Boston Scientific and the Road to Ruin

By Catherine Elton | Boston Magazine |

IT’S STILL NOT ENTIRELY CLEAR why Ray Elliott resigned, but the move has raised the question of whether more bad news awaits. One Wall Street analyst says it’s hard to believe the company’s portrayal of the CEO’s departure as nothing more than the normal course of business. “It sounds hollow,” the analyst says.

Not all of the speculation has to do with Boston Scientific’s past. The same analyst points out that when Elliott announced his resignation from Zimmer Holdings, that move, too, was cast in rosy hues: He was going home after a job well done. Within months, however, the orthopedic industry was rocked after Zimmer and a few other companies settled a Department of Justice investigation into kickbacks allegedly paid to doctors.

Elliott says he left on his 10th anniversary of running Zimmer and that he had no idea about the DOJ investigation when he made his decision to resign. As to Boston Scientific, he says investors shouldn’t anticipate more bad news, since none is coming.

But internal problems are not the only challenges Boston Scientific faces. The world in which it operates has changed. Patient advocates, government investigators, and concerned doctors have made the public aware of some of the industry’s shadier practices. The kickbacks scandal at Guidant resulted in Boston Scientific agreeing last year to post on its website the payments it makes to physicians. And device failures and quality-control issues at Boston Scientific, and at other companies like Medtronic, have led to increasing calls for the FDA to tighten the approval process, which has slowed the pace at which new products get to market.

What’s more, it’s become evident that some medical devices have been overutilized. An academic study in 2007 found that doctors were grossly overusing stents, one of Boston Scientific’s core products. That report sent stent sales spiraling. Then, this past January, another study suggested that cardioverter defibrillators — Boston Scientific’s other core product — were also being overutilized by doctors. The Department of Justice is investigating why this might be. Defibrillator sales, too, are now down.

  • craig

    I worked for Sci Med until it was acquired in 1995. I was fired by dumb assed engineers who were given titles called ‘manager’, who were full of themselves, had no knowledge of the functions of a manager (I had an undergrad. in management, five years’ experience prior to Sci Med, plus a degree in electronic technolgy). Firms that are almost entirely engaged in engineering make the mistake of promoting their ‘own kind’ – that is, engineers, who while they are essential in the engineering function, are absolutely CLUELESS when it comes to maximizing human resources. Hubris, group-think, discrimination against people with other world views, prima donnas, all create a culture of fear among those who love their jobs more than being courageous and speaking truth to neanderthals. Hubris, arrogance CAN KILL!!!! This is how faulty devices find their way into victims and ultimately why B.S., Medtronic etc, are doomed to oblivion UNLESS the culture fosters true managers/coaches who are actually interested in the development of talent who have spent years and tons of their money acquiring the skills. How much talent is sent packing by a dumb-assed engineer who can’t even spell or…

  • Ruben

    I’m a former international employee that was fired when I was the responsible to run the business in a country that was one of the largest market opportunities in the world for BSC.
    Fired in retaliation because through the use the Channel that was included at the Code of Ethic made a formal complaint about many operators “BSC is used to call them Managers” that were using “cold sales” to reach quote that allows them to gain bonus.
    Those fictitious sales were later considered to be part of the annual “write off” at company balance-sheet. As an example, I found ($130K) value equipment (IVUS), seated at a distributor since two year without any action from “BSC Managers” no payment – no return, just an Invoice to gain the bonus for “managers” that of course was paid.
    I made a claim for retaliation at Boston court, that was rejected because the The Sarbanes-Oxley doesn’t protect a citizen of a foreign country. While it was created to protect the investors from any risk, that in a global company can come from international business also. The last CEO “improves” his salary from 600K to 32.4M per year using the same strategy of “bonus…

  • sandy

    confused and saddened that in a time of economic hardship state-wide, and nationally… a local magazine would choose to disparage a locally headquartered company that employs thousands in this state.

  • chris

    I worked at NSC for 2 years in clinical sciences. The place was toxic and leadership was non existent. What goes around comes around. Mr manager was a moron, she is highlr paid, no degree, no morals, and was inappropriate as she bullied any one she wanted to and leadership let her get away with it, no balls to confront her. The ship has sunk.

  • BH

    The article was a clear demonstration of cowardice on the part of the author and the “unnamed analyst”. It’s easy to post negative comments if there is no accountability. In addition, the unprofessionalism demonstrated in publishing unnameed vulgar assessments is inexcusable. Would expect more objective (at least more balanced) “reporting” from a local magazine in writing about a local company that develops life saving medical devices that reduce healthcare costs and help physicians treat patients needs.

  • Martin

    This women signing this article is obviously a crazy feminist writing this coments like;
    “Fed by hubris, testosterone, ego, and greed”.
    Former executives describe what ensued as an all-out testosterone fest.
    Its showing us that testosterone *(men hormon) is responsible for all problems here… Now we should just say that this lady wrote this article estrogenicly stupid and unbalanced and unsure??? Its simple discriminating men and blame them for all here ;p

  • Joel

    This company gets whatever it deserves and folks in the comment section defending them are simply pathetic. I worked for them as a manager for several years and their just the typical old school, east coast good ole boys squeezing every ounce of blood out of their workers and then throwing them away to stay profitable.