What Intuitive Surgical has been desperately maneuvering to prevent you from seeing.

ORIGINAL ARTICLE WITH ALL LINKS HERE: Citron Research report

Citron Research Updates Taylor v Intuitive

March 26, 2013

Intuitive Surgical's Bad Day in Court:  Trial Proceeds in Three Weeks

Citron breaks the latest news on Intuitive Surgical (NASDAQ:ISRG), and presents the documents the
company has been desperately maneuvering to prevent you from seeing.  Intuitive
Surgical motion for summary judgment has been denied, and the documents in the case are now available.  They make for very grim reading. 

Latest Update:  Tuesday March 26:   The judge in Taylor vs Intuitive
Surgical ruled against Intuitive's motions to dismiss in summary judgment.   The case is now set for trial
to begin April 15 th .  The ruling held that negligence and defective product claims will be tried under
Washington's Product Liability Act, while punitive damage claims can be tried under California law.  The
actions will be bifurcated to separate trials, without objection from either side.  ( Click for the ruling ) 

What this is about:
Taylor vs Intuitive is the first of a series of recent liability cases against the company to come to trial.  It
sets a roadmap for all death and serious injury cases against Intuitive, by exposing for the first time, the
company's failure in its commitments to the FDA and to the public, to properly train surgeons to use the
da Vinci robotic surgery suite safely.   

From today's New York Times (here) to last week Bloomberg story (here), Taylor vs Intuitive has begun to focus major press coverage on the real issues of robotic urgery since Citron alerted the Street to it just last month.   Today's Boston Globe (here),  focuses on the Masschusetts Board of Registration in Medicine's advisory letter (here) which cautions about inadequate credentialing of robotic surgeons.

The real questions being raised in Taylor vs Intuitive are not about the da Vinci device in the hands of an extremely skilled robotic surgeon.  What is being exposed is the company's negligence in grossly
undertraining doctors, directly leading to catastrophic outcomes for patients.  As the documents linked
in this piece make starkly clear, the company has been aggressively advising hospitals to lower
training standards for robotic surgery certification, while dumbing down its own training ,
all to get more surgeons doing live cases with the da Vinci sooner and cheaper, at lower cost to the
hospitals, regardless of the risks to the patients. 

Case Background:
Fred Taylor was hospitalized for routine prostate surgery.  Although his obese body build made him a
poor candidate for robotic surgery, he was operated on using the da Vinci robotic device.  Testimony
states that Intuitive Surgical's Clinical Sales Representative (CSR), a company sales position compensated on the number of cases actually done using the system, apparently climbed under the operating table to try to adjust it to hold Mr. Taylor better.  The surgery went very wrong and dragged on for many hours.
At the end, Mr. Taylor was immediately transferred to ICU at another hospital with severe
complications.  Among other bad outcomes, his bowel had been punctured during surgery.  A variety of Citron severe complications ensued; Mr. Taylor died four years later, never having recovered his health from the adverse events of his surgery.  The surgeon performing the surgery had previously performed only one other robotic surgery, and subsequently decided not to perform further robotic surgeries; he felt misled by the company's estimate of training required to obtain proficiency using the da Vinci.

During discovery, counsel for Mr. Taylor's estate obtained numerous pieces of documentary evidence
outlining Intuitive Surgical's culpability in establishing insufficient training for surgeons on the da Vinci. 

The cases tests whether the company is liable for Fred Taylor's injuries and/or subsequent death.  

The Documents Intuitive doesn't want you to see:   

1)   Testimony of Gene Nagel:  Vice President of Training and Development  
Mr. Nagel was in charge of training customers – which included surgeons, and also Intuitive sales staff. 
Education:   Degree in operations management and marketing 
Scientific or medical training: None
First employment:  Salesman in Wine Industry
Next employment:  Sales of medical technology (appx 9 years) 

The Introductory Test for Intuitive was a 10-question multiple choice test given after a 45 minute video. 
The surgeon could not fail – if any wrong answers were selected, the surgeon was just guided
onscreen to try again.  It was impossible to get any questions wrong.   The company sent a certificate of
completion when the quiz was finished.  Nagel testified that he was unaware if anyone had ever failed it.  
Mr. Nagel also testified he was responsible for reducing Phase II (hands on) training at Intuitive's site
from three days to one day. 

