Business Blog: Hoover’s Business Insight Zone

In last week’s post, “Make a list of ‘crucial basics’ and check it twice,” I referred to the federal bureaucratic holdup that was impeding the implementation of Dr. Peter Pronovost’s breathtakingly effective checklist system for decreasing infection rates in hospital ICUs.

Good news! Dr. Bob Wachter — one of the country’s most eminent hospitalists — reports that the Office for Human Research Protections has cleared up the problem and will no longer impede the rollout of Dr. Pronovost’s work. He thinks it’s a historical breakthrough.

This is a seminal moment for quality improvement in the United States. The prior OHRP decision, if left standing, could have mandated regulatory approval and the need to obtain patient and provider consent every time one wanted to improve a process and measure its impact. Today’s decision recognizes the need to balance traditional “research” regulations against the harm that will result if good people are forced to leap over unnecessary bureaucratic hurdles every time they seek to implement a safety or quality practice and see if it worked.

Moreover, as more and more regulations – many sensible but some asinine – are promulgated in the name of safety and quality, I hope the OHRP story kickstarts a process in which the regulators and the regulated collaborate to ensure that the ultimate goal of better patient care is being served.

Now, whether you’ve got people’s lives at stake or not, please go back to my earlier post on “crucial basics” and ask whether your own practices are impeding basic improvements. Are you subscribing to “many sensible but some asinine” self-regulations?

This thought puts me in mind of a famous line from one of the greatest process-improvers in American history — Benjamin Franklin:

The taxes are indeed very heavy, and if those laid on by the government were the only ones we had to pay, we might more easily discharge them; but we have many others, and much more grievous to some of us. We are taxed twice as much by our idleness, three times as much by our pride, and four times as much by our folly, and from these taxes the commissioners cannot ease or deliver us by allowing an abatement.

How much is your organization taxing itself with its idleness, pride, or folly?

[ICU photo by adamci; Franklin image via the National Portrait Gallery.]

Three years ago Fast Company published an Alan Deutschman article that opened my eyes to the deep need for better-informed psychological approaches to the world of business. Deutschman, who later expanded the article into a book, launched the piece with a one of those crackerjack openings that magazine writers pine for:

Change or Die.

What if you were given that choice? For real. What if it weren’t just the hyperbolic rhetoric that conflates corporate performance with life and death? Not the overblown exhortations of a rabid boss, or a slick motivational speaker, or a self-dramatizing CEO. We’re talking actual life or death now. Your own life or death. What if a well-informed, trusted authority figure said you had to make difficult and enduring changes in the way you think and act? If you didn’t, your time would end soon — a lot sooner than it had to. Could you change when change really mattered? When it mattered most?

Yes, you say?

Try again.

Yes?

You’re probably deluding yourself.

You wouldn’t change.

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Late in 2007, Atul Gawande made a stir with this New Yorker article:

The Checklist

Maybe it would be more accurate to say that Dr. Peter Pronovost, the subject of the article, has made a stir in the world of intensive-care medicine with his work introducing systematic checklists to monitor ICU procedures.

The concept is simple: for many medical procedures, the bulk of problems can be avoided and the bulk of benefits gained by hewing closely to “best practices” that are well-known within the medical profession. In many cases, these practices aren’t complicated; they include things like making sure that all doctors and nurses wash their hands thoroughly right before a procedure, or covering a patient’s entire body with antiseptic drapes when inserting a stent.

Simple as these individual steps may be, remembering them all is tough to do amid the hurly-burly of an emergency room or an ICU. So Pronovost, an M.D./Ph.D. with lots of smarts and lots of energy, has worked on setting up procedures for using checklists that take care of the remembering for you. A nurse is responsible for ensuring that medical staff adhere to every step of the checklist in every case.

As Gawande tells it, the results have been little short of astounding. Here’s a sampler:

Pronovost and his colleagues monitored what happened for a year afterward. The results were so dramatic that they weren’t sure whether to believe them: the ten-day line-infection rate went from eleven per cent to zero. So they followed patients for fifteen more months. Only two line infections occurred during the entire period. They calculated that, in this one hospital, the checklist had prevented forty-three infections and eight deaths, and saved two million dollars in costs.

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I’ve been meaning to talk about this company — which made its IPO filing the last week of July — but I’ve kept forgetting. Talecris Biotherapeutics‘ stock in trade is protein therapy products, which use proteins (as the name would suggest!) to treat a variety of ailments including burns, hemophilia, and immune deficiency disorders. Since its products are derived from blood plasma, the company has its own network of plasma collection centers.

Okay, so far so good — but why a $1 billion IPO? It’s not like Talecris is a marquee name.

The short answer: private equity priorities. Cerberus Capital and Ampersand Ventures paid a pretty penny for Talecris a couple of years ago when they bought the business from Bayer. As you’d expect, private equity outfits like these are nothing if not focused on how they’ll make money from a deal. So while Talecris doesn’t seem particularly special in its field, its owners have a strong vested interest in selling it while the selling is good — a window that may be closing given the overall malaise that has struck the financial markets in recent months.

The bad news for Talecris itself is that the proceeds from the IPO probably won’t do much for its ongoing business. (I’ve shared my opinions on the “wisdom” of this approach before.) Instead, the money will be used to pay off its investors and (maybe) pay down some of the debts that private equity firms always load onto their portfolio companies.

For more coverage on this IPO, check out this story from the Raleigh News & Observer:

Talecris plans IPO to raise $1 billion

For an opinionated take on what the deal means for the private equity/IPO nexus as a whole, check out David Hamilton’s take from VentureBeat:

Talecris, a Ludicrously Large IPO, and the Beginning of the End for Private Equity?

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