This month’s headlines

Mark your calendar for the 2007 Annual Conference and Manufacturers Forum, to be held at the beautiful Coeur d'Alene Resort in Coeur d'Alene, Idaho, June 3-5.

No Excuses. No Blame. Got the stomach to look at your strengths and weaknesses as a business and sales leader, and then make some adjustments? Then we’ll see you in Coeur d’Alene.

2007 Conference at a glance. Education, networking, success – it’s all there.

Consorta to join HealthTrust. The last of the big Catholic purchasing groups is set to fade away, as Consorta prepares itself to become an equity owner of HealthTrust Purchasing Group.

Henry Ford institutes tough vendor-access policy. Henry Ford Health System, Detroit, Mich., reports that it has instituted strict new policies to eliminate potential conflicts of interest in relationships between vendors and employees, and to more closely monitor what products are introduced into the health system.

Talking the language of patient safety. If you’re not talking patient safety to your hospital customers, now might be a good time to start. In fact, patient safety is a train that hospitals are climbing onto in increasing numbers, sometimes by choice, sometimes by law.

When romance and medicine collide. The romance between a Florida cardiologist and a St. Jude sales rep, coupled with a 400 percent increase of St. Jude’s sales to the hospitals where the cardiologist practices, was the subject of a recent investigation

Cardiologist calls for more scrutiny of new technology. Better analysis of the costs and benefits of new medical technology is needed to reduce health costs, according to the author of a study on CT scanning for cardiology, published in the January/February 2007 issue of the journal Health Affairs.

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Got the stomach to look at your strengths and weaknesses as a business and sales leader, and then make some adjustments? Then we’ll see you in Coeur d’Alene.

IMDA has signed Gerry Layo, a lauded speaker and business coach, to be the keynote speaker at the 2007 IMDA Annual Conference and Manufacturers Forum. Layo will kick off the Conference on Monday morning, June 4, with a presentation on how to build a world-class sales organization. Besides being funny and insightful, Layo has a gift for making his audiences look inward and take full responsibility for their companies’ successes.

“He’s extremely energetic,” says Conference Co-Chair Tom Birmingham of Bay State Anesthesia, who saw Layo speak at a recent Vistage (formerly TEC) conference in New York. “His focus is on attitude enhancement, accountability, desire and drive.” Layo believes strongly in differentiating one’s company, “but he takes it to the next level,” says Birmingham.

Layo began his career 20 years ago in a business-to-business sales capacity. He has co-founded and run three companies, and served as vice president of sales and marketing for ITEX, Bellevue, Wash., a marketplace for cashless business transactions. His current company, Granite Bay, Calif.-based Sales Coach International, helps executives in the areas of sales, sales leadership and customer service. Sales Coach International also offers a “Coach Program, in which Layo and a group of coaches work with companies in an ongoing coach/consultant capacity.

Layo promises that his presentation will be focused on medical specialty sales and marketing companies. He believes in challenging the status quo and showing his audience how to get better. One of his favorite quotes is from former General Electric CEO Jack Welch, who said, “If the change on the outside of your company is occurring faster than the change on the inside of your company, then the end is in sight.”

Learn more about Gerry Layo at his website, www.gerrylayo.com. And watch future issues of IMDA Update for more information.

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Sunday, June 3: Golfers can enjoy a game in beautiful Coeur d’Alene on Sunday morning, June 3, starting at 8 a.m. Registration opens at 2 p.m., followed by a first-time-attendee orientation at 3 p.m., and the general Welcome Reception from 4 to 6 p.m.

Monday, June 4: Keynote speaker Gerry Layo will get the conference off to a strong start Monday morning. The Manufacturers Forum will be open for one day only, from 12 to 2 p.m. and again from 5:30 to 7:30 p.m. on Monday. Educational sessions and breakouts will be held Monday afternoon. The Annual Awards Dinner will begin at 7:30 p.m. on Monday night.

Tuesday, June 5: Tuesday will begin with a continental breakfast, followed by an in-depth look at the impact of a Democratic Congress on U.S. healthcare policy, with special emphasis on what it means to specialty sales and marketing organizations. Breakouts will be repeated Tuesday afternoon. The Conference will adjourn at 3:30 p.m. A golf outing is planned for those who wish to stay at the resort an extra day.

