statement.

Health IT medical devices are the exception, of course.  A health IT virtual medical device is always of rock-solid architecture, always uses "principled engineering practices" in software development, and never has life-threatening consequences, of course.

Hence its special regulatory accommodations over non-virtual (tangible) medical devices.

-- SS

Hospital Executives - What Will They Think of Next?

Health care organizations are now most often run by people with management, not clinical backgrounds.  It seems like business schools have taught managers to sign on to whatever the latest management fashions are.  So what are the latest fashions in hospital management?  Here are a few hot items.

Retreading Pharmaceutical Representatives

My jaundiced reading of the business news suggests that most executives think that marketing is the most important part of their organizations, and that clever marketing can sell any product or service. For example, the pharmaceutical industry spends about twice as much on marketing as it does on research and development (despite pharma executives' protestations that they run research driven businesses) (see this post). So it should be no surprise that now hospitals are using "hospital representatives" to market referrals to their institutions to doctors.

From last week's USA Today:

n northwest Indiana, Carrie Sota visits five or six doctors' offices every workday as part of her new sales job.

But Sota isn't selling the physicians on a prescription drug or a medical device. She's promoting her hospital — the University of Chicago Medical Center.

Sota, 30, is one of four employees the academic medical center has hired in recent months to make 'sales calls' on physicians in the hope that they will send more patients to the hospital. 'We are trying to build meaningful relationships,' said Sota, who was previously a saleswoman for a small medical device company.

The University of Chicago Medical Center is one of a growing number of hospitals nationwide hiring former drug and device sales reps to visit doctors' offices to persuade them to use their services over competing facilities.

Rather than handing out samples of prescription drugs, the sales reps call on doctors armed with the latest information on how their facility is reducing hospital-acquired infections and improving patient-satisfaction scores.

In visits that can last five to 20 minutes, reps try to win doctors' loyalty by helping them get better times on operating room schedules or easier patient referrals to hospital-based specialists. The sales reps can also carry messages back to the hospital, such as a doctor's request for a new medical device to be available in surgery.

The article suggested a few problems with this approach. First, the point of the marketing is not to improve the match between patients' needs and the services the hospital provides. Rather, it is to generate referrals that have the potential to provide the maximum revenue:

While hospitals have always tried to woo doctors to refer patients to them, the institutions are growing more direct in their efforts. The hospitals mine data to see which doctors have the most profitable, well-insured patients, and then they assign those doctors to a sales rep.

So in particular,

Many of the physician liaisons focus on specialists, who bring in patients for services with the highest profit margins, including orthopedics, cardiac care and cancer care, [Duke University Health System physician liaison manager Christine] Perry said.

Second, the hospital reps have incentives based on revenue, not on value to the patient:

About two-thirds of Tenet's liaisons are former drug and device sales reps, and they can make tens of thousands of dollars in bonuses if doctors increase their referrals to the hospitals.

Third, across the system, the revenues generated may be much less than the costs incurred, since most of the marketing will only succeed in moving patients from one hospital to another:

Paul Ginsburg, president of the non-partisan Center for Studying Health System Change, said, 'When you look at the health system, this is a waste of resources. It's a zero-sum game.'

He added: 'The net results of changing physician-referral patterns is that one hospital gains at a cost of others, and all the hospitals burn resources to pay (sales)people who take up the doctor's time.'

Of course, the reps could succeed in persuading doctors to refer patients to specific hospitals for services the doctors originally did not think the patients needed. That would be good were the patients to need those services, but bad if they were not.
Fourth, we have discussed (for example, here and here) how pharmaceutical representatives use sophisticated psychological and emotional manipulation, despite claims that all they do is provide unbiased information and educational, to influence physicians to prescribe drugs. Again, this may result in patients getting drugs whose benefits do not outweigh their harms. It is possible that hospital representatives will do something similar:

'These people are really good and really assertive and very sophisticated,' said Stephen Newman, Tenet's chief operating officer.

Unbundling Payments

The airlines decided a while ago that they could make more money by charging passengers for each checked bag, and even for those little meals on plastic trays. It looks like hospital executives have discovered a new way to unbundle.

As reported last month by the St Louis Post-Dispatch, hospitals have begun charging often hefty "facility fees" for patients seen as outpatients in hospital clinics or hospital owned practices, even for very minor procedures or just office visits, and even for Medicare patients. (Private physicians who see patients in their own offices cannot charge such fees to Medicare patients, and most private insurance companies will not cover such fees.):

A few weeks after Allison Zaromb took her 4-year-old son Meir to see a dermatologist in an outpatient office at the SSM Cardinal Glennon Children's Medical Center campus, she received separate bills from the doctor and the hospital.

The cost for a 3-minute procedure to treat Meir's warts totaled $538, which included a $220 bill for physician services - and a separate bill for a $318 hospital 'facility fee.'

