Physician-Owned Distributors: The Wave of the Future or the End of the Model?

Abstract

New business entities called physician-owned distributors (PODs) have sprung up around the country. PODs are business entities that enhance the income of physicians who are investors via the recovery of money paid out for the implantation of medical devices in their patients. There have been a varying opinions among attorney groups and the Office of Inspector General as to their legality and what may constitute a legal entity. The legal opinion of attorneys employed by the major implant companies is that the PODs are illegal, whereas the legal opinion of those physicians setting up a POD is that the PODs are legal when properly and "legally" constructed. The Office of Inspector General has been watching these businesses as possible violations of the Stark Laws and kickbacks being paid out to the physician owners in the PODs. Some hospital groups have been prohibiting PODs from doing business in their hospitals because of fear of the excessive use of implants and possible kickback violations. These are confusing issues and as of this time there is no clear and concise model that can be considered legal, yet the PODs persist and are becoming more prevalent.