Dept. of Justice scrutiny of physician-owned distributorships: Implications for physician investors

In a development that many predicted, federal authorities recently initiated what is likely to be the first of many investigations into a physician-owned distributorship (POD). PODs sell devices for use in procedures at hospitals and ASCs, and many focus on implantable devices, including orthopedic and cardiac devices. A POD’s physician-owners or investors typically perform procedures using devices sold by the POD to a limited number of hospitals or surgical facilities. The medical community has seen a rapid growth in PODs during the past several years, and these entities are reportedly operating in more than half of the states as either traditional distributors or as group purchasing organizations.