How the medical supply industry blocks device startups from selling to hospitals • Hacker News Board

Re: How the medical supply industry blocks device startups from selling to hospitals

#81

Post by [deleted] » Wed, Apr 25, 2012, 7:54 PM UTC

robomartin wrote: post #71

anigbrowl wrote: post #62

Earlier quoted context omitted.

Part of the problem is that we continue to give the keys to the shop to bureaucrats who have zero real-world, business or employed-by-a-non-government-business experience. You really can't expect much from anyone who has lived their entire life within the confines of an ecosystem where personal decisions carry almost no risk. A lot of the time the rules are not made by bureaucrats but by politicians in receipt of lob…

Nope. Read it again. Government rules is what changed the nature of these GPO's from hospital-funded to being funded by kickbacks from the various vendors. That one act alone seems to have triggered a massive shift in power. Businesses will adapt to the environment they operate within. If they can identify an advantage they will use it. I am not going to blame a business for moving within the existing framework any m…

[deleted]

Re: How the medical supply industry blocks device startups from selling to hospitals

#82

Post by Aloisius » Wed, Apr 25, 2012, 7:54 PM UTC

gcb wrote: post #25

DanBC wrote: post #15

The movie EDIT "puncture" (thanks diek!) is a reasonably entertaining account off the retractable needle. US healthcare (and thus, US patients) may miss out on improved syringes, but I hope they're able to sell many of these to the developing world where needle re-use is a serious problem. Re-using needles when 10% of the population has HIV/AIDS is awful. Not just because you risk transmitting HIV to other people, bu…

Name one regulated market in the us that have fair competition. Btw. It's not only in the us. Regulation today is the most secure form of monopoly

Uh, regulation often prevents monopolies. See: anti-trust regulation.

Re: How the medical supply industry blocks device startups from selling to hospitals

#83

Post by Symmetry » Wed, Apr 25, 2012, 7:57 PM UTC

tyree732 wrote: post #64

Symmetry wrote: post #54

Earlier quoted context omitted.

I think the fix in this case would be removing the laws that encourage anti-competitive arrangements.

How is the government incentivized in any way to do that? Politicians in the US receive substantial campaign contributions from established military suppliers who would stand to lose a lot from said laws. I don't see any rallying cries from the public about the competitiveness of supply arrangements government entities currently have.

Basically this is one of those areas where we can expect positive change iff there's a lot of public outcry. Sometimes the political stars align and we get actual reforms, but its not anything that we should expect that politicians would ever get up to on their own.

Re: How the medical supply industry blocks device startups from selling to hospitals

#84

Post by praptak » Wed, Apr 25, 2012, 8:00 PM UTC

robomartin wrote: post #40

As an entrepreneur I have dedicated most of the last 25 years to doing hardware (read: manufacturing) ventures. Manufacturing in the US is hard, if not impossible, save cases where the ecosystem or nature of the market can support it. Problems one could face include: ip (patents) mine field, government regulations, liability issues, lack of localized supply chains, high labor costs, high insurance costs, high taxes a…

> The article in question highlights something that we should all understand very well at this point: Government rule-making is, more often than not, fraught with unintended consequences that, ultimately, end-up costing us in terms of money, freedom and choice.

This is how I see it:

1. Government makes an anti-kickback rule.

2. It relaxes the rule.

3. Corporations take advantage of the opportunity using kickbacks to entrench themselves in the market, costing us money, freedom and choice.

4. Your conclusion: government rule making is bad.

Re: How the medical supply industry blocks device startups from selling to hospitals

#85

Post by robomartin » Wed, Apr 25, 2012, 8:08 PM UTC

luser001 wrote: post #78

robomartin wrote: post #76

Earlier quoted context omitted.

I disagree. Here's the relevant section: Then, 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. (For example, in exchange for signing a contract with a given gauze m…

What you generically call "government meddling", I call (more precisely, imho) "corporation-funded, lobbyist-enabled legislative corruption".

What you generically call "government meddling", I call (more precisely, imho) "corporation-funded, lobbyist-enabled legislative corruption".

This is a very popular view generally promoted in the more liberal corners of the political ecosystem. Not being in either the liberal or conservative extremes I tend to see things differently.

