Anyone who has had to either give or take a blood sample has surely thought “there must be a better way.” The promise of replacing the pain of the needle and the seeming waste of multiple blood vials has an immediate appeal. If there was a technology that could
Theranos were one of the hottest health teach startups of the last decade. Indeed, their USP – that existing blood testing could be replaced by a pin prick – would have been a genuinely disruptive one.
Theranos was founded in 2003 by Elizabeth Holmes, then 19 years old, who dropped out of studying engineering in Stanford in order to start the company. In 2015 she was named by Forbes magazine as the youngest self-made female billionaire in history, with an estimated worth of $4.5 billion. In June 2016, Forbes revised their estimate to zero. What happened?
At times of writing, Holmes has been charged with “massive fraud” by the US Securities and Exchange Commission, and has agreed to pay a $500,000 fine and accept a ban from serving as a company director or officer for ten years. It is unclear if a criminal investigation is also proceeding.
At its height, Theranos had a seemingly stellar team of advisors. The board of directors has included such figures as Henry Kissinger, current US Secretary of Defence James “Mad Dog” Mattis, various former US Senators and business figure. In early 2016, in response to criticism that, whatever their other qualities, the clinical expertise of Mad Dog Mattis et al was perhaps light, it announced a medical advisory board including four medical doctors and six professors.
Elizabeth Holmes’ fall began in October 2015, when the Wall Street Journal’s John Carreyrou published an article detailing discrepancies between Theranos’ claims and the actual performance of their technology. This was in response to a Fortune cover story by Roger Parloff, who subsequently wrote a thoughtful piece on how he had been misled, but also how he missed a hint that all was not what it was.
Theranos’ claims to be able to perform over 200 different investigations on a pinprick of blood were not borne out; and it turned out that other companies’ products were used for the analysis of many samples.
The fall of Theranos has led to some soul-searching among the health tech stat up community. Bill Rader, an entrepreneur and columnist at Forbes, wrote on What Entrepreneurs Can Learn From Theranos:
I have been watching first in awe of perceived accomplishments, and then feeling burned, then later vindicated, when the actual facts were disclosed. Don’t get me wrong, I really wanted their efforts to have been both real and successful – they would have changed healthcare for the better. Now, that seems unlikely to be the case.
… By now, almost everyone has heard of Holmes and her company, and how she built Theranos on hype and secrecy, and pushed investors into a huge, $9 billion valuation. Now everyone in the industry is talking about this and lawsuits are flying.
Just a couple months ago, a Silicon Valley venture capitalist appeared on CNBC’s “Closing Bell” and instead of talking about the elephant in the room, he diverted to a defense strategy for the Theranos CEO.
He claimed Elizabeth Holmes had been “totally attacked,”and that she is “a great example of maybe why the women are so frustrated.”
He also went on to say, “This is a great entrepreneur who wants to change health care as we know it.”
The last statement was the strangest thing he said. Wouldn’t we all like to change things for the better? But “wanting” and “doing” are two different things.
Rader’s piece is worth reading for clinicians and IT professionals involved in health technology. The major lesson he draws is the need for transparency. He describes being put under pressure by his own board; why wasn’t he able to raise as much money as Theranos? It transpires that Theranos’ methods may make life more difficult for start-ups in the future, and Rader fears that legitimate health tech may suffer:
Nothing good has come of the mess created by Theronos secrecy, or as some have characterized, deception. The investor has been burned, the patient has been left with unfilled promises (yet again) and life science industry start-ups, like my company, have been left with even more challenges in raising much needed investment. And worse of all, diagnostic start-ups in general are carrying an unearned stigma.
In this interesting piece, Christine Farr notes that the biggest biotech and health care venture capital firms did not invest in Theranos, nor did Silicon Valley firms with actual clinical practices attached. As Farr writes, the Theranos story reflects systemic issues in funding of innovation, and the nature of hype. And one unfortunate consequence may be an excessive focus on Elizabeth Holmes; a charismatic figure lauded unrealistically at one point is ripe to become a scapegoat for all the ills of an industry the next.
The “stealth mode” in which Theranos operated in for the first ten years of its existence is incompatible with the values of healthcare and of the science on which it is based. Farr points out how unlikely it would be that a biotech firm vetting Theranos would let their lack of peer reviewed studies pass. The process of peer review and building evidence is key to the modern practice of medicine.
Another lesson is simply to beware of what one wants to be true. As written above, the idea of Theranos’ technology is highly appealing. The company, and Holmes, sailed on an ocean of hype and admiring magazine covers. The rhetoric of disruptive and revolutionizing healthcare featured prominently, as the 2014 Fortune magazine cover story reveals:
Perhaps a healthy scepticism of claims to “revolutionise” health care will be one consequence of the Theranos affair, and a more robustly questioning attitude to the solutionism that plagues technology discourse in general.
Clinicians and health IT professionals should be open to innovation and new ideas, but also hold on to their professional duty to be confident new technologies will actually benefit the patient.