[News] RECALL THREAD-- IMPORTANT PHILIPS DREAMSTATION & SYSTEM ONE USERS

[Sleeprider]

WakeUpTime, thanks for taking the time to read my rant, Why Consumers Take What They Get, https://www.apneaboard.com/wiki/index.ph...rider_Rant
Things like this get lost in the ether, and even I forgot about it until the history of this corporate misbehavior was brought up in this thread. Talk about Karma!

[btreger]

Things like this get lost in the ether, and even I forgot about it until the history of this corporate misbehavior was brought up in this thread. Talk about Karma!

Sleeprider, I can't agree more with what WakeUpTime had written, "That op-ed article should be required reading for newly diagnosed apnea patients as an introduction and overview of the modern CPAP marketplace and Philips' distribution practices, as it existed one year before the Philips Recall.  It accurately described corporate and dealer behaviors that were likely not commonly known at the time".

I would only add that it serves as the cornerstone and prologue for this entire Thread. Great piece of writing.

[WakeUpTime]

"Philips Pays $2.4 Million for Allegedly Giving Kickbacks to Sleep Labs"
December 27, 2023
https://www.hmenews.com/article/philips-...llegations
https://www.statnews.com/2023/12/27/phil...ment-cpap/

SAN DIEGO – Philips Respironics has paid almost $2.5 million to resolve allegations that it violated the False Claims Act by giving kickbacks to sleep laboratories, the U.S. Attorney’s Office for the Southern District of California has announced.

The settlement resolves allegations that, from 2016 through 2021, Philips Respironics provided sleep labs with free masks used to treat and diagnose sleep-related respiratory disorders to induce physicians at the labs to write referrals or prescriptions for Respironics-brand masks that suppliers would then fill and bill to federal health care programs.

“When kickbacks are used as bribes, patients suffer,” said U.S. Attorney Tara McGrath. “Companies like Phillips Respironics will be held accountable if they undermine our trust in the medical system and shift medical advice from a patient’s best interest to lining their own pockets.”

The claims resolved by the settlement are allegations only, and there has been no determination of liability, according to the DOJ.

The Anti-Kickback Statute prohibits paying money or giving goods to induce referrals for medical services or items covered by a federal health care program, such as Medicare, Medicaid or TRICARE. Claims submitted to these programs in violation of the Anti-Kickback Statute give rise to liability under the False Claims Act.

In 2022, Philips Respironics agreed to pay $1.28 million to settle allegations that, between December 2015 and December 2016, it helped a DME supplier procure a 12-month, interest-free loan that was fully guaranteed by the company. Under the arrangement, Respironics bore the full financial risk of non-collection on the loan in the event the DME supplier defaulted on the loan.  

Also in 2022, the company agreed to pay more than $24 million to resolves allegations that it caused DME suppliers to submit claims for ventilators, oxygen concentrators, CPAP and BiPAP machines, and other respiratory related medical equipment that were false because it provided illegal inducements to the suppliers. Respironics allegedly gave suppliers prescribing data free of charge that could assist in their marketing efforts to physicians.

In 2016, the company agreed to pay $34.8 million to resolve allegations that it waved the per-patient per-month fee for its medSage automated resupply services for DME providers that bought the company’s masks.

The assessed fines are extremely small for Philips, and likely considered merely marketing expenses for gaining significant market share over competitors in many areas (dealers, labs, hospitals, insurance companies, hospitals, etc.) and in many countries around the world.  

This is the nature of how Philips has always done business globally.

• No doubt that Philips' kickback and other DME & Sleep Lab incentives went well beyond the indicated DMEs, Sleep Labs, and Insurance Companies.
  
• No doubt that these anti-competitive actions were global in nature, designed to secure exclusive (or significantly strengthened advantages) over other suppliers.  
  
• No doubt this behavior took place over, at least, two decades.
  
• The Philips "Return on Investment" for such inappropriate business behaviors is significant.
  

