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July 31, 2015   Download print version

New product launched to safeguard patients from counterfeit medical implants and improved recall accuracy

Hospital owner faces sentencing today for massive fraud scheme

Legionnaires' disease kills two, sickens 31 in New York City

Post-partum depression could be predicted by marker found in blood of pregnant mothers

AHIMA Survey: Growing support for making information governance a priority in healthcare organizations

Abbott acquires Omnilab, a provider of IT and middleware solutions for laboratories

The transparency revolution in American healthcare

'Jaw-dropping': Medicare deaths, hospitalizations and costs reduced


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August 2015

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New product launched to safeguard patients from counterfeit medical implants and improved recall accuracy

At the head of the controversy is a Wisconsin neurosurgeon and a California implant company alleged to have produced knockoff spinal screws and rods out of a non-medical grade machine shop.

The counterfeit parts were manufactured by a California machine and tool shop and sold by Spinal Solutions LLC, the suit charges. Findings of the Counterfeit Spinal Implants included:

·         The implants were made of low-grade material and were not made with the original high-grade titanium materials

·         Counterfeit screws had uneven threads and a much higher risk of backing out or breaking.

·         Some doctors who used the fake hardware took kickbacks including cash and private plane rides

·         Middlemen profited by wildly inflating the cost of the screws, according to one suit filed in Sacramento, CA.

·         A hospital executive pleaded guilty in April to paying doctors to bring in patients as part of a $500 million insurance scam.

·         Spinal Solutions executive admitted to bribing a former California State Senator to keep huge insurance payments flowing.

Counterfeit medical devices and recalled medical implants pose a real threat to patient health and are emerging more and more in the $110 billion per year market. Counterfeit and recalled implants may cause infection, injury, produce fallacious test results, and possibly death.

The World Health Organization (WHO) warns that 8% of the medical devices in use are counterfeit, creating a branch to protect the public from such devices called the International Medical Products Anti-Counterfeiting Taskforce (IMPACT).

Recalls cost the medical device industry on average $2.5 – $5 billion per year according to a McKinsey & Company study.

Thousands of patients, many of which may never be identified due to human data entry and retrieval errors, have defective devices implanted. Many of these devices cause pain and medical complications, with their recipients unaware their medical implant is fake or has been recalled.

Because there is no fool-proof way to track an implant’s pedigree today, it’s relatively easy for a device to be counterfeited and enter into a hospital’s inventory. Unscrupulous acts like those alleged by Spinal Solutions may simply switch the FDA approved implant with the counterfeit implant.

Others sell replica parts, often made in China, to unknowing hospitals that end up in hot water when revealed. An internet search for Chinese implants yields thousands of results – from dental implants to pacemakers. They even list the original manufacturer product and trade name such as “Hoffmann External Fixation Small Fragment Set Stryker Surgical Instruments Orthopedic Trauma” on their products. This makes it virtually impossible for a hospital to know with absolute certainty that the device is the FDA approved version rather than a fake. When it all unravels, often, the hospital is dragged into court.

Surgical devices are implanted in a sterile environment. In certain cases, hundreds of implants are brought into the operating room in countless set configurations. Keeping track of which devices were implanted and which were not with absolute accuracy has been impossible to accomplish. Many of these devices are small and identical in shape. They are typically brought in by outside manufacturer representatives or are re-sterilized from another case, if previously unused.

Nurses use several methods to try to keep precise implant records, including clip boards, stickers, calling out numbers, relying upon a manufacturer’s representative to provide accurate information and other manual methods, such as trying to piece it all together after the surgery. All of these methods, however, are highly inaccurate. At the end of the surgery, chances are that at least some of the implants have been misidentified.

Hospitals may be paying as much as 30% or more, because of inaccurate implant counts, unnecessary upcharges by reps, who charge hospitals; the hospitals in turn, unknowingly charge patients and insurance companies for these devices. A recent example of overbilling involves former regional manager and a former sales representative who admitted to rigging more than $800,000 in overcharges to hospitals and surgery centers by misrepresenting their use of the company's orthopedic products, U.S. Attorney Paul Fishman said.

