Devices & Diagnostics, Hospitals, Pharma

Why don’t companies ever learn that disclosing problems early is good business strategy?

Here we go again. The New York Times is reporting that Johnson & Johnson downplayed […]

Here we go again.

The New York Times is reporting that Johnson & Johnson downplayed the risks of its metal-on-metal hip implant, known as Articular Surface Replacement, even as its own internal inquiry showed that the all-metal implant would fail in 40 percent of patients who received it.

These internal documents are being made public for the first time through one of several lawsuits against the healthcare company related to its recalled ASR hip implant. J&J recalled it in 2010.

This is, of course, not the first time that a company has chosen to not reveal unflattering findings about a device, even though others were bringing about the same. There is the legendary case of Guidant Corp., which did not inform physicians for three years that a particular model of defibrillator was defective and short-circuited in about 24 patients.

And Boston Scientific had to pay a very hefty price in 2009 following its pricey acquisition of Guidant to settle a federal investigation into that little nasty business.

Neither is this problem limited to medical device companies and the healthcare sector. Remember the Ford Explorer-Firestone tire debacle, when Ford was aware of rollover problems overseas but failed to address them in the U.S.?

It’s a stereotype, though true, that corporations have a laser-like focus on cost, sometimes even to the exclusion of everything else. And yet, what a myopic approach that is.

Surely the financial loss related to a quickly nixed program or recalled product would be far less than the tangible financial pain suffered in lawsuits and federal probes not to mention intangible but real loss to corporate reputation. And trust is big currency in the healthcare sector, especially at a time of fragmented and decentralized media where reputations can crumble in the space of 140 characters on Twitter.

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