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Linda Chalat
Linda Chalat
Attorney • (866) 735-1102 Ext 366

Spine Clinics Show Marketing Backbone

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Laser Spine Institute LLC promises to ease back pain and have patients out the door in a few hours. And with medical centers across the nation, six are located in Colorado, their website proclaims that “Laser Spine Institute has been proud to help tens of thousands of people—from all 50 states and across the globe.”

But not all spinal patients are success stories, 15 medical malpractice cases have been filed against the company in the past 18 months. The lawsuits are the last stand against increasing dissatisfaction with the new medical-care model of high-volume, doctor-owned spinal surgery centers that market directly to patients on Google Inc.’s search site and others. For Laser Spine, the business model generated a 34.3 percent net profit margin from 2006 through 2009 — eclipsing even the 24.8 percent growth Google experienced for that period.

Laser Spine and other physician-owned surgical clinics, part of a boom in outpatient clinics operated by entrepreneurial physicians, sell a high-tech version of procedures that have been around for years — despite a lack of independent research to show that their approach leads to better outcomes. The company commands higher prices than traditional back surgeons, driving up the cost of health care while making huge profits for the physicians-owners.

Many outpatient clinics operate outside the traditional health care model, in which patients are referred to specialists by other doctors. Instead, the centers reach customers directly via marketing – in the case of Laser Spine, online marketing – supplemented by seminars conducted in hotel conference rooms.

The number of U.S. Medicare-certified ambulatory surgery centers — those that focus on outpatient procedures — grew to 5,260 in 2009 from 3,512 in 2002. All but 4 percent of them are for-profit entities. And like Laser Spine, 90 percent of U.S. ambulatory centers include doctors as investors, according to the Ambulatory Surgery Center Association.

Doctor-investors have an inherent conflict of interest for deciding when to operate. According to researchers from the University of Michigan in a study in the journal Health Affairs last year, looking at five common procedures at Florida surgery centers, once doctors became investors then the number of surgeries they performed increased by 87 percent.

Many physicians see the company’s laser surgery as either unnecessary or inappropriate for many patients who get it. Laser Spine’s surgeons, some of whom are investors in the 6-year-old company, perform as many as 5,000 operations a year, using small tubes called endoscopes that are equipped with video cameras. They insert the lasers separately, through catheters.

The use of drugs and medical devices are regulated by the FDA, but there is little federal oversight for the effectiveness of surgical techniques. Drug companies must disclose their medications’ risks, under FDA rules. Ads for surgical techniques have no similar rules. And there is little government oversight regarding which doctors can do spine surgery — all they need is a medical license, whether their training is in orthopedics, foot surgery or pediatrics.

Laser Spine often charges $30,000 for each procedure, according to an article in Bloomberg News which interviewed several patients and reviewed copies of billing records. That’s twice as much as Aetna Inc., the third- largest U.S. health insurer, will pay for traditional surgery.

From 2006 through 2009, Laser Spine earned net income of $98.9 million on revenue of $288 million, a 34.3 percent profit margin, according to testimony that chief executive officer Bill Horne provided last year in a business lawsuit filed by a rival spine center. Laser Spine now claims on the web that it is “the largest spine center in the world” and it had sales last year of $109 million.

Laser Spine’s in-house surveys show positive outcomes for more than 87 percent of patients, but the claim has not been verified by independent sources. But the number of malpractice claims against Laser Spine per 1,000 surgeries is several times the rate for all U.S. outpatient surgery centers, based on insurance industry data. And since July 2009, the institute has paid at least $2.8 million to seven patients to settle cases, according to the Florida Office of Insurance Regulation.

The 15 malpractice claims since October 2009 came during a period in which the company performed about 7,500 procedures, based on its 2010 estimates – almost 7 times the national average for outpatient surgery centers.

Not all physician-owned facilities are run in a high-volume fashion. But the story of Laser Spine does serve as a cautionary tale to those in need of medical help attempting to locate competent care of their own. Do your homework and ask questions before going under the knife or laser.