In another example, a sales representative with the publicly traded medical device company overcharged medical facilities by billing them for a greater number of products than they actually used or for more expensive products, which would bump up his own compensation, prosecutors said.

The American Legion believes that VA still has a problem tracking surgical implants, and until it is fixed veterans remain at risk. An audit made by VA’s Office of Inspector general two years ago identified expired surgical devices on VA supply shelves. The Government Accountability Office has also indicated that VA has an inaccurate tracking capability in recording the serial numbers of implant surgical devices.

A January 13th, 2015 GAO report found that the VHA was limited in its ability to identify and locate patients who had received surgical implants, which, according to the GAO, "has potentially significant patient safety and cost implications." The report also found VA surgical implant vendors are getting involved in patient care, which goes against industry practices, according to medical experts.

In an effort to combat counterfeit medical implants and improve recall efficiencies, the FDA is now implementing regulations that would place requirements on manufacturers so that legitimate products may be traced by marking unique device identifiers (UDI) on each of the products.

Technology has emerged that takes the guesswork out of implant tracking. Matrix IT Medical Tracking Systems, Inc., based out of Wisconsin, has created TRACTUS, a high speed scanner that is used in the sterile field to track the implant’s unique device identifier (UDI) information, including: Manufacturer, device, lot, serial and expiration. The scanner works real time during surgery and accurately identifies each implant as well as placement of the implant in the patient.

The surgeon scans the implant, and then identifies the implant’s placement inside of the patient. Because the sterile-covered scanner is placed next to the patient during surgery, each implant is identified on an “as you go” basis.

Surgery time is reduced because hospital staff don’t need to pause during surgery to record implant information, which saves money and is safer for patients.

After surgery, hospital departments such as central supply, sterile processing, patient financial services and medical records must each manually input this information into their computers. With TRACTUS, the data is electronically sent to the corresponding departments, saving the hospital labor costs.

Coupled with UDI tracking software that documents every implant from the manufacturer to the hospital, TRACTUS verifies that each device is FDA approved before it is implanted and provides the hospital with instant results of the implanted devices. In the event of a recall, the hospital may instantly alert affected patients.

TRACTUS also provides accurate implant utilization information so that the hospital may accurately charge for their services as well as verify manufacturer charges for implants used during surgery. TRACTUS offers utilization data that may be parsed such as a comparison of surgeons and how long a particular device takes to be implanted, cost by surgeon or procedure, as well as many other capabilities.

Future capabilities will allow the study of long term patient outcomes, providing important information on how each device and surgeon performs in multiple categories, including age groups, gender or diagnosis.

Inventor of the sterile field tracking technology, spine surgeon Branko Prpa, M.D. said “because Tractus is the final portion of the implant chain of custody, healthcare organizations may guard against counterfeit implants and quickly alert patients with recalled implanted devices.”

For more information on TRACTUS and Matrix Medical, their website is available at



Hospital owner faces sentencing today for massive fraud scheme

Prosecutors seek 12 1/2 years in prison in fraud case; ex-hospital CEO hopes for probation, community service.

As the leader of a hospital in one of Chicago's most impoverished neighborhoods, Edward Novak often championed himself as a down-to-earth businessman who brought access to health care to those otherwise ignored.

But federal prosecutors say Novak, the fabulously wealthy owner and CEO of Sacred Heart Hospital, in reality had a very different view of the residents of the Garfield Park area he supposedly served.

Novak, 60, was convicted in March with two of his top executives of charges of paying hundreds of thousands of dollars in kickbacks to doctors for referring patients on Medicare or Medicaid to the struggling hospital. Novak, the son of a pharmacist who grew up sweeping the floors at his father's shop, is seeking a sentence of probation and community service. His lawyers argued in a recent court filing that Novak rescued Sacred Heart from closure when he took over the failing hospital at 33 and built it into a 119-bed, acute care facility through hard work and dedication.

But in seeking more than 12 1/2 years in prison for Novak, prosecutors ridiculed his claims he was guided by charity and concern for the blighted neighborhood, saying the hospital reaped nearly $35 million from the improper medical referrals over the dozen years of the scheme.

