Stranger Than Fiction

Even Hollywood would pause before trying to sell this scenario. Imagine:

Over twenty years ago someone invented a cheap car gadget that would cut the 30,000 annual US car crash deaths by 75%, and with government help proved it in a randomized experiment fifteen years ago. The car industry was a tight cartel, however, explicitly encouraged by the government and exempted from anti-trust laws, and this cartel didn’t see much profit in adopting the no-more-crash-death innovation. Although the nation just passed a huge car industry reform bill, after a fierce national debate, this subject never came up.

Not very believable, is it. But, turns out, an equivalent scenario has actually played out in medicine. There are 30,000 annual US deaths from blood catheter infections, but the US med equipment industry is a tight government-encouraged cartel, explicitly exempted from anti-trust laws, and it doesn’t see much profit in adopting a cheap innovation proven fifteen years ago to cut infections by 75%:

According to some studies, the rate of bloodstream infections is three times higher with needle-less systems than with their needle-based counterparts. … Shaw’s innovation added only a few pennies to the cost of production. And it seemed to be remarkably effective: A 2007 clinical study funded by Shaw’s company and conducted by the independent SGS Laboratories found the device prevented germs from being transferred to catheters nearly 100 percent of the time. … Shaw had just invented the first retractable syringe, a fact that drew the attention of public health officials. In 1993, the National Institutes of Health gave him a $600,000 grant to shrink it down to the size of an ordinary hypodermic. …

Large companies used their clout to squeeze hospitals on prices. To keep costs in check, in the 1970s many medical facilities began banding together to form group purchasing organizations, or GPOs. … In 1986 Congress passed a bill exempting GPOs from the anti-kickback provisions embedded in Medicare law. This meant that instead of collecting membership dues, GPOs could collect “fees”—in other industries they might be called kickbacks or bribes—from suppliers in the form of a share of sales revenue. … GPOs’ revenues were now tied to the profits of the suppliers they were supposed to be pressing for lower prices. … In 1996, when the Justice Department and the Federal Trade Commission overhauled antitrust rules and granted the organizations protection from antitrust actions. …

Within a few years, five GPOs controlled purchasing for 90 percent of the nation’s hospitals, … Shaw’s retractable syringe hit just as these trends were converging. In fact, the year his product came onto the market, three of the nation’s largest GPOs merged to form a company called Premier, which managed buying for 1,700 hospitals, or about a third of all hospitals in the United States. … Over the next two years, [Becton Dickinson] landed similar deals with all but one major GPO. As a result, almost everywhere Shaw turned, he found hospital doors were closed to him. …

There was talk of legislation to rein the GPOs in. Spooked by this threat, in 2002, the industry introduced a voluntary code of conduct … When it comes to core business practices, [this code] is vague. …

GPOs maintain that by pooling hospitals’ buying power and getting big medical suppliers to submit to competitive bidding, they are able to negotiate better deals and save hospitals billions of dollars. … But the little information that is available suggests that they may actually drive up the price of supplies. A 2002 pilot study by the Government Accountability Office found, for instance, that hospitals that went through GPOs paid more for safety needles and most models of pacemakers. … MEMdata, a Texas-based company that helps hospitals process their bids for new equipment and captures the quotes in a database. … On average, [MEMdata founder] Yancy says, the GPOs’ prices are 22 percent higher than the ones that hospitals can get on their own. (more; HT Kevin Burke)

GD Star Rating
loading...
Tagged as: ,
Trackback URL:
  • burger flipper

    happily, Bryan Caplan can completely refute this ever happened since no company would allow a preventable death that might hurt its reputation (and he can buttress it w a personal anecdote if needed)

    • Dan

      The GPOs make the purchasing decisions; the hospitals are the ones with their reputations on the line. There is an agency dilemma.

    • Adrian Ratnapala

      Some can will blame the evil companies for being evil, others will blame the government for protecting the evil from competition. Both are right.

  • http://blog.greenideas.com botogol

    I can believe the high prices – in the UK govt hospitals and schools are forced to purchase stuff through centrally administered purchasers… to get the benefit of bulk buying.

    Stories of £5 bath plugs and £10 lightbulbs are common place.

  • http://williambswift.blogspot.com/ billswift

    Read Atul Gawande’s “The Checklist Manifesto”. You don’t even need this gadget, simply using a checklist will drop the rate of infections by more than 75%. Doctors of course are resiting this; they are too self-important to “submit” to a checklist; they would rather see their patients die.

    • http://hanson.gmu.edu Robin Hanson

      Follow my first link.

  • arch1

    Thanks much for sharing this. I am going to follow this issue, which seems potentially a biggie.

    I also agree with the spirit of billswift’s comment – though I haven’t read the Gawande book he mentions, I have read his “Complications” and “Better” and it is clear that there are significant cultural barriers to safer patient care in the Third – scratch that, First – world.