Zaromb, a periodontist who lives in University City, is now suing SSM Health Care Corp. and Cardinal Glennon Children's Medical Center in a proposed class action lawsuit on behalf of other patients

More generally,

With the proliferation of hospital-owned outpatient centers and hospital-owned physician practices, hospital 'facility fees' have become increasingly common. Such hospital facility fees often involve greater dollar amounts than the fees charged by physicians.

Technically, it all appears to be legal:

Under federal regulations, health systems are permitted to charge a hospital facility fee for an outpatient service if it's done in a clinic that is 'hospital-based' - meaning that the clinic is owned and operated as part of a hospital or health system, regardless of whether the clinic is physically located on the hospital grounds.

This technique does seem to be a way to increase revenue. But one person's revenue is another person's cost, so it also seems to be a great way to further increase the already high cost of US health care. It is not obvious, however, that these increased costs will lead to increased quality of care or value for the patient:

'From a consumer's perspective, when you go see your doctor, you go see your doctor - whether it's in an office inside a larger hospital complex or right across the street,' [Zaromb's lawyer John] Phillips said. 'The doctor's practice remains the same. ... They're making the doctor's office a ‘hospital-based' clinic for one reason: to make money by charging a facility fee, not to improve consumer service.'

Negotiating the Costs of Medical Devices

One of the favorite topics on Health Care Renewal, at least before we found even more outrageous subjects, was the stratospheric cost of medical devices. For example, look at posts from 2005 here, here, here, and here. So last month we found out that hospital executives have come up with a revolutionary idea to combat the high cost of devices. They will actually try to see what prices the device companies charge other hospitals, and then negotiate the prices down, as Reuters reported as big news in late November:

Implantable devices make up a sizable chunk of typical hospital budgets, and administrators are devising new ways to limit that cost as they brace for cuts to government reimbursement and treat more patients who can't pay for care.

That means methodically working through each category of device, from heart valve replacements and stents to spinal products, to see where they can negotiate lower prices. It also means creating databases of shared information on pricing between hospitals.

Imagine that! Of course, the notion that buyers ought to bargain with sellers to get the best price goes back a few years. However, only in 2011 did it apparently occur to hospital executives that they ought to negotiate the prices of one their most expensive purchases. This suggests that there has been something profoundly wrong with the basic assumptions underlying the commonly accepted wisdom that making the health care system more of a market will lead to more financially efficient care. 

Summary

In 1988, Alain Enthoven advocated in Theory and Practice of Managed Competition in Health Care Finance, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post here). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post here). Health care went from being controlled by clinicians to controlled by a growing volume of managers.  Most of these managers were generic, in that they had little if any knowledge of, experience in, or sympathy to the values of health care. These generic managers have used the same techniques advocated for the management of supermarkets or automobile manufacturers to manage health care organizations, despite all the obvious differences in context, goals, values, and people involved.

So these generic managers have brought us such "innovations" as the "hospital (marketing) representative," and the "facility fee" for outpatient visits, but only thought to negotiate device prices in 2011. But that is why we pay them the big bucks.

How many more arguments do we need that health care organizations ought to be lead by people who understand the health care context, share its core values, and are accountable for how these organizations affect patients' and the public's health?

Medtronic Settles, Yet Again

And the march of legal settlements continues... Circling around the block and coming in front of the viewing stand again is device manufacturer Medtronic. 

The Latest Medtronic Settlement

As Bloomberg reported:

Medtronic (MDT) Inc., the world’s biggest maker of heart rhythm devices, agreed to pay $23.5 million to settle claims it paid kickbacks to doctors who implanted its pacemakers and defibrillators in patients, the U.S. Justice Department said in a statement.

Medtronic agreed yesterday to settle two lawsuits filed in federal courts in California and Minnesota accusing the company of violating the federal False Claims Act by paying physicians $1,000 to $2,000 for each patient who was implanted with one of the company’s devices, according to the Justice Department.

'Patients who rely on their health-care providers to implant vital medical devices expect that those decisions will be made with the patients’ best interests in mind,' Tony West, assistant attorney general for the Justice Department’s Civil Division, said in an e-mailed statement. 'Kickbacks, like those alleged here, distort sound medical judgments with financial incentives paid for by the taxpayers.'

As usual, Medtronic did not admit doing anything wrong:

Medtronic said in an e-mailed statement that it makes no admissions that the studies were 'improper or unlawful.' The company also said it established a reserve for the anticipated payment in the fourth quarter of fiscal year 2011.

'We are happy that the investigation is behind us, so we can continue designing and executing clinical trials that generate evidence to improve patient care, outcomes and cost effectiveness,' Marshall Stanton, vice president of clinical research and reimbursement for the cardiac and vascular group....