Many of the patients were taken to Sacred Heart from distant locations, admitted to the hospital for dubious medical reasons and given care that was substandard at best, prosecutors said. Records show Sacred Heart was consistently rated as one of the worst hospitals in the country and was beset by problems ranging from improperly trained nurses to a maggot infestation in the intensive care unit that had to be quelled by dousing patients with bug spray.

"For Edward Novak, buying patients was not an issue of ethics or morality, let alone legality," prosecutors said in their sentencing memo. "The only calculus was the bottom line."

Indeed, a hospital executive convicted with Novak said the hospital should have been called "Our Lady of the Bottom Line," prosecutors said.

The government is seeking more than $10.6 million in restitution from Novak, whose personal wealth has been estimated in court papers at $30 million. He's been free on a $10 million cash bond since his arrest.

More than two years after the hospital abruptly shut down in the wake of a dramatic FBI raid, the boxy, four-story brick building on West Franklin Boulevard remains vacant, its front doors boarded up after a recent break-in attempt. On the building's facade, a faded vertical banner featuring smiling patients and the words "Healing body and spirit!" still hangs.

Records show the building, along with two nearby parking lots and an adjacent warehouse, was scooped up in late 2013 for just $250,000 by a Chicago-based for-profit group run by two doctors who have said they want to transform it into an outpatient clinic and a free-standing emergency room.

When authorities raided the hospital in 2013, a criminal complaint filed against Novak and his team of administrators made bombshell allegations that doctors were performing medically unnecessary tracheotomies and giving heavy sedation to patients in a process called "snowing."

At least five deaths at the hospital had been under scrutiny at one time, authorities said. But when the indictment came six months later, none of the ghoulish allegations involving patient deaths or over sedation was leveled against any of the defendants.

Still, the duration and brazenness of the fraud scheme — coupled with the unusual step of effectively shutting down a working hospital — kept the Sacred Heart case in the headlines.

The federal jury deliberated over parts of three days before convicting Novak on all but one of the 28 counts against him, including conspiracy and paying direct kickbacks to physicians. The jury found Clarence Nagelvoort, 60, the former chief operating officer, guilty on 11 of 12 counts, while Roy Payawal, 66, the former chief financial officer, was convicted on 17 of 27 counts.

Nagelvoort and Payawal are scheduled to be sentenced. Four defendants have been convicted in the case, including executives Anthony Puorro, 57, and Noemi Velgara, 66, who cooperated with the investigation. Last month, U.S. District Judge Matthew Kennelly acquitted a doctor of charges of accepting kickbacks in the scheme — the lone setback for prosecutors so far. Another doctor, Venkateswara Kuchipudi, known as the "King of Nursing Homes," is scheduled for trial in the fall. Visit the Chicago Tribune for the story.



Legionnaires' disease kills two, sickens 31 in New York City

A deadly outbreak of Legionnaires' disease that killed two people and sickened 31 is under investigation in the South Bronx section of New York City, health officials said on Wednesday.

The new wave of Legionnaires', a type of pneumonia caused by bacteria, has been recorded since July 10, the city's health department said in a statement.

It was double the number of cases recorded in the last outbreak, in which 12 people in the Bronx fell ill in December 2014. The cause was traced to contamination in cooling towers at Co-op City, the world's largest cooperative housing development, according to the health department.

The disease is caused by Legionella, a bacteria found in certain plumbing systems, including hot tubs, humidifiers, cooling towers and hot water tanks. It is spread by breathing in mist from water, and can't be spread from person to person.

The health department said it was testing water in the area to determine the cause of the outbreak. Symptoms for Legionnaires' include fever, cough, chills and muscle aches. Read the news story at MSN for the story.



Post-partum depression could be predicted by marker found in blood of pregnant mothers

It is now possible to identify women who are at a particular risk for depression following the birth of their child. The study carried out by an international team of scientists has found a marker in the blood of pregnant women which can be used to detect postpartum depression.

The scientists have identified the role of the gene oxytocin receptor may play in instances where women become increasingly vulnerable to depression.

Oxytocin is a hormone which is known to play a positive role in women who are about to undergo child birth. Oxytocin is also known to play a positive role in maternal bonding and lowers stress levels in mothers.

