Physician owned distributorships (PODs) are companies that sell doctor owned medical devices. The doctors then use these devices in surgical procedures on their own patients.

The concern being that when a doctor performs a surgery requiring an implantable medical device, also has an ownership interest in the device, fraud and abuse could be substantial. Because of this, the inspector general for Health and Human Services (HHS) issued a “special fraud alert” concerning PODs.

In a report, Senator Orrin Hatch of Utah, the senior Republican on the Senate Finance Committee and staff found “rapid proliferation” of PODs operating in at least 20 states since 2009. “Anytime a few bad actors determine the treatment and care of patients as this warning makes clear, patients safety is put at risk and millions of dollars are lost to fraud. I will continue to scrutinize these high-risk structures and demand answers from HHS.” said Mr. Hatch

“We recognize that this valuable model bears a risk of abuse. We are happy that the OIG (Office of Inspector General) is creating clarity in defining characteristics of distributorships that violate the public trust.” said John Steinmann, an orthopedic surgeon who is an owner of the distributor Inland Spine & Orthopedics in Redlands, CA.

 To read the full Bloomberg News report by Alex Wayne, click here.

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