The following story was researched and written by The Utah Investigative Journalism Project in partnership with The Salt Lake Tribune.
For more than a decade, Intermountain Healthcare surgeons replaced or repaired damaged joints, muscles and tendons with medical devices from Arthrex, the leading supplier for sports medicine.
Since January, however, Intermountain and its insurance subsidiary, SelectHealth, have contracted instead with competitors it sees as providing high quality devices at lower prices. “This new process has already resulted in substantial savings for patients,” Intermountain calculates, “anticipated to exceed $5 million in 2021.”
But Draper surgeon Dr. Paul Winterton argues Intermountain’s move to drop Arthrex was marred by conflicts of interest — with doctors who receive lucrative payments from competitors of Arthrex shaping the decision.
After an internal committee reviewed orthopedic device suppliers, Intermountain decided against continuing with Arthrex and decided to include Depuy Synthes, which is owned by Johnson & Johnson. Depuy Synthes is the global leader in orthopedic medical devices overall, though not in the sports medicine segment.
Dr. Hugh West, who led the committee, received nearly $13 million in royalty payments from Depuy Synthes over the last seven years. He was paid, on average, $2.1 million a year between 2014 and 2019, public records show.
Another member of the committee collected $1.1 million in royalties over that same period from a different Arthrex competitor.
Federal requirements for doctors to disclose payments to them by medical device manufacturers, drug companies and others went into effect in 2013, out of concern that health care decisions might be influenced by those relationships.
Winterton is one of the 10 out of 11 physicians interviewed by The Utah Investigative Journalism Project who also expressed concern that Intermountain had chosen inferior products in contracting with Depuy Synthes.
All but Winterton and recently retired orthopedic surgeon Richard Jackson asked not to be identified, saying they feared retaliation from Intermountain, the region’s largest health care provider, one of Utah’s top employers, and a nonprofit that disclosed $9.6 billion in revenue in its most recent annual report.
“They are willing to compromise patient care over a few pennies,” Winterton said. “It’s just absolutely despicable.”
Several of the doctors interviewed said they had raised their concerns about safety. None offered an example of patient harm or less successful recovery from surgeries since the change.
In a statement, which it released after it declined an interview request, Intermountain defended the quality of its suppliers’ devices. It also stressed that its decision-makers receive royalty checks based on devices they invented — but they do not receive those royalties when their devices are used with patients in the Intermountain and SelectHealth system.
Still, several of the doctors interviewed questioned whether those financial ties create a bias.
Payments and pressures
Payments to doctors from medical device companies and other health care industries are not uncommon. Besides royalties for inventions, doctors may be paid for research, consulting or speaking, or be reimbursed for the costs of training or education about a product.
Winterton, the Draper surgeon, received $2,282 in 2018 from Arthrex, according to the federal database. In an interview, he said the funds covered costs for a stem cell training in Seattle. He pointed out the three-day commitment meant he was absent from his practice during that time.
Three more of the doctors interviewed for this story also received payments from Arthrex in the most recent seven-year reporting period, ranging from a total of $3,552 to $22,105. The payments covered training sessions, consulting, other services, travel, food and lodging.
These physicians also received payments in similar amounts from other companies in the industry, including DePuy Synthes, for the same purposes. None was paid royalties from the companies.
Consumers may be unaware of how a health care provider decides which devices to offer its patients. But across the country, hospitals and other systems are asking manufacturers for better deals, as they grapple with pressures to control costs while improving care, The Deloitte Center for Health Solutions said in an industry report last year.
University of Utah Health conducts similar reviews of the cost and effectiveness of the devices it uses, a spokesperson said.
Intermountain said its decisions last year about its orthopedic suppliers came down to dollars and cents, as it chose to contract only with companies who would provide high quality products at lower prices.
Arthrex was “more expensive than their competitors,” Intermountain said in its statement, adding that, “Arthrex’s proposals did not meet the pricing requirements.”
Once informed of that conclusion, Arthrex last April sent a notice to Intermountain canceling its supplier contract. “It’s important to note that Arthrex terminated the agreement, not Intermountain,” the nonprofit’s statement said.
A lucrative market
The sports medicine field of orthopedics covers an array of injuries to hips, shoulders, elbows, knees, hands and feet. For decades, Arthrex has dominated this specialty with devices that doctors have routinely used to replace failed joints and knit ripped muscles and tendons.
Arthrex has been the industry leader, claiming 58% of the sports medicine market with its popular surgical implants, according to an industry report released in 2020 by OrthoWorld Inc. That was almost double the share of the nearest competitor, Smith+Nephew. The market generated $5.9 billion in 2019 and is projected to increase to $6.3 billion by 2022, the report said.
Depuy Synthes, the same report said, has recently suffered declines in revenue. In 2018 and 2019, it was the only one of the industry’s big companies to report such declines.
And Depuy Synthes has had its run-ins with health regulators. It paid the National Health Service in the United Kingdom millions of dollars in 2018 after providing patients defective metal-on-metal hip replacements in 2004, leading to a recall in 2010. The debris from the products caused cobalt and chromium to build up in patients’ blood.
Many medical device manufacturers experience recalls; the U.S. Food and Drug Administration lists more than 30 recalls in 2020 of flawed products that could cause serious health problems or death, plus others of wide interest. Arthrex has recalled a knee replacement device and a type of suture anchors in recent years.
But in DePuy’s hip implant case, the company knew the devices were defective a year before the recall, and the product had an estimated 40% failure rate in patients, the New York Times reported. The company continued selling these implants until the recall.
In 2011, Kristin Smith-Crowe, a former University of Utah associate professor of management specializing in business ethics, told Reuters that the way the company handled thousands of lawsuits over the hip replacements posed a conflict of interest because the doctors evaluating these cases were being paid indirectly by DePuy.
Caring for patients
In the past, Arthrex had provided hands-on training that allowed doctors to practice with its devices on cadavers and offered other educational opportunities, said Jackson, the recently retired orthopedic surgeon, who lives in Utah County.
When Intermountain dropped Arthrex, Jackson said, it provided only a kind of career-fair type setting for doctors to learn about the new vendors and their products.
“They had a one-day presentation of about six different companies,” Jackson said. “It was a ‘get acquainted with us’ fair. It was a one-day deal.”
Several of the doctors interviewed said they also felt meaningful training had not been offered on the alternatives to Arthrex products.
Jackson, along with the others, acknowledged that doctors can become proficient in the new devices, but he said it could come with a learning curve that will likely be borne by patients. That doesn’t necessarily mean patient injuries, he explained, but it could mean greater costs for patients who will spend more time in operating rooms as doctors learn how to use the new devices.
Jackson said in general, he admired Intermountain’s focus on making health care more affordable for its patients.
“For example, every subspecialty is able to take part in a conference every week where we discuss best practices and review complex outcomes and try to make ourselves [understand] what could be best,” Jackson said.
“I think they are making a big effort in that line to [follow] a standard of excellence,” he said, “… which is why it makes no sense what they’ve done with the Arthrex products.”
Winterton, like the other doctors interviewed, said he is upset about the change in device providers because it hinders his practice. He said he considers it a “privilege” and a calling to help patients in need.
“These are people that can’t lift their arms above their heads, these are people that can’t perform in their vocation or even the activities of daily living prior to [treatment],” he said.
Support for patients to recover and get back to normal “is being compromised by big-box financial decisions,” he said, “from a [provider] haggling over nickels and dimes despite making billions a year.”