The Conference Committee is moving forward rapidly with plans for the Conference, but is always open to members’ comments. Committee members are Tom Birmingham (tbirmingham@bay-state.com), Bruce Brierley (bruce@maxtecinc.com), Rick Pfahl (rick.pfahl@aaronmed.com), Duke Johns (dukejohns@cox.net), Katie Swartz (kswartz@asihq.com) and Mark Thill (markthill@thillcommunications.com).

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The last of the big Catholic purchasing groups is set to fade away, as Consorta prepares itself to become an equity owner of HealthTrust Purchasing Group, Brentwood, Tenn. Over the next 12 to 18 months, Schaumburg, IL-based Consorta will cease to negotiate contracts, ceding that responsibility to HealthTrust. It will continue to exist as a shared services organization, though greatly downsized, according to President and CEO John Strong.

With the addition of Consorta, whose annual purchasing volume exceeded $5.2 billion in fiscal year 2006, HealthTrust will represent $13 billion in annual volume. The combination was expected to be finalized by Feb. 28. HealthTrust President and CEO Jim Fitzgerald said the combination of Consorta and HealthTrust should yield better pricing, better administrative fees to members, and reduced overhead.

Consorta was founded in 1998 by the merger of two Catholic purchasing groups: Catholic Materials Management Alliance, St. Louis, and Diversified Health Services, Milwaukee. The organization suffered a blow in February 2006 when its largest shareholder – Ascension Health – announced its intention to leave the organization and join Dallas-based Broadlane, effective October 2006. Based in St. Louis, Ascension has 64 general acute-care hospitals in 19 states and the District of Columbia. But Strong denied that Consorta’s decision to join forces with another GPO had anything to do with poor performance on Consorta’s part.

“We just got off a record year,” he said during a telephone press conference held hours after the announcement was made. “We’ve been growing nicely. Our numbers were up 22 percent this year. We are doing this from a position of strength.” Even so, Strong and the Consorta board believe that the group purchasing market is growing more challenging, and that competition will only get hotter in the years to come. Joining forces with HealthTrust increases potential volume and, presumably, elicits better pricing from vendors.

During the press conference, Strong questioned the logic of Catholic or religious-based purchasing groups. “Catholic collaboration is not a single reason to join a group purchasing organization,” he said. “Many current and potential group purchasing customers view their relationships with group purchasing organizations differently. They see us as a supplier of contracts vs. [an organization] in which they want to have membership.”

After speaking with HealthTrust for the past 15 to 18 months, Strong said he and the Consorta board are convinced that its values and those of HealthTrust are aligned. “We believe all 12 of our 12 shareholders will participate in the transaction.”

At press time, the fate of Consorta’s and HealthTrust’s contracts was unclear. While stating that HealthTrust “will honor its contractual obligations,” Fitzgerald would not say whether HealthTrust would allow its contracts and those of Consorta to run their course prior to consolidation. “We don’t have a lot of clear-cut answers at this point, other than that we both have contracts in place,” he said. “We have a tremendous amount of due diligence and planning to go through.”

Neither Fitzgerald nor Strong would say for sure what will happen to Consorta’s custom contracting program, which provides staff to develop agreements exclusively for individual shareholders. That said, it seemed likely that HealthTrust would continue to provide the service. One Consorta member that uses the custom-contracting program -- Trinity Health, Novi, Mich. -- is said to have achieved $13.3 million in validated cost savings on $643 million in savings, with 82 percent of the savings through Consorta Custom agreements.

“We’ll be evaluating each of these different nuances and approaches to contracting,” said Fitzgerald. “As we do this, we’ll be able to communicate what our specific plans will be.”

When asked what Consorta will focus on in the years ahead, Strong said the organization will work with its shareholders to improve clinical evaluations and feed that information to the HealthTrust contracting team. He also said the organization will hone its data-gathering and data–analysis techniques, again, to improve HealthTrust’s contracting strategies.

Consorta’s current membership encompasses more than 530 acute-care and 250 extended-care facilities throughout the country. Meanwhile, HealthTrust supports more than 850 for-profit and non-profit hospitals and 1,200 non-hospital sites. Its largest member is Hospital Corporation of America, Nashville, Tenn., with 190 hospitals and 82 outpatient surgery centers. Another member, Community Health Systems, Brentwood, Tenn., operates 77 general acute-care hospitals in primarily non-urban areas in 22 states.

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Henry Ford Health System, Detroit, Mich., reports that it has instituted strict new policies to eliminate potential conflicts of interest in relationships between vendors and employees, and to more closely monitor what products are introduced into the health system.

