by Annie Cheney
“Are you kidding?” he said. “It’s a very competitive business. Why do you think funeral directors join the Masons and the Lions? It’s so they can get all the people when they die.” In a business where most people in the know also keep their mouth shut, Budelman liked to talk. And this was one of the many reasons I liked him.
Budelman wanted to chat today.
“So, what’s up?” I asked him.
“A doctor came to see me the other day about procuring some bones.”
A doctor? I thought. Why would a doctor go looking for bones in a funeral home? Like skin, heart valves, veins, arteries, and ligaments, bones are used for transplantation into living people. Like other transplant tissue, they are supposed to be procured in sterile settings, places like hospital operating rooms or surgical suites.
“What’s his story?” I asked Budelman.
“Meet me at Pals Cabin,” Budelman said.
Pals Cabin is a favorite lunch spot in West Orange, New Jersey. The restaurant has been around since the 1930s and still serves the same old-fashioned fare: lunch dishes like its hot roast beef sandwich, which Budelman likes to dip in warm beef juice. Inside, the restaurant resembles a ski lodge, with paneled walls and heavy wooden beams. The booths are comfortably wide, the waitresses are indifferent, and the lighting is dim, all of which make Pals Cabin an excellent place to carry on a conversation if you don’t want to be seen or overheard. At the front, a long bar pumps out strong cocktails to politicians, dealmakers, doctors, lawyers, and the other regulars, like Budelman.
At noon one day the following week, Budelman met me in the Pals Cabin parking lot. “How’s slime city?” he asked, gesturing with his head in the direction of New York and locking my hand in a tight grip.
“Fine, thanks,” I replied.
He snickered.
Gray Budelman is a tall man with a closely cropped gray beard and blue eyes that are perpetually fixed on whatever happens to be in the distance. On his wrist he wears a gold bracelet that spells out G-R-A-Y, and on his pinkie, a diamond ring. He followed me inside the restaurant, where we settled into a booth.
Budelman wasted no time ordering a Jack Daniel’s. “Twist of lemon and a dash of water,” he instructed the waitress. While he sipped his cocktail, he told me about the visit from the doctor. “This character here is from Fort Lee, New Jersey,” Budelman began, passing some papers across the table to me. One of the documents was a plain piece of paper, rather amateurish-looking, with a mission statement and a mysterious company profile for something called Biomedical Tissue Services: “Biomedical Tissue Services is dedicated to promoting and coordinating tissue donation while working with the highest ethical standards and quality professional services, through a commitment of excellence.”
Budelman explained that the owner of Biomedical Tissue Services, a Dr. Michael Mastromarino, had stopped by his funeral home with a business proposition. Mastromarino wanted access to corpses, Budelman said, and the doctor asked him if he would be willing to approach families who came to him for funeral services about donating bones from the bodies of their loved ones. Mainly, Mastromarino was looking for arm bones and leg bones.
“I would get the family’s go-ahead and authorize it, and they would send a technician out,” Budelman explained. The technician would come to Budelman’s funeral home in Orange, cut the bones from the corpse in his embalming room, and take them away.
“I don’t know much about it,” he went on, taking a long sip of his Jack Daniel’s. “The guy gave me a brochure. We talked for a while. Most of the conversation, he was telling me about his other funeral directors who he was trying to explain it to and they didn’t have a clue.”
“What do they do with the bones?” I asked.
“They grind them up and they make shit,” Budelman said impatiently. “I haven’t got the foggiest idea. As I said, the fellow approached me, and I tried to figure out how I could work it the way I wanted to do things. That was all I cared about,” he said. “It sounded like a pretty good deal.”
I was reminded of something that Budelman once told me. “I’m like an old whore,” he’d said. “I only get out of bed if there’s money involved.”
Apparently, the doctor did not disappoint in that respect. Mastromarino offered Budelman a flat fee for every donor he referred, ostensibly to cover the cost of using his back room for the procurement. This type of fee is what some people in the transplant business disparagingly call the “bounty.”
