Today’s Wall Street Journal reports that Theranos, the formerly highflying diagnostic startup, plans to appeal the devastating sanctions that were recently imposed by CMS.
Their odds of success are so low that it’s difficult to understand why they bothered. Those who have followed the drama know the full story, and I won’t bother to recapitulate it here. Suffice it to say that the company has developed a reputation for viewing federal regulatory agencies with contempt. That’s the business equivalent of pouring gasoline over your head and lighting a match.
Not that long ago the company was a media darling. Today, they have exhausted every drop of goodwill they once have held. They are certainly not getting a lot of love from those who commented on the WSJ article. Here are a few samples:
“The incredible inability of Theranos–and thus, its darling founder–to grasp the catastrophic message the CMS is trying to send them is laughable to the point of sadness. Well, almost.”
“This woman’s ability to remain in office is astounding. Not in a good way, but more like a tick that has embedded itself and is apparently determined to hang on and sustain infecting the host.”
“Theranos is a scam. Holmes is a huckster. Keep the sanctions in place.”
Other companies, and especially young entrepreneurs, can learn from this sad story. Here are the lessons:
- Compliance with federal regulations is a basic requirement for doing business in healthcare markets. If you don’t want to do it, don’t get into the business.
- Every company in the healthcare space needs competent regulatory affairs leadership, but that’s never enough. Regulatory expertise must be backed up with a commitment from the CEO and the board of directors to do whatever it takes to be compliant.
The regulatory regime exists to protect patients. Companies that ignore regulatory guidelines are rolling the dice with patient safety. That’s an even more serious sin than running a business into the ground.
About those sanctions — I’d wager the odds of Theranos succeeding in its appeal are near zero. We’ll see what happens.