Are surgeons getting kickbacks from Medtronic?

By Felix Salmon
December 20, 2010

The WSJ puts a lot of time and effort into its leders—those long, exhaustively-reported front-page exclusives about topics which might not be breaking news but which are still very important. So why is it that when a story is based on information found online, the WSJ still can’t seem to link to it? Today’s leder is a good one, about possible waste in the world of spinal surgery. But it could definitely do with a few hyperlinks:

Medtronic began releasing information about its payments to surgeons on its website in June, after coming under intense scrutiny from Sen. Charles Grassley (R., Iowa)…

Medtronic’s website shows that the company paid Dr. Vaccaro $1.28 million in royalties in the first three quarters of 2010…

Dr. Foley has had royalty-bearing agreements with Medtronic since 1996. The company paid him more than $27 million from 2001 to 2006, according to internal Medtronic documents reviewed by the Journal. On its website, the company discloses paying him another $13 million in royalties in the first three quarters of this year alone.

The failure to link to Medtronic’s website is part of what makes this story more confusing than it needs to be. There’s also a cryptic reference to a court ruling which is preventing the WSJ from printing everything it knows:

The Journal mined hospitals’ Medicare claims to see what proportion of fusions performed fall in this category. Due to a three-decade-old court ruling guarding the confidentiality of physician information, the paper is barred from disclosing what it found regarding the five Norton surgeons.

Critics of the court ruling and of the privacy policies of the federal Medicare program argue that making such information public would help taxpayers understand where their money is going, and potentially deter abusive or wasteful practices.

A couple of hyperlinks would be great here, too: which court ruling, exactly, are we talking about? And which critics? I’m sure their criticism is online, under their real names—so why not link to that criticism, rather than wave vaguely at it before moving on to something else?

The bigger problem is that the WSJ makes it very hard to separate two different stories. The first story is that Medicare is paying lots of money—$2.24 billion in 2008—for spinal surgeries, many of which might not be necessary or even desirable. The second story is that Medtronic is paying lots of money to a select group of surgeons who perform a lot of such surgeries.

The first story is reasonably clear, although it would have been helpful to compare Medicare with private-sector insurers: if everybody’s happily paying for these surgeries, then the problem doesn’t really lie with Medicare. The second story, however, is murkier. The WSJ is aggressive chasing it:

Corporate whistleblowers and congressional critics contend such arrangements—which are common in orthopedic surgery—amount to kickbacks to stoke sales of medical devices.

The official statements from both surgeons and Medtronic make the kickback allegations seem a bit of a stretch. But look how the WSJ follows those statements with an explicit reprise of the kickback theme:

Dr. Foley responded in an email that he doesn’t receive any royalties from Medtronic on devices he has contributed to when they are implanted in patients by himself, members of his practice or hospitals where he has admitting privileges.

Brian Henry, a spokesman for Medtronic, says the company applies that policy to all its collaborating surgeons, thereby eliminating the temptation for them to do more surgeries to earn more royalty income.

Two former Medtronic employees have alleged in separate whistleblower lawsuits that the royalty agreements are intended to disguise the fact that the payments the company makes to surgeons are really kickbacks for using Medtronic devices.

The paper says it “reviewed” a copy of one of the lawsuits—again, this is something it would be great for them to have posted. And more generally, it would be great to see some mathematics on the alleged kickbacks: how do the payments to surgeons compare to the profits that Medtronic makes from their work? Are the payments linked in any way to the number of surgeries they perform? What proportion of spinal surgeons get these payments? Is there evidence that surgeons getting paid by Medtronic use more Medtronic devices than their colleagues?

My gut feeling here is that Medtronic is quite deliberately paying large amounts of money to key spinal surgeons, who as a result become well-disposed towards the company and the kind of of surgery which involves its products. In turn, their enthusiasm spreads across their hospitals and their region as a whole, since these surgeons are senior, respected physicians who are emulated by their peers.

But that kind of thing is a kickback only in the most conceptual way: if the surgeons help to make a certain procedure more popular among their peers, then they’ll eventually get larger royalty checks. What I’m not seeing is any evidence that if certain surgeons funnel money to Medtronic by using Medtronic products in their operations, then some of that money ends up getting kicked back to them.

My larger problem with the WSJ story is that by concentrating on kickbacks and Medicare, it downplays the bigger picture—that surgeons around the country are getting paid millions of dollars by Medtronic and performing lots of unnecessary surgeries, with the cost coming out of everybody’s rapidly-rising health-insurance premiums. If there’s a scandal here, it would seem to be one endemic to the healthcare industry. I don’t understand why the WSJ would narrow its focus so specifically onto Medicare.

(Cross-posted at CJR)


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see

Felix – Are you being serious when you question why they would focus on Medicare vs. the surgeons and Medtronic?

I may be stepping too far out onto the conspiracy ledge but isn’t the “government can’t run healthcare” meme much more interesting to WSJ then a story about surgeons making too much money?

Posted by rfreeborn | Report as abusive

Being 64 and having a severe scoliosis, I naturally followed the WSJ link and read the article with interest. Like Mr. Salmon, I would have preferred more data. Still an on-the-whole good job from the Journal. FYI, there are many things that can be done to mitigate the danger of back problems as one ages.

Posted by frit | Report as abusive

I have no problem with WSJ investigating a company like Medtronic however I think it is funny that anyone including the WSJ thinks that Doctors, Bankers, Politicians, construction workers or any other American make decisions to use a product strickly because that product is objectively the best?

Doctors like everybody else have reasons they use certain products . . . i.e. – They were trained by thier mentors on that product, they have had good personal experience, good service from a company, good study data, etc.

Additionally, if a physician comes up with a good idea or product, gets it patented and then goes to the free market and sells that idea why shouldn’t that physician be able to profit from that idea? In every other part of our society this is allowed and promoted. But somehow because the government and insurance companies ultimately pay claims this shouldn’t be allowed?

Most of the best ideas come from those who are in the trenches doing the work. In this case surgeons. And why can’t medical companies pay physicians for thier ideas? Its UNAMERICAN let alone restrictive to legal trade to prevent this exchange.

Its funny that the WSJ is not happy that after Medtronic decided to put all physician relationships on a public website and thier payments for royalty’s or consulting (which is perfectly legal) they are not happy because they can’t find anything to print which will help them sell papers and advertizing? Boo Hoo WSJ!

How about we investigate the WSJ to see if they to bartering with Adverstisers. The cost of thier AD’s vary right? If they can sell more papers with stories that use hyperbole (who doesn’t like a good juicy story about corporate kickbacks) then they the WSJ can charge usery fees for thier AD space. Is that right or fair?

This goes on and on with the Media. I would challenge any journalist to find criminal acts by Medtronic. They are just a good target (17B company) who makes for a great story when your trying to increase your prices for AD’s.

Now that they started this sharade I guess we will have to watch what they come up with . . . and if they don’t find any improper and or illegal acts they will just dissapear into the woodwork without so much as a peep that they may have been wrong in thier analysis!

Posted by Eggplantman | Report as abusive

If this is true, then what’s the big deal to a guy like Grassley? Isn’t it the free market taking care of health care? A system that needs no fixing?

I am not surprised that an arrangement like this would happen, where the interests of patients and taxpayers do not line up with those of the doctors and the medical equipment providers. My only question is which campaign contributor/future employer is Senator Grassley fronting for when he “investigates” this issue?

Posted by OnTheTimes | Report as abusive