Just one critical mistake caused Theranos the most grief
Theranos seeks to win back the trust of the regulators. For that, it has voided two years of tests.
It’s the latest step in the blood-testing startup’s efforts to repair a seriously damaged reputation. There’s no single factor that can be blamed for the trouble Theranos is in, but there is one that has made everything worse: the decision to offer its tests directly to consumers.
Theranos’ business model is built on the idea that it can offer more than 100 simple blood tests directly to patients at a much lower cost than traditional blood labs, ideally using its own technology to test that blood with only a finger-prick.
But it has faced accusations about the validity of its technology since last year, and in January the Centers for Medicare and Medicaid Services found problems with its Northern California lab in January, saying some of its practices “pose immediate jeopardy to patient health and safety.”
Theranos says it has been working to address those concerns, recently announcing the departure of the company’s president and chief operating officer. Its founder Elizabeth Holmes said in a TV interview recently that, “we stopped testing and have taken the approach of saying, ‘Let’s rebuild this entire lab from scratch so that we can ensure it never happens again.'”
A potentially fatal flaw
Many new health companies have made waves by treating healthcare like any other product you might buy. Take a consumer genetics test, for example: Rather than making an appointment at the doctor, sitting for an array of expensive genetic tests, waiting days for the results and then having to trek back to the office to discuss them at your physician’s convenience, the company offered a simple, straightforward alternative: Spit in a tube, mail it in, and get results online in a visual, simple-to-understand format.
Theranos has been doing something similar, but with blood instead of spit. Skip the arduous, traditional blood-test process. Show up at your local Walgreens, fill in a form, and get your results in a few hours.
Here’s the problem: Doing it this way — without a doctor involved — puts the company under far more scrutiny than they’d endure if they included physicians in the process. That, coupled with an unclear process of how they ran their tests, is now putting them in a tough spot that’s led the CMS to threaten a two-year ban from the lab-testing industry against CEO Holmes.
Regarding the re-issued test results, Theranos spokeswoman Brooke Buchanan told that “excellence in quality” and patient safety is a top priority. “We’ve taken comprehensive corrective measures to address the issues CMS raised in their observations. As these matters are currently under review, we have no further comment at this time,” she said.
Theranos isn’t alone in facing the issue of how to offer a test directly to consumers. Many “disruptive” Silicon Valley health companies have run into this regulatory problem as well.
But because Theranos focuses on blood tests, which provide information that the average person could act on, like diagnosing a sexually transmitted disease or monitoring an existing diagnosis, Theranos faces an additional scrutiny.
For example, a patient who had gotten a blood test through Theranos went to the emergency room in 2014 after a blood-test result that showed abnormally high results. That test has since been amended to show normal results. These false-positives could be extremely harmful in the hands of consumers who aren’t in communication with medical professionals.
A series of miscommunication
No single error can be to blame for Theranos’ fall. Plenty of other missteps along the way have contributed to the confusion around the accuracy of its tests — and how blood-testing diagnostics work in general. The most notable? Not releasing data validating their technology to the academic community. Theranos has been purposefully tight-lipped about how its proprietary technology worked from the outset, perhaps for fear of competitors catching wind of what the company was up to.
At a conference in October shortly after the first Journal report came out, Holmes told her audience, “People don’t understand what we actually do.”
Holmes then went on to explain, in veiled terms, a bit about how the company runs its tests in an attempt to dispel some claims about dilution methods. And it was this initial miscommunication over how the tests work that eventually also culminated with a Fortune senior editor in December 2015 admitting that he’d been “misled” by the company while he’d reported on it for a June 2014 cover story. But the re-issued tests for the past two years that were run on Theranos’ proprietary “Edison” technology, as well as some on standard lab equipment as reported by The Journal, point to larger miscommunications in the way the labs were run.
At this point, the only thing that will matter from a scientific perspective is what the data says. The company has now announced that it will present its data at an industry conference in August.
Linda Avey, a cofounder of 23andMe told that you have to be willing to show what you’re doing. “The proof is in the data.”
