What happens when the world’s biggest medical device maker becomes a “health services provider”?BMJ 2018; 363 doi: https://doi.org/10.1136/bmj.k4917 (Published 26 November 2018) Cite this as: BMJ 2018;363:k4917
- Jeanne Lenzer, associate editor, The BMJ
A cluster of men stand on a corner near a home improvement store in Tijuana; several hold rough cardboard signs advertising their skills in hopes of being picked up for a day labour job. Across from the corner is a sanctuary for the sick and injured, the Red Cross Hospital.
Two years ago, the hospital faced a $3m pesos (£117 000; €132 000; $150 000) shortfall and was forced to lay off 16 staff.1 Today, Alberto Quintanar Hernández, director general of the Red Cross in Tijuana, shows off some of the hospital’s bright new facilities: a cardiac suite with the latest equipment for cardiac computed tomography, balloon angioplasty, implanting stents and pacemakers, and open heart surgery. The hospital built the suite through a partnership with Medtronic, the world’s biggest medical device manufacturer.
The partnership has allowed the Red Cross to equip 13 of its ambulances with electrocardiographs that can transmit a patient’s heart tracing in real time to a doctor’s mobile phone.2 Quintanar opens the door to an immaculate private room. Nodding towards a massive flat screen TV mounted on the wall, he says, “It has wi-fi and Netflix,” adding with a smile, “We like to give patients a spa-like experience.”
Under a five year contract, Medtronic is donating staff to the cardiac suite, helping to devise clinical protocols, providing training to doctors on how to implant various medical devices, and managing the suite’s inventory. The contract doesn’t restrict the hospital to purchasing Medtronic’s devices, but the company controls all purchasing decisions, says Quintanar, adding, “They are the experts. I’m not.”
Tijuana is just one of more than 100 partnerships that Medtronic has entered into in Europe, Asia, Africa, the US, and Latin America.3 The deals include at least three NHS hospitals in the UK—in London, Dundee, and Manchester. An investigation by The BMJ in Tijuana in conjunction with the International Consortium of Investigative Journalists (ICIJ) reveals troubling aspects of this commercial partnership that should concern health ministers, patients, and physicians around the world.
A key concern is the purchasing power these deals give Medtronic and its potential effect on hospitals’ decision making—for example, on which device to procure. “It sounds wonderful on the surface, doesn’t it?” says Vikas Saini, president of the Lown Institute, a healthcare think tank based in Boston, Massachusetts. “What could possibly go wrong?”
A lot, according to Saini and critics like John Ioannidis, professor of medicine and health research and policy at Stanford University School of Medicine. Ioannidis says, “Professional cardiology societies are heavily funded by the device industry, trials are underwritten by industry, and major meetings are spectacular circus shows for the device industry to disseminate its products.” This latest development is concerning, says Ioannidis, because it sees industry “further infiltrate the hospitals and write the protocols, make procurement decisions, and train physicians.”
Saini, a cardiologist, agrees saying that allowing Medtronic to make purchasing decisions and to have a role in the development of protocols is like “allowing McDonald’s to decide what should be on your kid’s school menu.”
Both the Red Cross and Medtronic declined to release copies of the contracts or protocols to The BMJ or the ICIJ. Andrés Smith, an emergency physician and president of the board of the Red Cross Tijuana, declined an interview despite numerous requests.4 Smith also works in Chula Vista, California, where open payments data shows he has received modest gifts and payments from multiple device manufacturers, including Medtronic.5 However, Mexico does not have laws requiring disclosure of industry payments to physicians, and Smith declined to say whether he has received any payments through his practice in Mexico; nor does Medtronic list payments to doctors in Mexico.
Other Medtronic partners approached by The BMJ also declined to give interviews or to release copies of contracts or protocols. Lehigh Healthcare Network, with five hospitals in Pennsylvania, announced in February that it will “team up” with Medtronic “on at least 70 medical conditions.”6 A hospital representative declined to speak, saying in an email that it is “in the early stages of the project” and had nothing to add beyond its news release. Cardiologists at Imperial College Healthcare NHS Trust in the UK did, however, agree to speak about their experience (box 1).
