Stryker Acquisition: Yes, Virginia, There Is A Market For Patient Safety

Jan 2 2014, 8:37am CST | by

The New Year’s Eve announcement that Stryker Corporation (NYSE:SYK) will acquire Patient Safety Technologies, Inc. (OTCBB:PSTX, OTCQB:PSTX) (“PST”) represents a significant sign of change ahead for the health care industry. The deal to be finalized: $2.22 per common share, with a total transaction value of approximately $120 million including estimated fees and expenses. Patient Safety Technologies’ main enterprise is Surgicount, bar coding technology that aims to reduce the incidence of sponges left in the body after surgery. Believe it or not, the idea that preventing such horrors is profitable, but it’s also a market breakthrough.

A couple months ago, I posted about the issue of objects left in after surgery, complaining that hospitals aren’t investing adequately to prevent this terrible surgical error. Sponges, retractors and other implements or tools left in the body are the most common “sentinel event” reported by the Joint Commission, the organization that deems most hospitals eligible to treat Medicare beneficiaries. The results of these “events” are catastrophic for the patient, including infections, excruciating pain and/or death. People can stay weeks or even months in the hospital recovering from further surgeries to remove the object, the scar tissue, and ancillary bodily malfunctions.

You are already familiar with the technology that prevents all this if you happened to stop by the grocery store over the holiday season: bar code scanning, It costs a whopping $10 per surgery for Surgicount or their competitors to embed bar codes in surgical sponges, and sponges are the objects most easily left in. Yet 85 percent of the hospitals that find the money for robotics, CT scanners, lasers, pianos in the main lobby, valet parking, billboards and other dazzlements just can’t find a few bucks to address one of the most appalling and nauseating problems any of us can imagine happening to us.

It’s easy to assail hospital executives for their cheapness. They deserve that. But the fact is, in the past at least patient safety had no business model; keeping patients safe doesn’t appear to pay off financially as hospitals cope with uncertainty and rapidly shifting policies under Obamacare,

But outside of Washington, the market won’t accept that business model, and Stryker’s move is a major sign. As I’ve discussed, business leaders are increasingly demanding transparency and insisting on results—and they are not waiting for Congress to make sure they get what they need from their health benefits investment. They are also moving toward high-deductible health plans, which give employees skin in the game in demanding the best value. Perhaps $10 isn’t such a big investment after all, if you preserve your reputation in a new marketplace, where patients and employers insist their needs should come first.

The accelerating competition for safe hospitals is what Stryker seems to be betting on, and my money is with them.

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

China pledges $81 mn financial assistance for Afghanistan
Beijing, Oct 31 (IANS) China Friday pledged to provide non-reimbursable assistance of 500 million yuan (about 81 million dollars) to Afghanistan this year at an international meeting on Afghanistan held here.
 
 
EU seeks talks with Russia over goods duties: WTO
Geneva, Oct 31 (IANS) The European Union (EU) has sought a consultation with Russia over the tariffs the latter imposed on certain agricultural and manufactured goods, the World Trade Organisation (WTO) said Friday.
 
 
Virgin Galactic's spaceship crashes during test flight
Los Angeles, Nov 1 (IANS) A passenger rocket plane developed by Virgin Galactic's crashed Friday after suffering an "in-flight anomaly" during a powered test flight over the US state of California, the company said.
 
 
Bhopal fugitive Warren Anderson is dead (Roundup, Changing dateline)
Washington, Oct 31 (IANS) Warren Anderson, the former CEO of Union Carbide Corp, has died at 92 after living for 30 years under the shadow of the 1984 Bhopal gas tragedy that killed thousands.
 
 
 

Latest from the Network

Three Iraqis arrested on terror charges in Switzerland
Geneva, Nov 1 (IANS) Swiss authorities Friday said they arrested three Iraqi nationals suspected of planning a terrorist attack in Europe. The office of the attorney general of Switzerland said in a statement that the...
Read more on Politics Balla
 
Pakistan repatriates 29 Afghans
Islamabad, Oct 31 (IANS) Pakistan handed over 29 Afghans arrested during a military operation in its northwestern tribal region to Afghan authorities, the army said Friday. The Pakistani security forces had launched a...
Read more on Politics Balla
 
Less than half of Americans support stricter gun laws: Poll
Washington, Oct 31 (IANS) Less than half of Americans said they back tougher gun laws, which is significantly lower than the 58 percent recorded just after the 2012 school shooting in Newtown, Connecticut, that left 20...
Read more on Politics Balla
 
Zimbabwe's main opposition calls for fresh polls again
Harare, Oct 31 (IANS) Zimbabwe's opposition MDC-T party said Friday economic challenges confronting the country could only be resolved if the country holds free and fair polls. MDC-T president Morgan Tsvangirai told...
Read more on Politics Balla
 
Trapped miners confirmed dead: Colombia
Bogota, Oct 31 (IANS/EFE) Twelve workers trapped by a flood inside a coal mine in the northwestern province of Antioquia are dead, Colombian authorities said Friday. "With an inspection we made in the night hours, we...
Read more on Politics Balla
 
10,000 agents searching for missing Mexican students
Mexico City, Oct 31 (IANS/Prensa Latina) The search for the 43 students who disappeared in Iguala, in the Mexican state of Guerrero, continued Friday with participation of 10,000 agents, including federal forces,...
Read more on Politics Balla
 
Unicef wants unimpeded delivery of aid to kids in CAR
Geneva, Oct 31 (IANS) The UN Children's Fund (Unicef) Friday asked for unhampered delivery of humanitarian assistance to children in need of support amid the recent episodes of unrest in Central African Republic (CAR...
Read more on Politics Balla
 
UN calls for inclusive urban development
United Nations, Oct 31 (IANS) UN General Assembly President Sam Kutesa Friday called for an inclusive and sustainable approach for urban development that considers the needs of marginalised groups. Commemorating the...
Read more on Politics Balla
 
Ponzi schemer in US cheats residents of $22 mn, jailed
Washington, Oct 31 (IANS) If you have been one of those approached by some 'known' person for investing in something with an assurance of 'easy money', you may benefit reading about this Ponzi schemer, jailed in the US...
Read more on Politics Balla
 
China pledges $81 mn financial assistance for Afghanistan
Beijing, Oct 31 (IANS) China Friday pledged to provide non-reimbursable assistance of 500 million yuan (about 81 million dollars) to Afghanistan this year at an international meeting on Afghanistan held here. China...
Read more on Politics Balla