When I asked Budelman how much he was offered, he gazed past me toward the woman in the next booth. His fingers drummed on the wood tabletop.
“Can you give me a ballpark range of what he would pay you?”
“Not really,” he said.
“What amount would make you say yes to the deal?”
“Five hundred dollars and up,” he replied.
“I just got to figure out how I can play it,” Budelman said, producing a pack of wintergreen tobacco from his pocket. He wedged a fat pinch into his cheek and adjusted it for a while with his tongue. The best situation, he mused, would be one in which the body was going to be cremated. That way he wouldn’t have to do a lot of reconstruction to compensate for the missing bones.
“How did this guy find you?” I asked.
Budelman shrugged.
“Don’t you want to know?” I said.
“No,” he said, waving me away. “I get so many god-damn weirdos ringing my doorbell and calling me up every day that I don’t pay much attention to them.”
As I looked into it, I learned that Dr. Mastromarino, who lists himself as CEO of Biomedical Tissue Services, had been a dentist until a few years before. In November 2000, he surrendered his license after being arrested for possession of Demerol and a hypodermic needle and being under the influence of a controlled substance. So he set up an office in New York City, though he had no license, and in October 2002, New York authorities forced him out of practice.
By then, Mastromarino had teamed up with a funeral director to start Biotissue Technologies, now Biomedical Tissue Services Ltd. The funeral director, Joseph Nicelli, was a “trade embalmer” who worked on call, embalming bodies for different funeral homes in Brooklyn. Nicelli owned the embalming service, Regional Funeral Services, and the Brooklyn-based Daniel George Funeral Home. According to a report that Mastromarino filed with the New York State Department of Health, in 2003, Regional Funeral Services and a Harlem funeral home called New York Mortuary produced 230 bodies for Biomedical Tissue Services.
Like his counterparts in the body-parts trade, Mastromarino has tried to recruit medical-school dieners to supply him. In 2004, he approached the diener at Albert Einstein College of Medicine in the Bronx. “He said they wanted femurs,” Vincent Ruggiero told me. “He said that they make screws out of them.” When Ruggiero explained that the bodies had been donated to the school for education, not transplantation, and that they were embalmed, Mastromarino assured him that “freshness wasn’t a big issue.” Ruggiero said, “No way.” But other dieners might very well have agreed.
Biomedical Tissue Services Ltd. was until recently part of a national network of tissue banks that supplies Regeneration Technologies, Inc., a for-profit processor in Florida. In 2003, the company, which is traded on the New York Stock Exchange, had $75 million in revenues.
Regeneration Technologies, Inc. grew out of a nonprofit tissue bank connected to the University of Florida. In 1998, when researchers at the tissue bank realized that some of the bone products they had developed could be very lucrative, they spun off the manufacturing arm of the business into Regeneration Technologies.
Like any manufacturer, a tissue processor depends on its raw materials for production. But in the tissue business, like the oil business, finding a consistent supplier is tough. RTI recognized this problem early on. When the company went public in 2000, it issued a caution to investors in the registration statement it filed with the SEC. “Due to seasonal changes in mortality rates, some scarce ti
ssues that we use for our allografts are at times in particularly short supply. . . . Any interruption of our business caused by the need to locate additional sources of tissue would significantly hurt our revenues, which could cause the market price of your shares to decline.” This left the company in the awkward position of depending on a constant death rate for its continued success.
So RTI took a proactive approach. Brandishing its supersonic BioCleanse machine, which it presented as the gold standard in tissue-cleansing equipment, the company began buying up nonprofit tissue banks around the country, forming strategic alliances with others, and courting funeral directors like Gray Budelman. The tissue banks that RTI purchased became part of a new company, RTI Donor Services, which advertises itself as a nonprofit but is little more than a tissue funnel for the profitable RTI. This was a cozy setup and RTI knew it. The company rewarded its subsidiaries and their employees with stock options and bonuses for meeting their tissue quotas.*5
In 1999, RTI paid $1.8 million for Georgia Tissue Bank, a community tissue bank in Atlanta. The previous year, it had funded another supplier, Allograft Resources in Wisconsin. Some employees at both tissue banks were given stock options. In 2000, RTI bought the Alabama Tissue Center, which specializes in heart valves, for close to $4 million in stock and cash. And in 2001, it took over New York Tissue Services, a tissue bank on Staten Island.
