Lab Soft News

23andMe Database Sheds Light on Genetic Aspects of Racial Mixing

I have posted a number of notes in the past about 23andMe, a company that does genetic testing of people who submit a sample of mucosal cells for DNA analysis (see, for example: 23andMe Builds Online Sarcoma Research Community; The Dispute between the FDA and 23andMe; What's Really Going On?; Pfizer and 23andMe Collaborate to Study Inflammatory Bowel Disease). The company is now running correlation studies of their DNA database with the self-declared ethnic groups of some of its customers (see: White? Black? A Murky Distinction Grows Still Murkier). Here's an excerpt from the article:

Over time...[23andMe] has built a database that not only includes DNA, but also such details as a participant’s birthplace and the ethnic group with which he or she identifies.....Recently they used their program to calculate what percentage of each subject’s genomes was inherited from European, African or Native American forebears....On average, the scientists found, people who identified as African-American had genes that were only 73.2 percent African. European genes accounted for 24 percent of their DNA, while .8 percent came from Native Americans. Latinos, on the other hand, had genes that were on average 65.1 percent European, 18 percent Native American, and 6.2 percent African. The researchers found that European-Americans had genomes that were on average 98.6 percent European, .19 percent African, and .18 Native American....Based on their sample, the researchers estimated that over six million European-Americans have some African ancestry. As many as five million have genomes that are at least 1 percent Native American in origin. One in five African-Americans, too, has Native American roots....

Most Americans with less than 28 percent African-American ancestry say they are white, the researchers found. Above that threshold, people tended to describe themselves as African-American. ....African-Americans in Georgia and South Carolina have the highest average percentage of African ancestry among African-Americans in the United States.....Latinos in the Southwest had high levels of Native American DNA, they found, while Latinos in the Southeast had high levels of African DNA....In Oklahoma, the researchers estimated, 14 percent of African-Americans have genomes that are at least 2 percent Native American. This high percentage is probably due to the unique history of the state. Some Native American tribes in the South, such as the Cherokee and Choctaw, kept African slaves. When they were expelled to Oklahoma in the 1830s, they brought the slaves with them. In some tribes, Native Americans and African slaves intermarried, and their descendants continue to live in Oklahoma today.

The NYT article quoted above points out that the analysis performed on the 23andMe database is subject to sample bias because it is limited to people who choose to submit DNA samples, perhaps because they are interested in their own genealogy and were willing to pay the fee. Moreover, the ethnic identity of their customers is self-declared. However, I found the article fascinating. I was not personally aware that Native Americans kept African slaves. Here's a brief summary of this practice from a Wikipedia article (see: Slavery among Native Americans in the United States):

The Cherokee was the tribe that held the most slaves. In 1809, they held nearly 600 enslaved blacks. This number increased to almost 1,600 in 1835, and to around 4,000 by 1860, after they had removed to Indian Territory.....The proportion of Cherokee families who owned slaves did not exceed ten percent, and was comparable to the percentage among white families across the South, where a slaveholding elite owned most of the laborers. In the 1835 census, only eight percent of Cherokee households contained slaves, and only three Cherokee owned more than 50 slaves. Joseph Vann had the most, owning 110 like other major planters. Of the Cherokee who owned slaves, 83 percent held fewer than 10 slaves. Of the slave-owning families, 78 percent claimed some white ancestry.

Many of our ideas about race are going to be altered, or perhaps even reinforced, by genetic studies with this article as only the opening salvo. People have very strong opinions about 23andMe, both pro and con. I find it a very interesting company and will continue to cover it when the occasion arises.

Oncology Clinics Organized on the Basis of Treatment Rather Than Type of Tumor

Cancer treatment in hospitals is being revolutionized by a strategy sometimes referred to as targeted therapy whereby both a patient and his/her cancer tissue undergo genetic analysis prior to the onset of treatment. Then, a drug is selected that best exploits the genetic weaknesses of that cancer. This approach is also commonly referred to as personalized therapy but this name suffers from a lack of specificity and will hopefully be abandoned soon (see: What is Personalized Cancer Medicine?). Targeted cancer therapy thus requires a genetic diagnostic phase prior to the onset of therapy.

I have posted notes about personalized medicine and targeted therapy for about eight years (see for example: Genetic Testing to Cull Out the "Un-Right Patient" as a Candidate for a Particular Drug Therapy; Continuing Discussion of the Role of Lab Medicine in Personalized Medicine; Genetic Testing as a New Cancer Care Standard; Clinical Trials Also Changing). An interesting aspect of this new phase of cancer care is how it will affect the training of oncologists and the naming of cancer clinics. With regard to this first point, training is shifting from an organ system orientation for oncologists (e.g., a lung or GI cancer specialist) to a genomic orientation with emphasis on the cell defect that has caused the malignant lesion (e.g., a BRCA or HER2 specialist).