"We can greatly improve the outcome of this disorder with the identification of markers, biological or otherwise, that can identify women who may be at risk for its development," said senior author of the study Jessica Connelly, assistant professor of psychology at University of Virginia. Visit News Everyday for the study.



AHIMA Survey: Growing support for making information governance a priority in healthcare organizations

As healthcare professionals work to advance information governance (IG), there is growing support among leaders to make IG a priority, according to an American Health Information Management Association survey on IG conducted with Cohasset Associates, Inc.

In this second AHIMA survey to examine IG practices and readiness in healthcare, more than 40 percent of the over 1,260 respondents reported advancements in IG at their organizations in the last year. In the first survey on IG by AHIMA and Cohasset Associates released in June 2014, two-thirds of the responding healthcare professionals said their organizations did not have a comprehensive IG strategy.

A new white paper, based on the survey, examines the readiness of healthcare professionals to address the technical and strategic demands they face in an evolving IG environment, as well as the career opportunities from the advancement of IG in organizations. Complete results and analysis can be found in the Cohasset Associates | AHIMA 2015 Information Governance in Healthcare: Professional Readiness and Opportunity white paper.

The results indicate that 76 percent of survey participants said their overall body of knowledge and skills will support their organization’s transition to IG, illustrating that professionals involved in healthcare IG disciplines are positioned to lead IG efforts. The findings also underscore that moving IG forward requires the work of multiple disciplines including health information privacy, information integrity, data quality and the management of health records.

Additional findings of the survey include:

·         36 percent of survey respondents indicate that their organizations have designated a senior executive to sponsor IG

·         23 percent of  respondents identify themselves as the chair or participant of their organization’s IG oversight body

·         Respondents strongly agree that communication is among the most compelling of their skills, enabling them to foster IG advancement support with leadership and staff within their organization

·         43 percent of respondents believe their IG role gives them the opportunity to be more visible and valuable to other departments in their organizations

·         Through their work to advance IG, healthcare professionals experience job satisfaction; however, opportunities exist to bolster the satisfaction level

To continue prioritizing IG in healthcare and growing the right skills for implementation, AHIMA recommends healthcare professionals: Press for the formation of an IG oversight body such as an IG council, committee or working group within their organizations; Illustrate how IG supports a healthcare organization’s strategic goals by linking the investments necessary for IG advancement to improved clinical and business performance; Establish or participate in online IG communities to learn more and share IG knowledge; Take advantage of the growing knowledge of IG; Illustrate expertise in IG by becoming involved in an organization’s IG oversight body as a demonstration of IG credibility; and Communicate regularly IG-related achievements and needs that demonstrate benefits to the organization. Visit AHIMA for the survey report.



Abbott acquires Omnilab, a provider of IT and middleware solutions for laboratories

Abbott announced that it has acquired Omnilab, a leading provider of software solutions for clinical diagnostics and blood transfusion laboratories. Omnilab’s software solutions, known as middleware, connect laboratory information systems (LIS) to analyzers, automation systems, point-of-care or other diagnostic devices within the laboratory. 

Designed by laboratory experts to meet the unique needs of the lab, Omnilab IT and middleware solutions include a complete suite of applications with a range of advanced features, such as test ordering and result management, sample management, quality control and workflow management, and clinical decision support. These IT solutions play an increasingly important role in helping laboratories standardize processes and improve decision making, interfacing with thousands of instruments and different LIS systems.

Middleware solutions are a critical component of Abbott’s total laboratory solution for customers and were previously available to Abbott customers through a partnership agreement, primarily in Europe, Middle East, Australia and New Zealand. Abbott will expand availability of the Omnilab LabOnline IT solutions to additional markets outside of the United States globally. Visit Select Science for the release.



The transparency revolution in American healthcare

Despite significant efforts by numerous organizations, medical error still exists in the laboratory and hospitals in general. In Tuesday’s plenary session, Martin Makary, MD, professor of surgery and health policy at Johns Hopkins University, described how increasing transparency in hospitals can significantly reduce medical error. “There is an incredible movement towards transparency in America today, emphasizing civility, teamwork, and evidence-based practice.” 