Most shockingly, Intuitive's Training department reported to its Sales Department with :
  No medical or scientific oversight
  No minimum skills proficiency 
  No demonstration of knowledge or competency required

2)   Sales Brochure for 2008 "Drive the Curves" 
Internal sales department communication, emphasizing maximizing the number of cases "driven" onto
the da Vinci platform.   Not one word about doctor competency or patient care. 

3)  Dave Carson (area Sales Manager) memo : Sales goals  = number of procedure targets 
Urgent emphasis on meeting sales targets – more cases, no delays, shorter operating suite turnover. 
Not one word about patient outcomes.  

4)  Gilliam (CSM) email re importance of influencing hospital credentialing guidelines.
Reinforcement of the importance of being clinical consultants to client hospitals "especially with
regard to "credentialing guidelines" – essentially influencing hospitals to lower their training
requirements before allowing surgeons to begin to use the da Vinci on actual patients. 

5)  Michael Rose (Clinical Sales Representative for Montana Hospital) email 
Specifically counseling a hospital client to reduce the number of proctored (supervised) surgeries using
Da Vinci from 5 down to 3, and in another category from 3 to 2.  In another email on the same topic, pointing out that the cost to the hospital will be significantly reduced  if this training component is
reduced. 

6)   Internal sales strategy document 
Admits the key sales strategy is to "Create a competitive landscape between hospitals & surgeons". 
(Citron wonders how client hospitals will feel about inking new systems purchase commitments now
that the sales strategy is fully disclosed.)   This strategy includes deeming certain hospitals "Centers of
Excellence" again with no specific training requirements.  It is purely a marketing credential.   
"Drive account procedure growth, leading to capacity and scheduling constraints". 

7)  Intuitive's training brochure for surgeons – four parts – basically two days prior to first da Vinci
procedure on a patient

8)  Email from e-Marketing department re referrals:  Clarifying policies for surgeons to be listed
on Intuitive's patient referral website after 20 surgeries of any complexity. 

9)  Market Protection Email:  CSM to sales department internal  email about granting a client
hospital "market protection".  What right does Intutiive Surgical have to extend such a right to
a hospital?  Was Fred Taylor's surgery, or dozens of others hurriedly scheduled under pressure
from Intuitive to gain or keep "market protection" ?

10)  Email from VP of sales about pounding the bushes for cases, going the extra mile, and "scrub
all schedules" and "turn over every stone possible" to find one or two more cases to meet
sales targets.  How is this the practice of medicine?  

11) Taylor Post-operative notes – stool coming out urinary catheter 



Conclusion  
Taylor v Intuitive will have tremendous impact on Intuitive Surgical's sales pipeline.  Clearly Intuitive
Surgical lost its moral and ethical compass somewhere a few years ago, and set forth on a "sales at all
costs" strategy. This has led it to a variety of actions for which it will now be held accountable, including: 
  Manipulating  hospitals buying committees with promises of "exclusivity"
  Deeming certain hospitals "Centers of Excellence" designation for marketing benefit without
establishing any professional criteria 
  Producing a training program wholly inadequate to fully and properly train a surgeon to prevent
serious injury or death to the early patients exposed to the surgeon after such training 
  Flogging sales team members to pressure hospitals to convert as many procedures as possible
to use the robotic surgery suite, regardless of the clinical appropriateness of the cases in
question

Compensating Sales team members directly for numbers of procedures done, without disclosing
this to the client hospitals, where these personnel are often right in the surgical suite – during
surgeries.  But worst of all, pressuring hospitals to reduce credentialing standards for surgeons, while dumbing down its own training – all the while with the training department reporting to nobody
except sales. 

Again, Citron is not stating that in the context of an appropriate case, a da Vinci in the hands of a highly
trained and experienced surgeon might deliver a great outcome.  But it is clear that the solution has
been heavily over-marketed, with training and its concomitant costs grossly short-changed, with huge costs in terms of adverse outcomes and deaths to patients.  Further, these adverse outcomes have been chronically underreported.   After hundreds of thousands of surgeries, the company has no data to support the correlation between adverse outcomes and surgeon experience, and no idea how many adverse outcomes of surgery with its product are out there.