Medtronic and Imperial
Medical device makers such as Stryker, Boston Scientific, and Medtronic are transforming into health services providers. One of the earliest partnerships was forged in 2013 between Medtronic and the Imperial College Healthcare NHS Trust in London. Five years into a seven year contract, Medtronic reports that its partnership with Imperial has cut costs, saved money overall, and increased throughput of patients.
Kevin Fox, consultant cardiologist at Imperial College Healthcare NHS Trust at Charing Cross Hospital, was responsible for helping to forge the partnership. He told The BMJ that capital funding problems created a dilemma for the college. Renting equipment or borrowing money to update outdated cardiac equipment would require large sums of cash or ongoing payments with additional interest costs.
Medtronic, he said, provided a solution. The company provided a newly equipped cardiac unit, additional free staff, and the expertise to run the upgraded unit efficiently. Imperial considered offers from other providers but selected Medtronic based on its “service quality” and because it provided the “most economically advantageous” offer.
In return, Fox said, “We’d agree to buy some of their [products] at negotiated prices, and the more devices we buy the cheaper they get.” He said, “We do use a fair amount of Medtronic equipment, but not exclusively.”
Medtronic says that it abides by a “no inducement” clause stating that payments “have not been determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties.”
Rob Clark, a company spokesperson, told The BMJ that the volume discount agreement with Imperial does not violate the “no inducement” clause because it applies only to individual physicians and not to hospitals.
Fox said that Imperial does not use clinical protocols developed with (or by) Medtronic; cardiologists follow guidelines issued by the National Institute for Health and Care Excellence and European Society of Cardiology.
According to a report by Medtronic, the company’s seven year partnership with Imperial “included a cardiology transformation programme” with estimated savings of £840 000 during the first year of its contract.7
Fox couldn’t confirm the savings, saying that financial benefits during the first two to three years while he headed up the partnership, were “extremely difficult to measure.” He said he believes Imperial did realise clinical benefit “in some ways,” but that it was difficult to quantify those benefits since the project was like “trying to repair an escalator while it’s still going up and down.”RETURN TO TEXT
Hospitals in distress
The Red Cross Hospital in Tijuana was inaugurated in 1991 as a non-profit charity to provide disaster relief, and it routinely cared for uninsured and underinsured people. Over time, the hospital began tackling the broader health needs of the community, providing treatment for conditions such as diabetes and hypertension. Eventually it added preventive care, including mammography and bone density testing, to its services. That focus on its social mission seems to have faded as the hospital began to rely more heavily on revenue from patients and their insurers.
Fernando Fernandez, a cab driver, was taken to the Red Cross Hospital four years ago after cutting his finger at work. Red Cross ambulances provide a general service to the Tijuana population, not just those treated at the Red Cross Hospital. Fernandez says that as soon the Red Cross ambulance arrives, “The first thing they ask you is what insurance you have.” Fernandez was covered by private insurance through his employer and was taken to the Red Cross Hospital. He holds up a finger to reveal a slender scar and says, “They gave me six stitches and charged me 3000 pesos, plus I had to pay for the medicine.” Fernandez’s insurer did not cover the emergency visit, and the hospital demanded the entire fee.
Arturo Godinez Pérez, a neurosurgeon, volunteered at the hospital during its early years but eventually grew disenchanted as he saw the hospital “becoming more of a business” than a charity. Now, Godinez works as a neurosurgeon and the subdirector of Hospital General in Tijuana, which cares for people who rely on Seguro Popular—the country’s universal health insurance created for those without regular employment.8
Hospital General was built in 1982 to serve a population of half a million residents. Now, the 297 bed hospital serves a catchment area of three million. It has an ageing infrastructure and equipment that fails to function properly at times. When I visited, its lobby was a confusing jumble of people waiting to see doctors and loved ones. A bathroom was strewn with trash, with a large wad of blood soaked tissue on the floor.
The Red Cross Hospital has also had financial problems. Although it is a private hospital that charges patients and insurers, as a charity it is does not have the advantage of other private hospitals in Tijuana, which have become meccas for medical tourism. Arón Ureña Zaragoza, director of medical tourism for the Mexican state of Baja California, says Tijuana attracts medical tourists from the US and Canada as well as Europe, Asia, and the Middle East. Ureña says people find they can “pay for their flights to Tijuana, enjoy a vacation, get their medical care, and still have money left over” compared with what they would pay in the US. While other private hospitals are expanding and building, Quintanar says the Red Cross Hospital was in arrears by 2016 and was forced to lay off staff.
