Another Troubled Device Company

A report on another troubled medical device company, in the Austin Statesman:

A year ago, ArthroCare Corp. chief executive Mike Baker insisted that nothing was amiss with his company, even as critics were raising questions about billing and other practices at its insurance reimbursement subsidiary.

The allegations were 'the most salacious kind of garbage,' Baker told the American-Statesman.

But on Wednesday, the Austin medical device company said it was under investigation by the U.S. Securities and Exchange Commission and U.S. attorney's offices in Florida and North Carolina over insurance billing and other practices.

Baker and two other top executives resigned.

The company said the audit committee of its board of directors had found evidence of 'improper practices,' including double-billing of insurance companies, providing inaccurate claims information on where procedures were performed and pushing doctors to use the wrong coding, which could result in higher reimbursements.

The company said employees also provided doctors and their billing staffs with free merchandise and administrative services in exchange for using ArthroCare products.

Two months ago, the company said it would restate its financial results going back eight years because of irregularities in the reporting of revenue.

At that time, the chief financial officer and two other executives resigned.

ArthroCare makes medical devices, including a wand that allows doctors to perform certain spinal surgeries using minimally invasive techniques.

Note in this case the juxtaposition of questionable relationships with physicians, questionable billing practices, and questionable financial practices.

This is just a bit more evidence that poor ethics are rampant among the leadership of health care organizations. Yet with all the current buzz about health care policy, the need for health care reform, and the need to address our chronically rising health care costs, decreasing access, and stagnant quality, there has been little discussion of raising ethical standards for the leaders of health care organizations.