Meanwhile, can you find the MAUDE record for Fred Taylor's disastrous surgery?  It doesn’t exist.  So
what are the true number of deaths and serious injuries resulting from inadequate training on da Vinci? 
Answer:  After over 10 years in the field, nobody knows.  Who is going to be held responsible for that? 

It is Citron's opinion that the company is headed for a long period of painful reevaluation of its training
and quality assurance policies, perhaps mandated by more intense FDA scrutiny.  Its relationships with
its client hospitals is going to be much more obstacle laden in future quarters, its reputation will suffer,
and its sales growth will slow.   Hospitals will be re-evaluating their aggressive marketing campaigns for robotic surgery, especially those without proper disclosures of risks.

As it takes its place among its peers in the medical device and technology industry, Intuitive's multiple
will compress to comparable levels, and its share price will fall to appx. half its current levels. 

This is not a "one day wonder" commentary piece.  These consequences are inevitable.  It is shameful
that the company has been so quick to announce a stock buyback, but so reluctant to place its training
operation in the hands of competent arms-length scientific and medical experts accountable to an
independent oversight board.

Intuitive sales agressive strategy

Here is an extremely interesting report on Intuitive Surgical sales strategy and agressive marketing.

NY TIMES - Salesmen in the Surgical Suite

When Fred E. Taylor arrived at Harrison Medical Center in Silverdale, Wash., for a routine prostatectomy, he expected the best medical care new technology had to offer: robotic surgery, billed as safer, less painful and easier on the body than traditional surgery.

The operation, on Sept. 9, 2008, was supposed to take five hours. But it was marred by a remarkable cascade of complications and dragged on for more than 13 hours, leaving Mr. Taylor, who had been an active 67-year-old retiree, incontinent and with a colostomy bag, and leading to kidney and lung damage, sepsis and a stroke.

Mr. Taylor survived his injuries but died last year. Now, his wife, Josette, is suing Intuitive Surgical Inc., the company that makes the equipment and trained the surgeon to use it. As it turned out, the surgeon, Dr. Scott Bildsten, had never before used the robotic equipment without supervision.

“We are the old school, where you trust the doctor,” said Mrs. Taylor, who noted that her husband’s life was so limited after the operation that he used to cry about being “trapped in this body.”

It is not the first time patients have claimed they were harmed by Intuitive’s robotic surgical equipment, called the da Vinci Surgical System. But the Taylor case, set for trial in April, is unusual. Internal company e-mails, provided to The New York Times by lawyers for the Taylor estate, offer a glimpse into the aggressive tactics used to market high-tech medical devices and raise questions about the quality of training provided to doctors before they use new equipment on patients.

Intuitive, based in Sunnyvale, Calif., declined to comment on the lawsuit but said studies showed that its robotic equipment results in better outcomes than conventional open surgery. “The most objective and therefore best measure of efficacy for all of those involved in training — from Intuitive Surgical, the hospitals, the proctors and the surgeons themselves — is represented in the comparative clinical outcomes of da Vinci surgery,” said Angela Wonson, the company’s vice president for communications.

According to Intuitive, 1,371 hospitals in the United States have purchased a da Vinci system, and many have purchased two. Nearly half a million procedures worldwide were performed robotically last year, including prostatectomies and hysterectomies, among other operations.

A surgeon using the da Vinci system sits at a console with a camera that provides a high-definition, three-dimensional image of the surgical site. He or she manipulates miniaturized instruments; computer and robotic technology translates and scales the surgeon’s hand movements.

Hospitals are responsible for setting the credentialing standards, or training requirements, for physicians who will use the equipment on patients. But internal company e-mails suggest that Intuitive’s sales representatives were intimately involved in the process, presenting themselves as experts and pressing for lower standards in order to ease the training path for busy surgeons, to increase use of the equipment and to drive sales.

In an e-mail dated May 31, 2011, a Western regional sales manager for Intuitive noted that area surgeons had used robotic equipment only five times, although the company’s goal was to see 36 robotic operations performed by the end of June. He urged sales staff to persuade surgeons to switch upcoming cases to robotic ones.