RTI even expanded overseas. As of this writing, it had distribution agreements in Germany, Austria, Switzerland, South Korea, Greece, Italy, Spain, and Portugal. The company also joined forces with Tutogen Medical, a tissue-processing company with offices in Germany. As part of the agreement, Tutogen would supply RTI with bone shafts from the legs of dead Europeans. Together, the two companies made plans to establish the University of Florida Tissue Bank Europe, now headquartered in Italy. Thanks in part to these and other scavenging activities, company revenues more than doubled between 1998 and 1999.
In the meantime, the company has been making inroads with the traditional gatekeepers of corpses: funeral directors. Other tissue banks avoid harvesting tissue in funeral homes for fear of contamination. But RTI has BioCleanse, which the company says eliminates any such risk. It has forged agreements with funeral homes in New York, Indiana, California, Arizona, and elsewhere. In New York, the funeral homes are known as “crystal partners.”
To sell them on the idea, RTI flies funeral directors to Alachua, Florida, so they can see BioCleanse up close. The funeral directors always leave impressed. One man from California told me that as soon as a family signs up with his funeral home, he faxes their information to RTI—without telling the family. If the family later agrees to tissue donation, he gets a slice of the pie.
Like many newcomers to the business, RTI’s CEO, Brian Hutchison, came from the medical-device industry. He had been vice president of Worldwide Product Development and Distribution for Stryker, a $3.96 billion medical-equipment manufacturer. Stryker makes, among other things, orthopedic implants and bone substitutes.
I asked Hutchison what attracted him to the business. He explained that during his twelve years at Stryker, he had heard about the tissue business but was never very interested in it. “The industry was probably $200 million in revenue total. It wasn’t very attractive,” he said. Hutchison took notice, however, “when the industry grew from roughly $200 million to roughly $800 million from the early nineties to the late nineties.” In December 2001, he became CEO of RTI. “At the end of the day, I view this as a manufacturer,” he said.
As the tissue business has grown lucrative, medical-device companies have started to move in. It’s a natural step for them. Their salespeople already have relationships with surgeons and hospitals, which makes them valuable partners for companies like RTI. “They have a sales force that gets out and gets to know their customers and wines and dines them and gives them the benefits. Free samples and that sort of thing,” said Dr. Michael Strong, a pioneer at the Navy Tissue Bank. RTI’s bone products, in turn, enable the device companies to expand their product lines.
The two sides of the trade in corpses have converged in corporate America. The same companies that buy body parts to showcase their devices are now distributing human tissue in glossy packaging. Medtronic buys spines from broker Arthur Rathburn to show off the company’s new back-pain device. Medtronic also buys spinal bone products and paste from RTI, which it markets and distributes to hospitals and doctors around the country. Just as Medtronic recruits and rewards surgeons willing to test and promote surgical devices, they now recruit surgeons to try bone products made by RTI.
Brian Hutchison was also doing his part. Soon, he’d be meeting with a spine surgeon, “a key opinion leader.” Unfortunately, Hutchison said, this particular surgeon was still using autograft bone—that is, bone taken from the patient’s own body. “He still takes autograft bone and shapes it the way he wants it,” Hutchison said in dismay, as though this method, long considered the gold standard by surgeons for certain procedures, was somehow misguided. Hutchison went on: “I asked him at a recent meeting, ‘Why don’t you believe in allograft?’ And he said, ‘I don’t believe I can get a consistent supply and I don’t believe I can get a safe supply and I don’t believe I can get designs or products that can help in surgery.’”
Hutchison saw his chance. “I asked him, ‘Would it be okay if I spent some time with you in surgery and watched you do this? In return, would you please come to RTI for a day and I’ll pay for your flights and we’ll teach you what the latest issues are with allograft? I’m not going to try and convert you. I want to learn and understand where the future of spine surgery is headed. The surgeon said, ‘Okay.’”