    As a nit, I think “cut deaths by 75&” should be corrected to “cut infections by 67%” or some such.

  • Rebecca Burlingame

    I am glad Shaw is still trying to give those guys hell because they tried to ruin his life several times over. What it basically means is that most people who would try – or try – to invent anything for medical use who does not have the right connections does not even have a chance. That needs to change, and once enough people realize what is going on, I think it will.

  • Nanonymous

    Every time I get an IV (and hospitals and ER rooms are super eager to use them), those injection ports scare the hell out of me. The very design seems to be perfect in maximizing sepsis rates. The surface that is fully exposed (no cap!) and collects all the crap for hours and days (the flat silicon plug of the lumen) is pushed down and whatever is on its surface is washed into the bloodstream with the syringe’s content! The rubbing alcohol wipe is supposed to sterilize it but 1) nurses frequently neglect to wipe, 2) the wipe does not kill or remove all bugs.

    Shaw’s contraption does absolutely nothing to solve this problem. It only addresses the other side – the syringe tip that someone can cluelessly contaminate.

    The good old hypodermic needles, simply by virtue of them 1) having small surface area, 2) being prickly and thus not conductive to fooling around with negligently, are much, much, much safer than any of the needle-less designs I’ve seen. So what’s wrong with needles??? Apparently, the main argument is that they expose healthcare workers to needlestick injuries! So here we go: between the risk of a needle prick to the nurse and a bloodstream infection to the patient, a clear choice is made to protect personnel at the patients’ expense.

    http://www.ncbi.nlm.nih.gov/pubmed/18075022

  • http://www.FoolQuest.com Aaron Agassi

    Funny you should mention it: Are you aware, historically, of the fierce and protracted resistance even to seatbelts?

  • Rebecca Burlingame

    Nanonymous, when I read your concerns I consulted with my husband who is basically a “professional” patient. First, he suggested, whenever a nurse neglects to clean the port, stop them and make sure they do. While it is not 100% foolproof it’s better than not doing so. The most IVs he has ever had at a time is four, and they never went septic. However, he is only one patient out of the numerous patients a nurse has on a shift. In other words, in a day the nurse is exposed to potential needle sticks many more times than a patient’s single IV stick. There are also ways to check the hospital’s record for percentages of septis related incidents.

  • Nanonymous

    Rebecca,

    In other words, in a day the nurse is exposed to potential needle sticks many more times than a patient’s single IV stick.

    It’s called an occupational hazard, a normal thing. Logging and fishing are most dangerous occupations in the USA and neither faces workforce shortages. Besides:

    1) If nurses do their jobs properly, there will be no needlestick injuries. That’s like taking guns away from the police because some policemen can accidentally shoot themselves and others.
    2) Three orders of magnitude more people die from sepsis related to the needle-less IV designs than from all of the medical needleprick injuries combined.
    3) Wiping only reduces the risk several-fold. It’s the design that is totally flawed. And most people with catheters in the hospitals don’t even recognize the need for wiping! We are so lucky that in most people with good immune system most bugs in the bloodstream never have a chance of proliferating. But if you are immunocompromized and in ECU – well, you are as good as dead 50% of the time.

  • Rebecca Burlingame

    Nanonymous,
    At the end of the day I do not know if Mr. Shaw’s inventions are better than the limited offers from the “big guys”. But what is important to me is that individuals like him continue to have the right to provide their options for what they believe can help. (If we do not have the right to heal, who among us has the right to health care) What’s more, it is the recorded stories of countless people – as to their personal experiences with the goods produced or services provided, that make it possible for others to make informed decisions as to whether or not they choose to try the product. As individuals, we can all do a far better job of monitoring systems than the few individuals government can ever afford to hire for the job. Many of us have the same incentive to provide for free, what the few get paid for, plus their stories tend not to get recorded for all to see, like ours do. Mark Thoma had a post a few days back that reflected on this reality, when he noted that in the small town he grew up in, many regulations were not necessary because all the people knew about the services their neighbors wished to offer, and what they were like. Today the Internet makes it possible to be like that small town that doesn’t really need much regulation, because of the value of every recorded story, as to what individuals would provide to one another.

  • http://reprabbits.blogspot.com James Andrix

    Another bias at work (I don’t know the name offhand): One of my my initial reactions was that of course the auto industry should cut 75% of auto accident deaths, but 75% of catheter infection deaths is just a small part of the total deaths that happen in hospitals, so there’s not reason they should focus on that. Clearly this is insane.

    The only way I think this would hold up is if implementing the fix would really cause so much inefficiency as to create more deaths elsewhere, but that doesn’t seem likely to me.

  • Ragout

    Sounds like yet another failure of free enterprise and for-profit medicine. It sounds like the government needs to remove GPO’s anti-trust exemptions, ban kick-backs, and generally step up regulation. Still, I’m glad to hear that government-run hospitals such as the VA have adopted the safer needles.