“Don’t let proctoring or credentialing” — shorthand for supervised surgery and hospital certification — “get in our way,” the e-mail said.

In December 2009, a sales representative urged a hospital in Billings, Mont., to ease up on its credentialing requirement, saying in an e-mail that requiring surgeons to do five supervised operations using the robot before going solo was “on the high side” and could have “unintended consequences.” Hospital officials replied, saying, “We will review and most likely will decrease the 5 down to 3.”

Ms. Wonson, the Intuitive spokeswoman, said the company does not get involved in determining who is qualified to operate its robotic equipment, which is the responsibility of the hospitals. “We do not make recommendations,” she said in an e-mail.

Dr. Bildsten was one of six doctors given free training by Intuitive, including one day of hands-on training at the company’s facility in California. He also had done two practice runs on the equipment with a more experienced surgeon before operating on Mr. Taylor, he said in a legal deposition. Still, he said, no one warned him that a patient like Mr. Taylor, who weighed nearly 300 pounds, was not a good candidate for robotic surgery.

He did not respond to telephone messages requesting comment.

Company e-mails submitted in the Taylor case also suggest that members of the sales staff at Intuitive worked diligently to persuade surgeons to choose the da Vinci procedure for patients even when they were planning to use a different method.

In one e-mail on June 28, 2010, a clinical sales director urged the sales team — whose compensation was linked to filling a quarterly quota of operations — to “scrub” doctors’ schedules and get procedures moved up by a few days in order to make the quarterly goal. “Let’s bring it home!” she wrote. “Be sure you scrub all schedules, identify cases on Thursday and Friday that can be moved up.”

On Aug. 9, 2010, a clinical sales director wrote to his team: “Be proactive in finding cases to convert. Be prepared to challenge each trained surgeon every time you see a lap or open case. Be unsatisfied with the thought of ending a day without a converted case.” (“Lap” refers to laparoscopic procedures, an alternate form of minimally invasive surgery.)

The sales representatives were often in the operating rooms, where they offered advice to newly trained surgeons who were having technical difficulties with the robot, according to legal depositions in the Taylor case. The representatives also appear to have had access to the operating room schedules and were urged to “partner” with surgical teams “to review and select appropriate cases,” according to court documents.

On March 3, 2011, a sales representative wrote in an e-mail to his team that he had met with a gynecologic surgeon in Utah who was trained a year earlier but had stopped doing robotic cases. The surgeon subsequently “agreed to convert the next two to da Vinci.”

In depositions, some Intuitive sales representatives defended their involvement, saying that it was important for surgeons to use the robotic system frequently in order to maintain and improve their skills.

The Food and Drug Administration allowed the sale of the da Vinci system in 2000 under a controversial process called “premarket notification,” often used to bring medical devices to market without the rigorous trials of safety and efficacy typically required of new drugs. Manufacturers are able to exempt devices from the rigorous trials by claiming they are similar to existing devices already on the market.

When devices are brought to market this way, the F.D.A. “cannot require training programs as a condition of clearance,” said Synim Rivers, an agency spokeswoman.

Before allowing this type of market clearance, the agency twice asked Intuitive for more information about how doctors would be trained to use company equipment. Intuitive provided details of a 70-item exam for surgeons and a three-day hands-on training protocol.

By 2002, however, the company had revamped its training program, replacing the 70-item exam with a 10-question online quiz and reducing the time spent in hands-on training at Intuitive’s facility to one day.

The largest study to date of robotic hysterectomies has questioned the use of robot-assisted surgery over more conventional forms of minimally invasive surgery. A study published in February in The Journal of the American Medical Association evaluated outcomes in 264,758 women who had laparoscopic or robotically assisted hysterectomy and found no overall difference in complication rates between the two groups.

But the researchers did find that robotically assisted surgery for hysterectomy costs on average about one-third more than laparoscopic surgery.

Last week, Dr. James T. Breeden, the president of the American Congress of Obstetricians and Gynecologists, publicly urged patients “to separate the marketing hype from the reality” when considering a surgical method for hysterectomy. “Just because it’s newer and higher technology,” he said, “doesn’t mean it’s better.”