RTI’s subsidiary tissue banks get their raw materials by convincing donors and their families that there’s a pressing need. They play on the generosity and altruism of the public to get donations. But their marketing efforts suggest that they’re not simply meeting the current demand. In fact, they’re also drumming up new business, increasing the demand so they can sell more “products,” create an ever-more-pressing need for donated tissue, and boost their profits.
Several people who started out at the Navy Tissue Bank told me they were dismayed that companies had started profiteering on tissue. Dr. Michael Strong pointed out that the Navy offered its tissue for free. When he started, he said, it was about science. “In the past ten or fifteen years, it’s become more of a trade. I have seen hospitals in which the sales guy comes in with a suitcase full of tissue and says, ‘Here, try this largest bone block,’ and scrubs into the operating room and they put it in and there’s no record of that in the hospital.” He added, “When you introduce the profit motive in this field, then the money drives decisions—and decisions are at the expense of safety.”
Tissue selling is a secretive business. Today, more than 850,000 tissue transplants are performed every year, but the public understands very little about the process used to acquire and distribute the tissue. Most people assume that tissues, like organs, are lifesaving. They assume that because they have given tissue, it will, in turn, be given to a recipient. Few people are aware of the middlemen and the profit-making companies involved.
Tissue bankers see no reason to tell them. As a general rule, processors will not disclose tissue prices—Hutchison declined to comment on RTIs—nor will they reveal the amount of tissue that they obtain and sell every year; in some cases, processors will not even release specifics about where they acquire their tissue.
A common PR tactic is to portray such discussion as offensive to the memories of donors and to the feelings of donor families. Discussing such details could give donor families the wrong impression, tissue bankers say—it could make families feel as if their loved ones were nothing more than commodities.
But why is this? Donors to any other cause are entitled to know if their donation has been used to line someone’s pockets. Whether they know it or not, donors are responsible for the profits of companies like RTI.
The
FDA sides with the companies. The agency will not release any detailed information on the companies’ products, their relationships with suppliers, or their processes. The agency has ruled that the amount of tissue a tissue bank sells, the names of its buyers, and its suppliers—is proprietary.
This cloak of secrecy affects even surgeons. A recent study of 340 hospitals around the country found that orthopedic surgeons, who may rely on tissue more than other surgeons, are surprisingly ignorant about the tissue business. Sixty-five percent of surgeons surveyed had no idea where the tissue they used came from or how it had been processed.
In 85 percent of the institutions surveyed, the employees ordering the tissue were not orthopedically trained. In most cases, they knew little to nothing about the practices of the tissue banks with which they placed their orders. Their main criterion for selecting their suppliers was how quickly and easily the companies could get them the parts they wanted. Cost was a second consideration. But methods of processing and retrieval were low on their list of criteria. Most of the surgeons thought that the tissue they were using was sterile, and in most cases it was not.
Surgeons don’t always recognize problems as tissue-related. Patients who acquire bacterial infections through tissue, like Brian Lykins, often present nonspecific postoperative symptoms like nausea, fever, and redness around the surgical site. As Dr. Warren King, a California orthopedic surgeon, said, “If a patient has just had surgery and the knee is red hot and swollen anyway—is it red hot and swollen because you just had surgery or . . . because you have an infection there as well? It’s not that easy to determine an infection in a knee post-op.”
If surgeons don’t recognize an infection, they can’t report the problem to the tissue bank. It is then impossible for the tissue bank to warn other surgeons who may have used tissue from the same donor.
Even when doctors do recognize a problem, the tissue banks may be quick to dismiss it and reluctant to share information. Dr. King recalled one instance when one of his patients developed a bacterial infection in his knee that King later learned had been contracted from the tissue. When King confronted the tissue bank, a tissue-bank official heatedly denied the charge. When King asked how the bank processed its tissues, the official said, “We can’t tell you that. That’s a proprietary secret.”