Enter the deal with Medtronic. No longer satisfied with being merely a device manufacturer, Medtronic says it is evolving to become a “healthcare service provider,” offering a wide range of services, from data management to providing protocols for care, physician education, and consulting services. Through its “integrated health solutions,” the company plans to manage 70 diseases, from diabetes (promoting its “Diabeter” device) and coronary artery disease (stents, pacemakers) to hearing loss caused by ear infections (using its device to detect ear infections).691011
Medtronic says the objectives are to improve quality of care, enhance operational performance, and boost financial returns for its partners.9 According to a case study written by Medtronic, patients at Imperial College Healthcare NHS Trust in the UK were seen more promptly than they were before its partnership, and the hospital saved £840 000 in the first year of its seven year contract with the company.12 In another case study, of Maastricht University Medical Centre in the Netherlands, Medtronic states the centre saved $2.5m in its first year, while experiencing a “20% capacity increase,” and “an increase in patient satisfaction.”13
Medtronic’s promise to cut costs relies on cutting administrative waste and “increasing efficiency” so that doctors can perform more operations and thereby charge more, creating more money for the hospital and presumably selling more Medtronic products.
The secrecy surrounding the contracts and protocols is troubling, says Sanket Dhruva, assistant professor of medicine at the University of California, San Francisco. He is cautious about Medtronic’s claims of cutting costs, which he says needs to be scrutinised independently, asking: “What is the level of transparency? What outcomes are being measured?”
Helping poor people
When the Red Cross in Tijuana announced the launch of its partnership with Medtronic in June, it stated that it would serve an area that is “home to an underserved patient population, with very low rates of insurance.” If the claims of increasing efficiency are true, Medtronic’s partnerships could help hospitals like the Red Cross in Tijuana do a better job of caring for its patients and free up resources to care for those who cannot pay for cardiac and other specialty services. However, it is not clear that this is what it is doing.
Sergio Borrego Ramirez knows a good deal about poverty and access to healthcare in Tijuana. He is a subdirector at Las Memorias, a run-down homeless shelter in eastern Tijuana, an area known for its poverty and violence. Shelter residents have medical problems ranging from HIV to tuberculosis, hypertension, and diabetes. The shelter runs on a shoestring budget, nearly a third of which comes from the state. For the past two months the state has defaulted on its support. Residents are covered only by Seguro Popular and must be taken to Hospital General if they have serious medical problems, Borrego tells me.
For patients with heart problems, the only surgical intervention available to them at Hospital General is a pacemaker. Unlike the Red Cross Hospital, Hospital General cannot perform cardiac catheterisation, angioplasty, or open heart surgery. Godinez, the hospital subdirector, says at the beginning of 2018, the hospital contracted with Medtronic to buy 50 pacemakers. By the end of September, all 50 had been implanted.
The Red Cross’s partnership with Medtronic does not yet seem to be helping the surrounding underserved patient population. Godinez says the Red Cross ambulances run in one direction for cardiac patients: they bring poor patients to Hospital General, but when Godinez has a patient who needs angioplasty, he can’t send them to the Red Cross Hospital. Patients must try to scrape up enough money to pay high fees at a local private hospital or drive 12 hours to Hermosillo, Sonora—the nearest public hospital that offers those services. Both options are beyond the reach of many patients.
Quintanar says the Red Cross Hospital intends to treat underserved patients in its cardiac suite but has not been able to do so because the hospital needs to obtain certification by Seguro Popular. He says a recent meeting with Seguro Popular was encouraging, and that the Red Cross could be certified to treat underserved patients as early as January 2019.
However, even if the Red Cross Hospital receives certification, there are other reasons for concern about the partnership the hospital has entered. Dhruva says that the intrusion of commercial interests into healthcare decision making, through the development of protocols and purchasing decisions, risks diverting attention and resources away from basic healthcare needs in favour of delivering lucrative high tech products. “These decisions are focused on costly devices,” says Dhruva.
