Product Sales in Health Businesses – Is it Ethical?

This post – is in the form of a Q and A as I received this question from a recent seminar attendee in London – and it raised some interesting points.

Dear Paul,

I recently attended your conference in London and thoroughly enjoyed the presentation. I have been in Private Practice for 15 yrs and run my own practice for the past 10. I found the information both interesting and stimulating and we are busy putting some of your ideas into practice.

I particularly liked the idea of selling stock items direct from a distributor and therefore not having to hold the stock oneself and have a large amount of choice for our patients. At the same time, making a profit between the wholesale and the retail price from the distributor.

However, our association guidelines are that, members should not financially profit from recommending a particular product so how do you get around that problem?

Martin (Physiotherapist – London)

Hi Martin,

Nice to hear from you – and please that you enjoyed the London seminar – it was a great event – although not quite in the same league as the recent royal wedding.

Your question raises some interesting points – not only for a business minded professional like me– but also the issue of the impact that our professional and regulatory bodies have on our ability to run a successful and profitable business.

I am sure we will get some great discussion on this topic on my forum – but to kick things off – here are some thoughts that came to mind:

To some degree I understand the rationale behind the associations concern about therapists making a profit from product sales but does’nt this also cut to the bone of our professional ethics.

The associations are pretty much saying that we “as professionals” cannot be trusted to recommend products based on what is in the best interest of the patient – so we need to be regulated so that we don’t make a margin on anything we sell – just in case the profit margin determines our recommendation.

This is no different to an association telling us how many times we can treat each patient – because we all make a profit for every consult we deliver – which totally removes the discretion and professional  experience of the therapist.

These recommendations are also very typical of public health directives – because I know is my businesses – if we have inventory sitting in our clinics- taking up space and using my capital up front to acquire these items – I want to be selling these items for a profit to make it worth my time, effort and money to have them in stock in the first place.

Whilst I could rant on for ages about the issues here are some possible solutions that other health professionals have suggested as a way to make extra income from product sales in health care:

-       Set up your product store as a separate business name and run all sales through your “product company” rather than through your clinical business.

-       Check the wording of your associations directive (as they all vary) – in your example you said the words “our association guidelines are that members should not financially profit from recommending a particular product” – so you may actually have a range of products available and the patient actually chooses the product after you have explained the pros and cons of each item.

-       Set up your product store on the back end of your website – and send patients to this online shop to buy the product they require – if the store is set up in another business name then you have no problems – but I would find it hard to see how you could be under the scrutiny of your association for having a range of products on your site that the patient selects from.

At the end of the day you need to satisfy your professional association requirements – to maintain your registration – but some of the regulations are so outdated and prohibitive that they make it very difficult for a health professional to survive in the competitive health marketplace.

I sometimes wonder how much consultation occurs between the legislators at the top of our associations and the grass roots professionals at the coal face – especially in private practice.

I welcome your comments on this topic.

Paul Wright

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3 Responses to Product Sales in Health Businesses – Is it Ethical?

  1. sharon says:

    I would not recommend some products because they ethically dont do the job as good as another but i could source the better ones sometimes cheaper than the pt can buy externally. This is where we have an advantage. I cannot see any association reprimanding a therapist for selling something at below RRP if they can justify its benefits over another and i certainly would not let the patient choose. They nearly always choose products that are ineffective in what they need. l would practise as you see fit & advise your recommendations & if you can source products and onsell them at competitive prices its only the patient that benefits.
    If you are challenged by an association explain why you make certain recommendations and you are making it more accessible to your patients by supplying it. The worst that could be done initially is a warning. If it was me why not challenge the big guns in explaining how its detrimental to patients. They need to prove it in a court of law & l would say they don’t have a leg to stand on. lm all for challenging unreasonable restrictions. Anything in a contract that could be deemed unreasonable can be deemed as inadmissible unless it has cascading clauses that replace such clauses should they be deemed inadmissible in court. It also seems the law is flexible in bending the letter of the law in situations like this where there are too many grey areas not covered in the guidelines. If its not clear in the guidelines, what you cannot do and what you can, then its not applicable.

  2. Ryan says:

    Hi Paul,

    This is an interesting discussion. In my experience as a clinician and as a product developer I have found that Physiotherapists often feel that they should pass on products at cost, whether directed to do so by the association or not. In my view the issue about not profiting financially that Martin mentions might relate more to receiving ‘kickbacks’ from companies in return for promoting their product. This was an issue with drug companies providing rewards for doctors for prescribing particular medications. I have had many discussions with clients who generally prefer to buy directly from the physiotherapist (rather than being sent to the pharmacy down the road or onto a website) so that they know that they are getting the right product, the correct size, advice on how to apply/use it and they expect that the clinician makes a retail margin on the product for this service.

  3. David says:

    This is a timely discussion as I am about to commence sale of items from my clinic. I must admit that I hadnt consider the restrictive governances of the various professional bodies, and I will have to look into this before I start however I like the sound of establishing a separate company that deals exclusively with product sale.

    On a related but slightly separate topic, Paul, how do you reimburse your staff if they make a sale of a product. Do you say 5% of all profit after costs and taxes etc or a fixed amount per product, say $5.00 for every swiss ball sold. Also what % mark up do add to your sale items

    Any thoughts would be gratefully received

    David