When DrRich left his medical practice nearly a decade ago, he spent much of the next few years as a consultant to certain companies that make implantable defibrillators.
Most of his work was in research and development, and had next to nothing to do with defibrillators themselves, or any aspect of treating cardiac arrhythmias. Rather, DrRich was interested in developing physiologic sensors that could be deployed in implantable devices, and the algorithms that could use these sensors to predict and detect various developing medical conditions (so as to enable early intervention, and potentially prevent said medical conditions from becoming manifest). DrRich considered this work a) interesting, and b) representative of a business model that could potentially flourish within a healthcare system whose chief concern is reducing costs.
And whenever the captains of industry who signed his checks would ask him something about implantable defibrillators, usually seeking his opinion on a proposed subtle variation in some unbelievably complicated programming feature, DrRich’s reply was likely to be something like this: “Sir (or Madam) – I will be happy to study the question you pose to me, as I am working on your dime. But it greatly saddens me to see all this time, energy and talent wasted on adding yet more irrelevant features to a mature technology, in pursuit of a business model that is fundamentally broken.”
To which they would smile indulgently, hand DrRich the document describing the proposed changes, and schedule a meeting to discuss them.
The indulgent smile was in recognition of the fact that DrRich never made a secret of his disdain for the business model embraced by implantable defibrillator companies. The fact that these captains of industry put up with DrRich’s disapproval was a clear indicator that they considered it to be “quaint,” and apparently not worth taking seriously, and that the value DrRich provided in other arenas at least counterbalanced the annoyance of having him criticize their core business every chance he got.
DrRich’s disdain for the implantable defibrillator business model was based on two factors.
First, their business model relies on the artificially high prices the system will pay for their devices. DrRich has discussed this before. While these high prices are not directly the fault of the companies themselves (rather, they are fundamentally the fault of Medicare processes that distort and destroy natural market forces), these companies have now come to rely entirely on this artificial price structure, and have established all their business practices around this high-margin enterprise. The problem is that this high-price model absolutely precludes any reasonable penetration of this life-saving technology into the vast population of patients who might benefit from it. Also, because the price structure is not only artificial but arbitrary, a few simple changes in Medicare processes could abruptly destroy their business overnight.
Second, nobody is really interested in preventing sudden death. It’s difficult to sell any product when there’s no demand for that product, and there is no demand for sudden death prevention. In contrast, most other medical problems have a built-in constituency Read more »
*This blog post was originally published at The Covert Rationing Blog*