Medtronic Needs To Use Sword?
Medtronic chief has a rocky tenure
Bill Hawkins has led the company through a massive recall, the great recession and conflict-of-interest questions over a consultant's pay
When Bill Hawkins took the top job at Medtronic two years ago, his predecessor presented him with a sword.
The replica of a 16th-century blade measures more than 4 feet in length and is mounted in Hawkins' office as a reminder to cut through red tape and take on competitors in the medical device industry.
Turns out the sword might have been a bit on the small side.
In time, the recession started hitting some of Medtronic's customers, and health care reform surfaced as a political football that could spike industry profits. Finally, this summer, Medtronic found itself at the center of controversy over the medical device industry's practice of paying big bucks to hire physicians as consultants -- a practice that has raised questions about potential conflicts of interest.
Hawkins received his sword on Aug. 22, 2007, from Art Collins, the retiring CEO who, in turn, had been given a different sword at the outset of his term at the top by predecessor Bill George.
On the day Collins presented the gift, Medtronic's stock traded at $52.64. On Wednesday, shares closed at $37.85.
The total return on Medtronic's stock during the period has been off by 26 percent, which is comparable to the Standard & Poor's 500 index but worse than an SP index of health care companies.
At the outset of his CEO term, Hawkins didn't expect Medtronic would be caught up in controversy surrounding payments to physicians who serve as product consultants to the company. But that's precisely what happened this summer with the release of billing documents filed by University of Minnesota spine surgeon Dr. David Polly.
The records were released by U.S. Sen. Charles Grassley, R-Iowa, as part of his ongoing probe of financial ties between companies and physicians. Among other things, they show Polly billed Medtronic on nine occasions between 2005 and 2007 for phone calls or meetings with Hawkins.
Hawkins said he was surprised to learn Polly billed for the interactions -- especially a $2,000 bill for time Hawkins spent watching surgery in a Minneapolis operating room. "I can't remember ever in my 32 years that I was billed for being in a procedure," he commented.
But that surprise shouldn't be misinterpreted, Hawkins said. Polly did not err in submitting the bill, he said, and Medtronic did nothing wrong in paying it.
Medtronic needs close relationships with physicians -- so much so that, even as CEO, Hawkins has tried to maintain a steady schedule of similar operating room visits.
"It's very important for me to ... see exactly how our products are being used, just so I can have a better appreciation for what we're doing to advance a certain disease state, or maybe some of the challenges that (doctors) are having," he said.