In a press release dated Dec. 14, Henry Ford said “[t]his move is in keeping with the ‘just say no’ approach espoused by the American Medical Association and other health care leaders…, all of whom have adopted similar policies to create a clearer divide between medicine and product marketing.”

Some might take issue with Ford’s claim that its policies are “unique” and that they call for “the nation’s first certification of vendors for medical facilities.” In fact, other IDNs, including Sentara Healthcare in Norfolk Va., have implemented aggressive policies of their own. (See “Vendor-access guidelines issued,” October 2006 IMDA Update.) Still, few would argue that Ford’s policies aren’t strict.

Certification

For example, all med/surg and pharmaceutical sales reps who want to call on one of the health system’s facilities must become certified through a Henry Ford-sponsored certification class, and then obtain an ID badge. The cost for the certification class and the badge is $100 and is due at the time of the training. Any vendor participating in or observing a clinical procedure must adhere to additional requirements related to health and safety, and he or she is required to wear black scrubs to be easily identified.

Vendors must make an appointment before calling on Henry Ford’s staff. They will receive confirmation of their appointment via e-mail. On appointment day, vendors must check in at the location designated by the confirmation, with confirmation in hand. What’s more, “[p]romotional products of any kind, food supplied by vendors or literature distributed by vendors, will no longer be permitted at any Henry Ford site,” according to the health system.

Henry Ford has instituted internal controls to limit the introduction of “unknown products” into its facilities, including:

• Invoices will no longer be paid in the absence of a corresponding purchase order.
• The “New Product Introduction Policy” establishes a formal product request, evaluation and introduction process.
• A consignment/loan policy helps identify and manage consigned or loaned equipment, instruments and other products.
• An “emergency procurement policy” outlines a procedure for processing a procurement occurring on an emergency basis outside normal business hours.

The model

Among the American Medical Association’s policies cited by Henry Ford are the following:

• Any gifts accepted by physicians individually should primarily entail a benefit to patients and should not be of substantial value. Accordingly, textbooks, modest meals, and other gifts are appropriate if they serve a genuine educational function.
• Individual gifts of minimal value are permissible as long as the gifts are related to the physician’s work (e.g., pens and notepads).
• Subsidies to underwrite the costs of continuing medical education conferences or professional meetings can contribute to the improvement of patient care and therefore are permissible.
• Subsidies from industry should not be accepted directly or indirectly to pay for the costs of travel, lodging, or other personal expenses of physicians attending conferences or meetings, nor should subsidies be accepted to compensate for the physicians’ time.

To view a list of “Frequently asked questions” about the AMA policy, and to read answers geared to physicians, click here.

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If you’re not talking patient safety to your hospital customers, now might be a good time to start. In fact, patient safety is a train that hospitals are climbing onto in increasing numbers, sometimes by choice, sometimes by law. Not that hospitals have neglected their patients’ welfare in the past. But, because of fear of litigation, they have been reluctant to publicize events that have adversely affected their patients. But those days of silence appear to be numbered.

Following the lead of Minnesota, Connecticut, Illinois and New Jersey, the state of California has mandated that, beginning July 1, 2007, hospitals promptly report adverse events to the state Department of Health Services, who will then publicize them. Gov. Arnold Schwarzenegger signed into law The Hospital Error Reporting and Safety Act in September. It follows by roughly seven years a highly publicized report by the Institute of Medicine called “To Err Is Human: Building a Safer Health System,” which estimated that between 44,000 and 98,000 Americans die each year due to medical errors.

The California law requires hospitals to report adverse events that cause death or serious disability within five days of detection of the event. The events are classified as:

• Surgical events, including surgery performed on a wrong body part or wrong patient; retention of a foreign object in a patient after surgery; and intraoperative or immediate post-operative death in a normal, healthy patient.
• Product or device events, including events associated with the usage of contaminated devices or the usage of devices in ways they weren't meant to be used; and death or serious disability associated with intravascular air embolism occurring while the patient was cared for in the facility.
• Patient-protection events, including the discharge of an infant to the wrong person; patient death or serious disability associated with patient disappearance for more than four hours; and patient suicides and attempted suicides.
• Care-management events, including deaths or disabilities from a medication error, administration of incompatible blood or blood products; maternal death or serious disability associated with labor or delivery in a low-risk pregnancy; death or serious disability associated with hypoglycemia; death or serious disability associated with the failure to identify and treat hyperbilirubinemia in neonates; Stage 3 or 4 pressure ulcers acquired after admission; and patient death or serious disability due to spinal manipulative therapy.
• Environmental events, such as death or disability from electric shock; burns or falls; any incident in which a line designated for oxygen or other gas to be delivered to a patient contains the wrong gas or is contaminated by toxic substances; or death or disability associated with the use of restraints or bedrails.
• Criminal events, including care administered by someone impersonating to be a licensed healthcare provider, abduction, sexual assault or physical assault.

