Another look at the health care market

In class, we have discussed the pros and cons of the market system in health care.  This article presents another issue: competition among companies and their tactics to improve sales.  The article talks mostly about a company–Biotronik– that produces heart devices.  Biotronik is a little known company whose national share of the heart-device market is about 5 percent.  Still, last year 95% of the heart devices implanted at the University Medical Center of Southern Nevada were Biotronik devices.  Even more remarkable, the company’s devices were not even used before 2008. So, why are the devices that were not used at all 2-3 years ago dominating at one hospital?  Well, lets not forget that the health system is a market. In 2008, Biotronik hired cardiologists at the hospital to be ‘consultants’ for the company.  These surgeons receive payments as high as $5000/month for this role. In addition, the physicians are “courted” with fancy dinners and other ways of flattery.  Regarding this subject, one report claimed that “He loves his white wine and being entertained.”

The practice of using consultants is not unique to Biotronik.  Medtronic, St. Jude Medical, and Boston Scientific (who are the leaders in the heart device industry) also use these tactics.  So, what do we think about them?  Are the merely a result of the health system market?

There is competition among companies to provide their device to hospitals, yes, but does that mean anything to the patient?  Doctors can influence the hospitals at which they work to buy the device that they ‘consult’ for.  That doctor then chooses to implant the device into his patient.  The patient does not receive savings on the device (which can cost up to $35000) simply because his doctor is getting a good deal.  Thus, there is not really consumer choice or competitive pricing.  On the other hand, there is plenty of company self interest.  We also have to wonder if this competition is unhealthy.  If doctors can be persuaded to use a certain company’s device, how can we be certain that the device is best for a certain patient.  Does the competition to snatch doctors up as consultants lead to compromised quality?

A number of companies including Biotronik are undergoing or have undergone investigations regarding marketing and sales practices.  Also, under the new federal health care law, by 2013 these companies will have to disclose any payments to doctors for consulting and other services.   Will this limit these practices or will companies simply find a new way to promote their devices?  Is this simply a part of the health system market or should something be done to stop it?

 

 

 

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