On December 11, 2015, I posted a tweet (@labsoftnews) that listed the names of major organizations that had been publicly linked with Theranos in recent months. It attracted a lot of attention, at least from my perspective (2,300 impressions and 30 retweets). These Theranos deals ranged from the deployment of in-store blood collections facilities in the case of Safeway and Walgreens to lab testing, or the intention to provide lab testing, for organizations. At this point, all of these arrangements have been terminated or seem to be under scrutiny. Below is my tweet in its entirety:
Theranos deals aborted or faltering so far: Walgreens, Safeway, US Army, Pfizer, Glaxo, Cleveland Clinic, Intermountain Health, Carlos Slim [Foundation].
I think that part of the interest in the tweet is due to the fact that Theranos to is currently on everyone's lips. Additionally, I think that the listing of eight prestigious organizations that had relationships with Theranos was riveting for readers. I began to ponder about the motivation for these organizations to make plans with Theranos that may now look like a mistake. I came up with the following four ideas:
- In some of these cases such as Walgreens, Safeway, the U.S. Army and the Cleveland Clinic, the decision to launch a relationship with Theranos was made at the highest executive level without much discussion with the lower level experts.
- In most of the cases, the Theranos "story" was so appealing that it overrode other practical consideration such as whether the company would be able to deliver on its promise of performing a large number of tests on a drop of blood quickly and less expensively than othe reference labs in the country.
- In some of the cases, the Theranos deal never really amounted to much but Therano marketed the relationship as being more important than it actually was. This seems to have been the case with drug giants Pfizer and Glaxo.
- We do not know at this time the extent to which the offer of shares of what appeared to be a hot stock influenced the organizational decisions to work with Theranos.
I want to focus briefly on the notion of the naiveté on the part of executives about the complexity of clincal laboratory testing. I hold the opinion that many hospital executives, for example, view lab testing as a matter of squirting blood or serum into an analyzer and generating test results. They may be hazy about details such as quality control, proficiency testing, federal regulation, and lab inspections. In fact, I think that some of the Theranos executives may need some schooling on these same topics. One might think that the validity of the Theranos "story," summarized in the second bullet point above, might have raised concerns among executives even if they were not experts in lab testing. In such cases, they may have been impressed by the apparent prestige of Theranos brand based on its announced relationships which, in fact, were not as iron-clad as they seemed.