Previous Legal Settlements by Medtronic
Note that this is not the first time Medtronic has been accused of paying doctors (kickbacks, this time, which seem to be the ethical equivalent of bribes) to use its products. The Bloomberg report also noted:

In 2006, Medtronic agreed to pay $40 million to settle allegations that its Sofamor Danek unit violated state laws and the False Claims Act by paying sham consulting fees and providing lavish trips to doctors who used its products from 1998 to 2003.

Perusing the Medtronic file on Health Care Renewal also showed that Medtronic has had to settle other lawsuits alleging misconduct:

- In 2008, Medtronic subsidiary Kyphon settled a suit for $75 million and signed a corporate integrity agreement for allegations that it defrauded Medicare through a scheme that lead to excessive hospitalization for patients who received the company's spine surgery device (link here)
- In 2010, Medtronic settled multiple civil lawsuits for $268 million for allegations that it marketed an implantable cardiac defibrillator with faulty leads whose failures lead to 13 deaths (link here)

Cases of Apparent Conflicts of Interest Generated by Medtronics' Payments
In fact, paging through the Medtronic file on Health Care Renewal, we also found these cases of apparent conflicts of interest that Medtronic caused by making payments to or otherwise creating financial relationships with:

- FDA advisory board members (2007 link here),
- health care professionals who appeared on public television programs about heart disease and treatments of it (2007 link here),
- members of a non-profit organization which was supposed to guide the FDA regarding drug development  (2007 link here),
- prominent academic orthopedic surgeons who were in positions to influence other physicians' choices of orthopedic devices (2008 link here and 2009 links here, here and here),
- a military surgeon who wrote questionable articles about the supposed virtues of a Medtronic bone growth product (2009 link here),
- a top leader of US Veterans Affairs Department who objected to the appointment of an industry critic as US Surgeon General (2010 link here),
- spine surgeons apparently who could promote Medtronics' spine surgery products in (2010 link here) and who did not disclose all such payments when writing ostensibly scholarly articles on the subject (2010 link here)

So prior to the current settlement for "alleged" kickbacks, Medtronic had a long history of allegations that it had financial relationships with physicians who were in a position to promote the use of its products or its policy interests.

Why the Bad Behavior Continues

The latest settlement by Medtronic illustrates why the anemic approach by US government agencies to health care corporate misbehavior does not deter bad behavior.

- The punishment was a fine not large enough to have any effect on the finances of the corporation.. Such a relatively small financial penalty might just be seen as a cost of doing business by company executives.  (See these comments on the current case by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog.)
-  The punishment was not a result of any specific bad behavior.  In this case, like many others, the corporation did not have to admit to anything.  This leads to the paradox of a punishment meted out for apparently nothing other than "alleged" actions, making it appear that the actual punishment was just a payment by the company to allow it to continue the sorts of actions that were alleged with impunity.  (Such punishments without clear crimes happen all the time in cases affecting the finance sector.  See a federal judge's condemnation of this practice here.) 
-  The punishment seems unrelated to the corporation's historic behavior.  In this case, there was no reference to the company's previous settlements, or the other allegations of questionable payments to physicians and health care decision makers in other circumstances listed above.  (Keep in mind that Health Care Renewal strives to present interesting cases, but does not have the resources to report on every single case of bad behavior by health care organizations.  Hence the list above of apparent bad behavior may not be complete.)
-  The punishment applied to the corporation as a whole, and hence may disadvantage many people, stockholders and corporate employees in particular, who had nothing to do with the alleged bad behavior.  On the other hand, those who authorized, directed, or implemented the bad behavior were not subject to any negative consequences. 

So why on earth would corporate leaders cease bad behavior which could increase revenues short-term and hence increase their compensation (e.g., in 2011, the Medtronic CEO received $9,624,709 according to the 2011 proxy statement), when the likelihood of any negative consequences for them appears to be near zero? 

This would be bad enough if the bad behavior only causes financial disadvantage for stockholders or corporate employees.

However, the bad behavior in question seems to repeatedly involve paying physicians and other health care decision makers in ways likely to influence their decisions in favor of Medtronics' products and corporate well-being.  Making decisions this way, however, is unlikely to be good for patients' and the public's health, as it is likely to lead to excess use of expensive tests and treatments that may have adverse effects, sometimes severe.  Thus patients may suffer unnecessary morbidity and mortality, and the public at large may pay far too much for medical care.

So will we see in our lifetimes honest, tough policing of health care corporate behavior?  Will the punishments start to fit the crime, and will they be significant enough to deter future misbehavior?  Why do we continue to accept government actions that seem more solicitous of the executives of big corporations than the public for whose benefit government is supposed to be run?  Where is the outrage?   

So, once more, with feeling.... in my humble opinion, until the people responsible for the bad behavior experience negative consequences from that behavior, they will continue to perform, direct, and condone bad behavior. We will not achieve real health care reform in the US until we effectively deter unethical, self-serving behavior by leaders of health care organizations.

ADDENDUM (15 December, 2011) - On the GoozNews blog, Merrill Goozner called Medtronic's actions "a crime against science."