Focus on sophisticated technology
Saini, from the Lown Institute, says the Tijuana partnership “appears to be part of a growing and troubling trend of concentration of income and decision making power in healthcare around the world.” Saini says American healthcare companies are increasingly seeing middle income countries and even some low income countries as their next markets. Although providing the technological wonders of high end healthcare will undoubtedly benefit some patients, the drive for profits and revenues, on the part of both Medtronic and the hospitals with which they partner, will almost certainly skew care towards lucrative, procedure based interventions, in parallel to the US, while the most pressing needs of the community are more basic.
Medtronic has a troubled track record in patient care and in ethical standards of behaviour. In 2011, the company was fined $23.5m by the US government for paying kickbacks of $62m to 15 surgeons to encourage them to implant Infuse, a device to stimulate spinal bone growth, and to write favourable medical journal articles that failed to report its harms.14 A subsequent investigation found that the company failed to report to the FDA more than 1000 serious complications and deaths associated with the device.15 The company was fined again in 2014 and 2018 for paying kickbacks to doctors to encourage them to implant Medtronic pacemakers and defibrillators (box 2).
Medtronic: A troubling history
2018: Medtronic agrees to pay $43m to shareholders for fraud regarding its studies of Infuse, a spinal device16
2016: Medtronic agrees to pay $12m to settle allegations by five states attorneys general that the company manipulated data to make Infuse look safer than it is. Company failed to report to the FDA more than 1000 complications, including deaths, related to the device.
2015: Fined $4.4m for labelling imported devices as “made in the United States” so it could sell them to the US military
2015: Fined $2.8m for selling a spinal cord stimulation device, which “lacks evidence of clinical efficacy,” without FDA approval
2014: Fined $9.9m for paying kickbacks, including free flights to events17
2012: Agreed to pay $85m to settle a class action lawsuit regarding illegal corporate promotion of bone graft material for off-label uses. Such use resulted in serious harms and deaths and led to an FDA black box warning
2011: Fined $23.5m for paying kickbacks to doctors to encourage implantation of its pacemakers and defibrillators14
2008: Company is ordered to pay $75m for false claims regarding the need to hospitalise patients treated with its bone-cement product.
2007: Agreed to pay $75m to settle more than 200 lawsuits claiming Medtronic concealed defects in its defibrillators
2006: Medtronic ordered to pay $40m to the federal government for paying kickbacks to doctors to implant their spinal devices
Critics say the provision of “free staff” to hospitals like the Red Cross in Tijuana and other donations by Medtronic are simply disguised kickbacks—benefits that allow doctors and hospitals to incur fewer expenses, and thereby reap larger profits, which work as the functional equivalent of a kickback.
Cathleen Forney, a former employee of Medtronic, rose to become a district service manager overseeing sales and marketing before she was fired in 2012. She alleges in a lawsuit that the company engaged in a nationwide scheme to provide free services to people “who made purchasing decisions about Medtronic devices” and that these free services were “intended to persuade healthcare providers to purchase Medtronic devices.” The lawsuit was allowed to go forward when a Pennsylvania court ruled that the “vast majority” of her allegations “were contained in valid prior public disclosures.”18
Medtronic declined to respond to Forney’s charges saying the company “does not comment on specific cases.”
Not all healthcare analysts believe that partnerships like these are necessarily a bad idea. Sandro Galea, dean of the School of Public Health at Boston University, says sometimes disruptive changes in medicine can be positive, although he said “adequate oversights need to be in place.” When asked what oversights could be placed over a company that, for example, exerts purchasing rights, he said, “I’m hesitant to say it can’t be done, although we shouldn’t [allow] the imperatives of companies to put private gain over the public good.”
But Stanford University’s Ioannidis, is dubious that sufficient oversights exist to protect patients from the predations of industry when it is so deeply enmeshed in multiple aspects of healthcare services. “A massive catharsis is needed in cardiology, but it is unclear how it can happen,” he says, when the reach of industry is so wide ranging and interconnected “that it all looks natural.”
Competing interests: I have read and understood BMJ policy on declaration of interests and have no relevant interests to declare.
Provenance and peer review: Commissioned; not externally peer reviewed.