The business model adopted by Theranos is interesting. If successful, it will challenge the status quo on price, technology, direct access testing, and blood draws. A note that I posted about the company last December has elicited more attention than any other so interest in the company is widespread (see: Finally, Some Important New Details about the Theranos Business Model). Part of the problem relating to the company is that not much information has been released about it's testing methodology which is based on science that has yet to be adequately validated. This has lead to the conclusion on the part of many pathologists that the hype about the company is designed to inflate its value. Now comes news that the Cleveland Clinic is partnering with Theranos to assess its technology and perhaps provide some esoteric testing to the company (see: Cleveland Clinic partners with Innovations winner Theranos for lab tests). Below is an excerpt from the article:
A partnership between the Cleveland Clinic and Theranos...may make blood tests much less painful for many patients in Northeast Ohio.....The Clinic is testing the company's method over the next year to see if it's feasible to use in place of traditional blood testing methods. In October, the Cleveland Clinic named a California-based company's technology for performing blood tests one of its top ten innovations for the coming year. Now, the Clinic is backing up that bet by partnering with the company, Theranos, to test its technology as a potential cost-saver for the entire health system. Theranos...uses a patented technology to perform a bevy of diagnostic tests on a single drop of blood, eliminating the need for long needles and multiple vials....The company, which currently provides its laboratory services through a network of Theranos Wellness Centers inside Walgreens stores in Arizona Northern California, can perform up to 30 tests on a single sample, many at a small fraction of the rates set by Medicare. A standard lipid panel, for example, costs $2.99 via Theranos, and can cost anywhere from $60 to hundreds of dollars, depending on where and when it's performed.....Though some patients may see the Theranos technique for blood draws in use at the Clinic as part of this early research, it will be at least a year before the health system has enough information to determine if it will use the new method in place of routine lab tests.....Part of the partnership does include the potential of expanding Theranos' portfolio of tests, though there are not yet concrete plans to do so....Pathologists at the Clinic may also provide diagnostic services to Theranos for the Clinic's patients or for Theranos' testing nationwide, and the Clinic's reference laboratory may also partner with Theranos to offer the diagnostic testing the company does not yet provide.
Pathologists who are skeptical about the Theranos claims about its chip-based analyzers and its low cost-per-test suggest that Cleveland Clinic may take a hit in its reputation if these claims are not borne out in its forthcoming assessment. I personally think that the Clinic has maneuvered itself into yet another win-win situation analogous to its radical policy of six years ago of not hiring smokers (see: Want a Job at the Cleveland Clinic?: Smokers Need Not Apply). This was a very gutsy move on the part of the Clinic that few other health systems would take for fear of legal repercussions and civil libertarian backlash. By taking this step, the Clinic lowered its employee health costs and made a powerful statement about its support for wellness. The only people it upset were smokers seeking jobs at the Clinic, a rapidly diminishing minority.
In terms of its announced relationship with Theranos, the Clinic now positions itself once more as an innovative organization that is embracing new technology that could potentially lower the cost of care. If it ends up validating the Theranos technology, it places itself in a position to deploy it early in its hospitals. It will also be able to provide esoteric testing to Theranos as it expands its presence in the myriad Walgreens stores. If it finds the Theranos technology inadequate, even if it withdraws from the relationship quietly, it will gain favor in the eyes of the Theranos critics. There is no way that the Clinic will endorse the Theranos technology if it does not provide quality test results, even if it stands to gain financially from a positive endorsement.