[btreger]

Interesting Concept for 2024

Using AI to obtain and organize report problems from the FDA on the DreamStaion 2 

From Nicko Dundai

Philips Dreamstation 2 - There's Something "Fishy" Going On! (youtube.com)

[WakeUpTime]

^^^

Didn't know about all the potential issues related to the DS2.  Seems like such a rushed product.  Philips likely believed that, pre-Recall, the rushed redesigned DS2 system introduction was the best way to solve its past issues.  Those with DS2s may not be feeling like they received an "upgrade" to the DS1; nor do they feel they received a comparable product to ResMed's Series 11.  

I hope they're working on a DS3.  I'm actually starting to be very concerned that Respironics may not have a long-term future.  That may not be good for maintaining a healthy competitive industry.  I still hope that they can climb out of their bizarre management decision-making processes and re-focus on the best interests of end-users.  When Respironics users hit their power button each night, I'm not sure that they're feeling that their breathing device manufacturer is exclusively focused on their optimal health and well-being.

Philips has an opportunity now to draw a fixed line between past and future behaviors.  It'll be interesting to watch if they can shed themselves of their past corporate flawed executive decision-making culture.  If they still think that their only flaw was choosing bad foam, or problematic ozone cleaning, then I'm not sure they'll ever recover to their pre-Recall state.  Rather than replacing the former CEO with an insider, they might have been better pulling in an executive with substantial quality-focused experience with end-users, even if they were from outside the industry.  Promoting from within Philips would seem to be a significant disadvantage rather than a new start.

The future, regrettably, does not look good for Respironics at this time.  We'll see how far their throwing virtually endless supplies of cash at past management mistakes will get them.  At some point, many investors might say "that's enough; you're done with this; re-focus and move on".

[Phaleronic]

 Method and noise results?

First one I removed the foam myself from the airchamber, the others I purchased replacement foamless airchambers (those are no longer available now though).  Here's a guide on how to do it (there are some posted in this forum as well):

No difference in noise levels to me or my wife..

https://www.youtube.com/watch?v=6SwGXBen...PAPReviews

[Sheepish]

Great tutorial video, thanks for (re)posting. I'm sorry I hadn't seen it sooner. It really helps to visualize the innards of the beast and where its toxic bits are so you can neutralize them. In my mind I had imagined the inner panels were coated with adhesive spray-on foam I had to scape off. Now that I see, I may attempt this reasonably straightforward remediation. For now, I'm fortunate a good friend has lent me a never-used Resmed Airsense I'll be trying out.

I'm also relieved it doesn't seem to sound like a Shopvac once the foam is extricated.  

[Phaleronic]

Sure thing! You're welcome

[Sleeprider]

I hope they're working on a DS3.  I'm actually starting to be very concerned that Respironics may not have a long-term future.

The market has changed a great deal since the start of the recall.  The shortage created by the recall and no devices available from Philips, in combination with Covid and various supply shortage issues, resulted in significant shortages that greatly inflated prices. This opened the door to dozens of market entries from China that were previously very small players in the U.S., and were highly discounted.  The shortages had DMEs scrambling for a reliable supply, and names like ResVent, BMC and others were filling cargo containers. The new market entrants couldn't have planned it better 

Today, we are actually seeing product deflation, seemingly lead by Resmed with the Airsense Card to Cloud version selling as low as $399 at Supplier #1 for the past month.  This puts a major player in direct price competition with the imports, and Philips is still in a recovery mode, and I don't think they have the revenue or reputation to restore it's marketing strategies of exclusive distributorship, incentives and stocking the labs and suppliers with their equipment.  They all got burned by, not only being consumed by the  recall, but lack of replacement supply and basically throwing out all of their testing devices and inventory.  I don't think you can over-state the challenge for Philips to recover its lost market share, reputation and ability to command premium prices, while competing on a more level playing field with Resmed and the imports, all while trying to introduce a new product line. The "Dreamstation" and Philips names are damaged goods. Look for a new generation, ownership or dissolution. I'll just add, the fancy covers and marketing never advanced the technology of the Philips PAP devices. They have made no significant technological advancements since the legacy machines of Respironics.

[WakeUpTime]

The market has changed a great deal since the start of the recall. 