Makary, who is also author of the best-selling book, Unaccountable: What Hospitals Won’t Tell You and How Transparency Can Revolutionize Health Care, named two major barriers to revolutionizing healthcare: access to data and variability in practice. He believes that these are man-made barriers and points to transparency as the answer. For example, a 2013 study determined that there are about 210,000 unintentional hospital deaths in the U.S. per year. Yet, these are not listed among the leading causes of death by CDC. He estimates that it is the third leading cause of death in America and suggests that we need to change the way we collect and publish vital statistics.

Further, despite billions of dollars spent to identify the latest diagnostic and treatment tools, we rarely track patient outcomes once these tools are implemented, Makary noted. Either the data does not exist or the public does not have access to it. Among over 150 government-funded registries tracking patient outcomes in the US, only 3% is available to the public. The goal of Makary’s research is to develop simple ways to make this critical information accessible to the public, ultimately increasing transparency in healthcare.

When he began writing his book, Unaccountable more than 3 years ago, transparency in healthcare was a controversial topic. But the climate around this issue has started to change, he said. Transparency is no longer a dirty word. In fact, there are now numerous examples demonstrating that it works, noted Makary. “Healthcare is on the brink of a revolution,” and transparency is a major reason for this change, he said. 

Makary and colleagues have looked at the effects of numerous tools aimed at increasing transparency and reducing medical error, including publishing patient and healthcare worker satisfaction surveys, checklists, and public reporting of medical quality indicators. He cited the examples at the Cleveland Clinic and the University of Utah where patient satisfaction surveys were made available to the public. Making this data available resulted in steadily improved satisfaction ratings along with increased physician rankings. 

In the field of laboratory medicine, Makary suggested that collaboration across specialties will become increasingly important. Academia is uniquely suited for such a transition, as it is an optimal place for partnerships between clinicians, laboratorians, and basic researchers, he said. Such a partnership emphasizing quality, invention, and transparency—focused on improving patient outcomes—will continue to revolutionize healthcare. Visit AACC for the report.



'Jaw-dropping': Medicare deaths, hospitalizations and costs reduced

The U.S. healthcare  system has scored a medical hat trick, reducing deaths, hospitalizations and costs, a new study shows. Mortality rates among Medicare patients fell 16% from 1999 to 2013. That’s equal to more than 300,000 fewer deaths a year in 2013 than in 1999, said cardiologist Harlan Krumholz, lead author of a new study in the Journal of the American Medical Association (JAMA) and a professor at the Yale School of Medicine.

Researchers based the study on records from more than 68 million patients in Medicare, the federal health insurance program for people age 65 and older.

Researchers were able to find additional information about hospitalization rates and costs among Medicare’s traditional “fee-for-service” program, in which doctors and hospitals are paid for each procedure or visit. This information wasn’t available for people in the managed-care portion of Medicare, which had about 29% of patients in the overall Medicare program in 2013.

Among fee-for-service patients, hospitalization rates fell 24%, with more than 3 million fewer hospitalizations in 2013 than 1999, Krumholz said. When patients were admitted to the hospitals, they were 45% less likely to die during their stay; 24% less likely to die within a month of admission; and 22% less likely to die within a year, the study found.

Costs for hospitalized patients also fell by 15% among fee-for-service patients.

A 1999 report from the Institute of Medicine, which found that hospital errors killed up to 98,000 people a year, jump-started a movement to improve healthcare, said P.J. Brennan, chief medical officer at the University of Pennsylvania Health System. “That was one of the first shots fired in the patient safety movement,” said Brennan, who was not involved in the new study.

Public health improvements also likely played a part in cutting death rates, Krumholz said. While more Americans today are obese than in the 1990s, the air is generally cleaner and fewer people smoke. New drugs for common conditions such as cancer and heart disease also may have kept people alive longer.

“What’s gratifying is the cost savings don’t appear to have come at the expense of quality,” said Helen Burstin, chief scientific officer at the National Quality Forum, a non-partisan group that aims to improve the quality of healthcare.

Burstin said she hopes the country will expand its efforts to improve healthcare quality by focusing on outpatient care, such as that given in nursing homes or by home health aides. Visit USA Today for the report.