California hospitals will have five days to report an adverse event unless it involves an ongoing threat, in which case the limit is 24 hours from the time it is discovered. The hospital also must inform the patient, or whoever is responsible for the patient, by the time it makes the official report.

According to a report in the Sacramento Business Journal (“Hospitals prepare for new medical-error reporting mandate,” Jan. 5, 2007), one aspect of the law could prove especially troubling for the state’s hospitals: The information contained in the adverse-event reports is not protected from discovery during a lawsuit. In other words, the reports are available to trial lawyers defending plaintiffs in malpractice suits.

Federal precedent

The California law becomes effective two years after President Bush signed into law the Patient Safety and Quality Improvement Act of 2005, which gave hospitals the right to confidentially report adverse events to so-called patient safety organizations, or PSOs. The PSOs, in turn, are charged with collecting and analyzing the data, and identifying patterns of failure and proposed measures to eliminate patient safety risks and hazards. The federal law significantly limited the use of this information in subsequent court proceedings.

“To maintain the highest standards of care, doctors and nurses must be able to exchange information about problems and solutions,” said Bush, upon signing the bill in July 2005. “Yet in recent years, many doctors have grown afraid to discuss their practices because they worry that the information they provide will be used against them in a lawsuit. This bill will help solve that problem.”

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The romance between a Florida cardiologist and a St. Jude sales rep, coupled with a 400 percent increase of St. Jude’s sales to the hospitals where the cardiologist practices, was the subject of a recent investigation by the Miami-Dade County Commission on Ethics and Public Trust as well as an 1,800-word article in The Miami Herald (“Jump in medical sales, romance coincide,” Dec. 15, 2006). “The case reflects a national debate about doctor ethics and the sales tactics of device manufacturers,” points out the newspaper.

The story involves Alberto Interian Jr., M.D., cardiologist at Jackson Memorial Hospital, Miami, the major teaching facility for the University of Miami School of Medicine. Interian started the University of Miami’s department of electrophysiology 20 years ago and is a tenured professor there. His romantic interest was (and, reportedly, remains) Monica Rodriguez, a nurse practitioner and medical products salesperson. Here is the chronology, as recounted by the newspaper and the ethics commission report:

January 2003: Monica Rodriguez, a nurse practitioner with 12 years hospital experience, is hired by Medtronic to sell pacemakers and implantable defibrillators.

April 2004: Rodriguez takes Interian to dinner and submits an expense report to Medtronic for $206.01. Rodriguez was once Interian’s patient, and says the dinner was to say thanks for his care through the years.

May 2004: In an annual performance review, Rodriguez’s boss at Medtronic gives her the lowest possible rating. She gets angry and resigns several days later.

Summer 2004: Rodriguez and Interian begin seeing each other socially.

July 2004: Interian tells Rodriguez’s former boss at Medtronic that Rodriguez might have acted irrationally, and recommends that Medtronic hire her back. According to the boss, “[Interian] indicated that if I didn’t hire her, somebody else most likely would and that it would cost us a lot.” (Medtronic does not re-hire Rodriguez.)

December 2004: St. Jude hires Rodriguez.

February 2005: Jackson Memorial’s purchases of St. Jude’s devices begin to pick up substantially. St. Jude’s sales at the VA hospital where Interian practices pick up as well. Meanwhile, Medtronic’s sales take a dip at both facilities. (Guidant doesn’t offer figures, but says its sales fell as well.) University of Miami Executive Director of Internal Audits Michael Maloney later says that Interian told him during an interview, “Yes, his use of St. Jude units have gone up since he started dating [Rodriguez] because the products were the best units for the patients and he sees no conflict. He says it’s a coincidence that he’s come to view [St. Jude] as better since he started dating her.”

June 2005: Anonymous letters faxed to University of Miami President Donna Shalala and Jackson Memorial CEO Marvin O’Quinn reveal Interian and Rodriguez’s romance and the shift of sales to St. Jude.