You have to ask a few questions to get to the bottom of it:

  Q: What are lobbyists?
  A: Organizations that create a way to reach out to 
  law-makers directly, voice opinion and have some 
  influence on relevant matters.

  Q: Why do businesses use lobbyists?
  A: Because they can and it provides them with a way 
  to navigate an already complex system.

  Q: Why are corporations able to fund lobbyist?
  A: Because it is legal

  Q: Why is it legal?
  A: Because politicians passed laws allowing it.

  Q: Why did they do that?
  A: Many reasons.  
  One might be that they need that funding to stay in power.
  Another might be that they don't really care about us but
  would much rather ensure their own political existence.
  Yet another might be that we, the people, don't really
  show-up in any meaningful way on their radars outside of
  elections.  
  And, finally, one more reason could be that, well, we allow it.

  Q: What should we do about it?
  A: Make it illegal.

  Q: Would corporations and lobbyists then be able to influence legislation?
  A: Maybe, but at least not through those legally-provided channels.

You don't have to ask too many questions to get to the fundamental reasons behind a problem. It's hard to hide from reality. I don't have a problem with someone (or a corporation) using the available legal framework to advance their cause or standing. If the means for political influence produce bad results the system is to blame, not the user of the system.

A simpler example might be in product design. If I design a chainsaw that is faster and more powerful to use I'd expect businesses to use it to gain advantage over competitors and make more money. If, as a result of this more people are getting hurt because the design isn't very sound, you don't turn around and blame the businesses using it. The design was at fault. Bad engineering. People will use what they are given to work with. Fix the problem, not the symptoms. It's not a perfect analogy, but it illustrates the fundamental idea.

Re: How the medical supply industry blocks device startups from selling to hospitals

#86

Post by Symmetry » Wed, Apr 25, 2012, 8:09 PM UTC

Aloisius wrote: post #75

anigbrowl wrote: post #68

Earlier quoted context omitted.

No, in 1986 the government removed rules (forbidding kickbacks) designed to prevent such behavior. In 1996 the government exempted medical supply companies from many antitrust regulations. The facts laid out in the article are diametrically opposed to the point your are trying to make. It's pretty hard for a large company to misbehave today and not pay a serious price for it. for example?

People like to pretend like all government regulation is stifling to innovation, but it is pretty clear that some regulation is necessary for a properly functioning market. The trick is, how much is too much. There needs to be a very good reason to shield any company from anti-trust regulations and I can't think of a valid one that would apply to medical supply companies.

I think that saying that regulation is necessary (as opposed to desirable) might be too strong. In most cases things can still function without regulation, because people know things aren't regulated and can take that into account by being cautious. Now, this is often inefficient and causes some number of people to get screwed over, but it still works.

I'm sure there could exist some golden system of regulation for health care and there are even countries like Singapore seem to have found something close enough, but its not clear to me that our current system in the US actually manages to be better than no regulation at all.

Re: How the medical supply industry blocks device startups from selling to hospitals

#87

Post by paul » Wed, Apr 25, 2012, 8:11 PM UTC

Retric wrote: post #80

paul wrote: post #67

When people complain about entrepreneurs building social networks instead of curing cancer, they need to understand that this is a big part of the reason. The internet attracts so much innovation in large part because it's very open to innovation. In more regulated/corrupt (the two are closely related) fields, such as health care, there are many barriers to competition that kill innovative new companies. Mobile was a…

Building App's is ridiculously simpler than solving major problems like cancer. Consider the smartest person you ever met could spends their entire life working on a cancer cure with everything they had and chances are they would have saved more lives by donating 10% of their salary to a vaccination program.

Yeah, cancer definitely isn't the "low hanging fruit". Hospital errors and infections would be much easier to address, though as this article shows, even that is nearly impossible.

Re: How the medical supply industry blocks device startups from selling to hospitals

#88

Post by rosser » Wed, Apr 25, 2012, 8:11 PM UTC

robomartin wrote: post #66

gamble wrote: post #60

Earlier quoted context omitted.

I'm not seeing how the government was an issue in this case. The article is about how private companies use kickbacks and cartel behaviour to restrict what products are available to hospitals. It seems like a lack of government action is the problem here.