From lengthy backorders just two years ago, to sub-$400 pricing (even sold at $208 with a promo code on 11/22), the new marketplace is indeed at a challenging new state for Philips.  

But we must not forget that most newly diagnosed patients will start at zero - to Philips' advantage, once again.  However, the patient will arrive home with their new device and will eventually begin searching for online information on their new medical device acquisition, which might prompt a re-connection with their DME.  There may be some DMEs that don't want to repeatedly go through that.  

The tables may have turned for Philips.  Previously, most suppliers may have proposed Philips as their defacto offering because of Philips' marketing strength and its wholesale incentives.  ResMed has likely taken over that position for many DMEs for different reasons.  

ResMed may also be in a better position to compete with new entrants, knowing they can make-up for it with future ResMed masks, parts and accessory sales - the inkjet printer industry model.  ResMed may also be significantly better than Philips at selling its masks to alternative-brand device users.  

I can't image being a Philips country sales channel manager and being asked to forecast quarterly device sales this year.  I'd want to reply with something like "your guess is as good as mine".  I'd think that Philips doesn't have any DS2 sales forecasting vision going forward, until having seen a couple of quarters.  If forecasted sales figures don't sufficiently support its ongoing costs, they'll likely want to know if the problem is their current product model, the new competitive marketplace, or their tarnished reputation.  I'd say that it's some of each.

There's another significant forecasting question that a Philips Channel Sales Manager might want to know:  What percentage of users who received a free replacement device, will continue to use that Philips replacement device, and will eventually want to upgrade to a new Philips DS2 (or DS3) device in the future?  It might be a device-type upgrade, or an out-of-warranty replacement.  This time however, it wouldn't be free.  

At some point, the question will be asked in a Philips executive meeting room:  "How much more new money will we need to continually put in?"  Unfortunately for Philips, they will need to put in new money to develop and launch a future DS3.  They'll also need new money to compensate for the fact that they've downsized their marketing and sales staff significantly over the past 18 months.  For Philips, it'll be their year of "testing the waters" to see where they’ve landed in the new marketplace.

There's something else that has also changed significantly.  Many device users became quite upset with their DME, possibly because of their initial Philips recommendation, their inability to provide significant information or updates, their ongoing defense of Philips, their significant delay in receiving a replacement, and so on.  Some of those users ultimately ended their relationship with their existing DME.  

Some users had also decided (or had been forced) for the first time to go their own way.  No one would have imagined that a sizable subset of end-users, without engineering or technical backgrounds, would be opening their medical devices, disassembling individual components, removing foam with cutting tools or drain weasels, and other surgical tasks related to their very dependent medical device.  Some have unveiled the curtain and launched themselves into a Brave New World of understanding.

Many DMEs also became quite upset with Philips for these and other reasons (lost sales, lost customers, potential legal issues, etc.).  Evidence of their frustration was seen in my receipt of an angerly worded e-mail from one of many DMEs that I've purchased from over the past decade - instructing all their customers to immediately stop calling their office for Recall information.  They stated that they were unable to communicate with any customers as a result of their phone lines and voice mail being perpetually occupied with Recall update requests every minute of every hour of every day.

No doubt that DMEs will continue to work with Philips, but the relationship likely won't be exclusive or dominant anymore.  Even worse, revelations into Philips' inappropriate marketing activities, and inappropriate patient privacy disclosures - all resulting in fines - will make for a softer (traditional) sales approach with Philips' customers (DMEs). For Philips, they'll find that both their distribution channel, and their traditional end-user, has changed somewhat.

It's likely that ResMed will continue to provide most of the purchased systems in 2024, though likely at lower product margins than were realized during the pandemic supply chain shortages and Philips Recall.  It will be very difficult to accurately know what Philips' actual active user market share is today, since significantly more users have now chosen to be "off the grid" (without cloud-updating and/or modems).  

There will always be one significant achievement for Philips going forward.  Philips can say that they produced and distributed more CPAP devices than anyone else in history, although many device shipments were refurbished, returned, replaced, resold, re-stored, re-inventoried and/or recycled.