The Department of Health and Human Services' Office of Inspector General issued a fraud alert about physician-owned distributorships. The warning contends that doctors who have a financial stake in the surgical equipment they use are at risk of abusing the Anti-Kickback Statue.

Surgical Technician Daniela Barrio prepares equipment before a spinal surgery at Foothills Presbyterian Hospital in Glendora. The surgeon Barrio was working with is not part of a physician-owned distributorship, but the practice of surgeons using implants that they have a financial interest in under scrutiny from the Department of Health and Human Services.

Dr. John Steinmann of Arrowhead Orthopaedics in Redlands is a proponent of physician-owned distributorships. PODs create capitalistic competition in the surgical implant device market and lowers costs to hospitals, he said. His company manufactures and distributes surgical implant devices. He acknowledges that the some doctors abuse the programs to make more money for themselves and calls for standards to increase transparency in the industry.

Dr. Jose Rodriguez, left, and Dr. Scott Lederhaus perform spine surgery at Foothills Presbyterian Hospital in Glendora. The surgeons are not part of a physician-owned distributorship, but contend that PODs create opportunity for surgeons to perform unnecessary procedures with financial benefits.

A sign at the check-in counter at Arrowhead Orthopaedics explains the financial interest the organization has in the surgical implants they use. The information is also provided in paperwork patients are required to sign prior to surgery.