No,no. Read it again. The government setup the rules that enabled exactly that behavior. If they (government) didn't try to play entrepreneur or investor we'd be far better off. There are cases where government involvement is warranted. I'm with Ron Paul on this one: Get them off our backs, we do and did just fine when they had less hooks into us. This is particularly true with the existence of the Internet. It's pre…

The government setup the rules that enabled exactly that behavior.

I see you making this argument over and over in this discussion, but you seem to be ignoring the flip-side of that fact: People exploited those government rules.

Any calculus of culpability for the current state of affairs that ignores that fact, pointing fingers solely at the government, is myopic to the point of absurdity. No-one forced these medical supply cooperatives turned for-profit organizations to exploit the rules for their own advantage, establishing a system of pay-to-play kickbacks that demonstrably holds back progress and actually kills people. (Don't mind me. I'm a little pissed off about this particular subject right now; I just had an uncle die from sepsis.)

The people in those organizations made conscious, rational choices to engage in that kind of behavior. If they didn't foresee the consequences of doing that, they're as dumb, blind, and undeserving of the responsibility for stewarding their corner of the world as the government bureaucrats who created the rules in the first place.

Or are you actually arguing that people who exploit unintended consequences for their own benefit, regardless of the impact to the rest of the world, are somehow blameless? That only the people who made those consequences possible have any culpability?

It takes two to tango, after all.

Re: How the medical supply industry blocks device startups from selling to hospitals

#89

Post by smokeyj » Wed, Apr 25, 2012, 8:17 PM UTC

paul wrote: post #67

When people complain about entrepreneurs building social networks instead of curing cancer, they need to understand that this is a big part of the reason. The internet attracts so much innovation in large part because it's very open to innovation. In more regulated/corrupt (the two are closely related) fields, such as health care, there are many barriers to competition that kill innovative new companies. Mobile was a…

So is regulation the answer or the cause?

Re: How the medical supply industry blocks device startups from selling to hospitals

#90

Post by anigbrowl » Wed, Apr 25, 2012, 8:17 PM UTC

robomartin wrote: post #71

anigbrowl wrote: post #62

Earlier quoted context omitted.

Part of the problem is that we continue to give the keys to the shop to bureaucrats who have zero real-world, business or employed-by-a-non-government-business experience. You really can't expect much from anyone who has lived their entire life within the confines of an ecosystem where personal decisions carry almost no risk. A lot of the time the rules are not made by bureaucrats but by politicians in receipt of lob…

Nope. Read it again. Government rules is what changed the nature of these GPO's from hospital-funded to being funded by kickbacks from the various vendors. That one act alone seems to have triggered a massive shift in power. Businesses will adapt to the environment they operate within. If they can identify an advantage they will use it. I am not going to blame a business for moving within the existing framework any m…

'Nope' is not an argument. Government rules previously forbid kickbacks, a common commercial practice. the rules were changed to remove this restriction. If legislators are corrupt for changing the rules, who is corrupting them? why should they skate? This was clearly a reduction in government interference in the marketplace, and what we've got instead is a situation where the dominant market player uses its commercial power to negotiate long-term exclusive contracts. Nobody in government forced them to issue such contracts or the hospitals to sign them without negotiating the right to purchase competing products.

Lobbying is a problem, but it is NOT illegal. I fully agree with disallowing it. So long as it isn't, those who can will use it.

Then advocate for that instead of putting all the blame on the government, and explain what you're going to fill the campaign finance gap with, or how you'll circumvent existing first amendment precedent. Bribery is one of those dances where it takes two to tango.

Something else that needs to change: Government workers cannot be unionized.

I happen to agree, but this is hopelessly irrelevant to the subject at hand.

In the real world the government workforce should have been cut by at least 25% to 50% and their salaries by another 20%+.

Suprisingly, Obama has cut government more than Reagan [1], and wants to cut it more [2]. Rome was not built in a day and it isn't torn down in a day either. Your argument seems adrift from reality and increasingly resembles mere ranting.

1. http://economix.blogs.nytimes.com/2012/01/06/under-obama-a-r...

2. http://articles.latimes.com/2012/jan/13/news/la-pn-obama-see...