Connections : Join the Conversation - The blog of Biomet CEO Jeffrey R. Binder
The New York Times, under Barry Meier's byline, has recently published several prominent articles that are generally critical of the orthopaedics industry. We have already commented on the first, which misrepresented the industry's position on joint registries. The second, which was actually a cluster of related articles, discussed clinical issues with metal-on-metal hips. While the reporting was generally more accurate in the second instance than the first, it was imbalanced in that it did not proportionately discuss the benefits of metal-on-metal implants.
On April 2, the Times published a third article that was highly critical of the industry for not offering warranties on implants. In fact, the article outlandishly quotes Arthur Levin, the executive director of the Center for Medical Consumers, as saying: "Either they [orthopaedic companies] do not have faith in their products or they are just saying tough luck to patients. It borders on unethical business behavior." Dr. Larry Dorr chimed in: "Companies have dumped these costs in the healthcare system. They don't have any skin in the game."
We will not offer a point-by-point refutation of the article or of Mr. Levin's statement, but we do make two major arguments for why orthopaedic implants are typically not warranted.
Argument 1: Difficulties in Determining Causation and Assigning Fault
It is well-established, almost to the point of cliché, that the reasons for orthopaedic implant failures are multi-factorial. In a very small minority of cases, the cause of failure is obvious and can be neatly assigned to one party. In the instance of a design or manufacturing flaw, Biomet and other responsible manufacturers typically work with affected parties to resolve their issues.
There are additional potential causes of failure that can be directly linked to the need for a revision surgery. In a small number of cases, there may be clear surgeon error, such as operating at the wrong site. Moreover, a significant number of devices require revision because of identifiable non-implant related factors, such as infections or traumatic events that damage the implant.
However, in most instances the underlying reason for failure is not obvious. An implant system may have an excellent clinical history in the broader population, yet still fail to deliver optimal results in a particular patient. The cause of each failure must be identified on a patient-by-patient basis. Is there an issue in the design that only becomes apparent in certain indications, patient subpopulations, or with certain surgical techniques? Did the surgeon make an error in implant positioning, alignment, or sizing? Was there a third-party navigation system involved? In fact, what magnitude of "error" is within the range of accepted human and technological limitations?
And what is the responsibility of the patient? It is well understood that patients' weight, activity levels and adherence to post-operative instructions are major determinants in the success of a joint replacement operation.
Simply stated, there are innumerable factors at play for most implants requiring revision. Nonetheless, apparently Mr. Meier and Mr. Levin would feel comfortable charging the implant manufacturer for the costs of the revision surgery. They are silent about surgeons being forced to guarantee their work—but be careful, doctors, that is the next logical step. And would the author and the consumer advocate feel equally comfortable charging a Medicare patient for his or her share of the fault?
The logic for charging involved parties with the cost of revision according to fault quickly unravels. Medicare does not charge more for patients who smoke, are obese, or engage in high risk activities of any kind, and the new healthcare legislation will regulate the ability of private insurers to do so. Why, then, would payors attempt to assign fault for revision procedures? Payors generally recognize that patients undergo certain risks when receiving treatment. With the exception of a limited number of hospital-acquired conditions (where the patient leaves the hospital with a disorder he or she did not have upon admission), payors do not assign the costs of the next stage of therapy to the providers of the previous stage. Unlike new infections or falls that occur during a hospital stay, payors do not have the ability to validly isolate and apportion fault for the failure of complex surgical treatments with multiple interacting variables.
One might argue that companies can provide a limited warranty that only comes into play if there is a clear, premature failure (assuming "premature" could be defined) related to device design or manufacturing. However, the problem here for companies like Biomet is what to do when parties attempt to collect on warranty claims that we believe are not device-related. Especially in the litigation environment that we face in the United States (absent tort reform), this puts the company in an untenable position—either accept blame that we do not believe to be ours and have it used against us later, or endure endless conflicts with doctors, hospitals, and patients over who is to blame—clearly not a productive activity.
Argument 2: Determining Value
The second set of reasons why warranty programs are atypical in our industry relates to the simple fact that customers do not place much value in them. By definition, any good or service is valuable only if there is someone willing to pay for it. The author cites automobiles and appliances as industries that offer warranties—they do so either because customers are willing to pay more for the product as warranted or insist upon the warranty as a condition of purchase. However, we have found no evidence that hospitals in the United States would be willing to switch products or pay more for products that are warranted. One might argue that this is because the hospitals are paid for performing revision surgeries and that the cost of the implant is part of the hospitals' reimbursement. Clearly, if Medicare or private payors were unwilling to pay for revision surgeries, hospitals might take a different perspective.
But, again, this brings us back to the problems in the previous section. It would be grossly unfair for payors to insist that revision procedures be performed free of charge. Why should an implant manufacturer be asked to provide free replacement implants, regardless of fault? Why should doctors be asked to provide free services in a revision surgery, regardless of fault? Why should hospitals provide their facilities free of charge, regardless of fault? And who should decide fault? In fact, more generally, who should decide whether the initial surgery met expectations for both implant durability and performance?
In a more rational market as described in our previous entries, where patients shared the cost of advanced technologies, companies would almost certainly need to offer warranties on these products as a condition of purchase by educated patients. But in today's U.S. healthcare system, the simple truth is that a warranty holds no value for customers.
Where Warranties Might Make Sense
As the Times article rightly points out, Biomet has in fact offered warranties in some European markets. There may be instances where it makes sense for us to do so given that (1) customers within a particular health system value the warranties and (2) we have reason to believe that a warranty limited to implant-related failures can be practically managed. Biomet's history where we have offered warranties has actually been very good. We have an excellent claims experience, which is a testimony to the design and quality of our products.
Lost in all the negative press is what we as an orthopaedic community know to be true—the extraordinary progress that we have made in helping patients to regain pain-free mobility (see the fact sheet on the Benefits of Hip and Knee Replacements).
Clearly, we need to do a better job of making sure that people know these facts. For what we have taken for granted as obvious truth and what drives us every day—the incredible value of our products to society—is encountering considerable skepticism by those who either do not understand the facts or choose for whatever reason to misrepresent them.
3 Comments to Warranties: Assigning Fault, Determining Value
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