July 2005: Interian sends a letter to Jackson’s purchasing manager and writes, “I am writing to advise you that I have a personal relationship with one of the representatives for St. Jude. If this is of a concern to Jackson, I will be happy to discuss this.”

October 2005: University of Miami’s lawyers say the case probably doesn’t violate anti-kickback statutes because “the relationship would not be considered remuneration.”

November 2005: Interian is fired as chief of cardiology, costing him about $50,000 a year. Eventually, Rodriguez is pulled from the Jackson Memorial account.

April 2006: The Miami-Dade County Commission on Ethics and Public Trust issues its report, concluding that an ethics complaint is justified. Noting that sales to Jackson Memorial of St. Jude’s pacemakers and defibrillators climbed from $598,000 in 2004 to more than $2.5 million in the first 10 months of 2005, the report’s authors note that “[t]he primary beneficiary of this windfall is arguably Monica Rodriguez, Dr. Interian’s acknowledged romantic interest.” They estimate that Rodriguez earned more than $100,000 in commissions for her sales to Interian’s department at Jackson Memorial, and “undoubtedly tens of thousands in additional commissions” from sales to other hospitals where Interian practiced. “Industry experts and internal analysts at [Jackson Memorial] and [University of Miami] are at a loss to find any explanation for St. Jude’s sales gains – short of conflicted and/or exploitive behavior on Interian’s part.”

Though Interian remains a faculty member in good standing at the University of Miami medical school, the organization reports that it has tightened its conflict-of-interest policies to include anyone who has a personal relationship with a vendor.

To view the Miami-Dade County Commission on Ethics and Public Trust report on the Interian affair, visit http://www.miami.com/multimedia/miami/news/interian.pdf.

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Better analysis of the costs and benefits of new medical technology is needed to reduce health costs, according to the author of a study on CT scanning for cardiology, published in the January/February 2007 issue of the journal Health Affairs.

"Any new technology is only valuable to the extent that it leads to improved patient care," said study lead-author Rita Redberg, director of women's cardiovascular services at the University of California San Francisco Medical Center.

The current "pay now, benefits might follow" model means that technology is a large contributor to the fact that the U.S. healthcare system has high costs and moderate quality, writes Redberg in the article, titled “Evidence, Appropriateness and Technology Assessment in Cardiology: A Case Study of Computed Tomography.”

The solution, according to Redberg, is "evidence-based technology assessment," a process in which providers weigh the benefits of a new technology against its costs and potential medical risks.

In addition to her medical training, Redberg received a master’s of science degree in health policy and administration from the London School of Economics in England. She has written, edited and contributed to a number of books, including You Can Be a Woman Cardiologist, Heart Healthy: The Step-by-Step Guide to Preventing and Healing Heart Disease and Coronary Disease in Women: Evidence-Based Diagnosis and Treatment.

Her recent article in Health Affairs is available for viewing by subscribers (or for purchase) at www.healthaffairs.org.

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IMDA Update Published by IMDA 5204 Fairmount Ave., Downers Grove, IL 60515 Phone:  (630) 655-9280 (866) IMDA-YES (866-463-2937) Fax: (630) 493-0798 Website:  www.imda.org E-mail:  imda@imda.org   Staff Katie Swartz: Executive Director Judy Keel: Executive Vice President Patti Perillo:  Database & Finance Admin. Mary Moran:  Chief Financial Officer Mark Thill, Editor (847) 255-0716 Laura Thill, Associate Editor (847) 255-4854 Mitchell Kramer, Legal Counsel (800) 451-7466   2007-2008 Directors President Shawn Walker, Bay State Anesthesia (978) 682-6321 President-Elect Kevin Trout, Grandview Medical Resources (412) 914-0950 Secretary/Treasurer Leo Mindick, Med-Tech Consultant Partners, LLC (516) 708-1111 Chairman of the Board Dave Campbell, Vital/Med Systems (303) 660-0888 Directors-at-Large Hal Freehling, O.E. Meyer (419) 609-1633 Tom Birmingham, Bay State Anesthesia (978) 682-6321 Tony Marmo, Martab Medical (201) 512-1100 Past-President Ed Boracchia, Boracchia + Associates (707) 765-3100 Manufacturer Representative to Board Rick Pfahl, Bovie Aaron Medical (727) 384-2323 The ideas presented in this newsletter may or may not be applicable to your particular situation.  Always consult your tax advisor, attorney or CPA before putting them into effect.