With regard to this second point, some cancer clinics in hospitals are being named on the basis of new cancer classification schemas. For example, I posted a note more than a year ago about a clinic at the University of Michigan focusing on patients with a cancer of unknown primary (see: Specialized Clinic Opens for Patients with Cancer of Unknown Primary). A more recent example of clinics tailored to therapy rather than organ system is the immunotherapeutics clinic at Memorial Sloan Kettering Cancer Center in New York (see: Immunotherapeutics Clinic). Here is the lead paragraph from the MSKCC web page describing this new clinic:

The mission of the Immunotherapeutic Clinic (ITC) at Memorial Sloan Kettering Cancer Center is to treat cancer patients with novel therapies that use the immune system to recognize and destroy cancer. Ipilimumab, an immune therapy that takes the brakes off the immune system, is an FDA-approved therapy for patients with advanced melanoma, and we are now investigating the effectiveness of drugs like this...for the treatment of all types of cancer....Patients are referred to the ITC by their medical oncologist at Memorial Sloan Kettering. If you decide to participate in an early-phase clinical trial within the ITC, the clinic's physicians and nurses of the ITC will care for you during the time you are participating in the study. Once your participation is complete, you will return to your regular medical oncologist for ongoing care.

One interesting aspect of this Immunotherapeutic Clinic (ITC) is that it serves as a portal to early-phase clinical trials of immunotherapy for the patients. Although currently focusing on melanoma and lung cancer, this type of therapy will undoubtedly soon be applied to tumors in other organs. This is thus a clinic focusing on a specific type of therapy rather than an organ or organ system. However, it also serves as a means for channeling patients into clinical trials, a key feature of specialized cancer hospitals (see: New Approach to Clinical Trials; Emphasis on Individual Patient Response; The Diversity Gap in Clinical Trials; Can It Be Closed?; Transferring EMR Data to Clinical Trial Documents; FDA Launches New Patient Network Website; Useful Resource for Clinical Trials). As noted in the excerpt above, patients seen in the ITC can only be referred by MSK oncologists who first determine their suitability for such an internal referral.

On the Future of EHRs: A Continuing Deep Dive

On December 22, 2014, I posted the first of what will be a series of notes discussing the ineffectiveness of EHRs (see: What's Really Wrong with EHRs: Beginning a Deep Dive). They will make reference to an article addressing the  "strategic challenge" of EhRs that I considered very well written (see: The Strategic Challenge Of Electronic Health Records). Because this article was very long and complex, in the first note I only quoted the first paragraph. Below is a second excerpt, digging deeper into the article:

In the era of paper records, hospitals struggled to collect information from across their business units. Nurses attached charge stickers on their sleeves and those stickers got lost on the way to the nursing station. Billing required staffs of experts toiling in dungeon-like record rooms, pulling sheets of paper from files, and manually compiling statements....EHRs were proclaimed the solution to these and other challenges....Electronic orders could improve charge capture and automate billing. EHRs’ potential seemed boundless. But the EHR push lost sight of something critical: Businesses exist to meet the needs of their customers. That is how businesses create value. 

As every clinician knows, hospitals don’t meet patients’ needs; clinicians do. Caregivers execute business unit strategy and create value when they interact with a patient and the patient’s health improves. Shared activities can help the service lines of a combined business create more value. Combining human resources, facilities management, and similar services should improve results and lower costs. EHRs are a form of shared service and therefore should support the interactions of caregivers and patients to improve patients’ health. But most EHRs were designed around corporate priorities—billing and high-level record keeping—and their support of the corporate strategy comes at the expense of the service lines. These EHRs treat care as a commodity and raise costs by shifting the burdens of data input onto clinicians. As a result, these EHRs don’t add enough value to care delivery, even though care delivery is why hospitals exist. In fact, care is not a standardized commodity.

For me, the most important sentence above is the following: ...[M]ost EHRs were designed around corporate priorities—billing and high-level record keeping—and their support of the corporate strategy comes at the expense of the service lines. In summary, most EHRs are too complex and are designed to perform too many tasks. It's impossible to optimize both patient billing and patient care simultaneously. The solution to this challenge is to return to separate systems, each developed to support individual "service lines." Pathology and radiology have adhered to this principle since the beginning of hospital computerization with their LISs, RISs, and PACSs.

To further this discussion, I quote from John Moore who blogs over at Chillmark in his year-end predictions (see: Looking into Our Crystal Ball for 2015):

Rapid Market Changes Force Out 50% of Healthcare CIOs: Half of today’s healthcare CIOs will move on in next 5 years as their role radically changes from being one focused on supporting large, relatively static systems to the need to orchestrate highly dynamic systems. We see no end in sight to the proliferation of user selected best-of-breed apps to get the job done – orchestration and governance will be key, project management not.

I frankly don't believe that many hospital CIO are losing their jobs. I am not aware that many CEOs are unhappy with their performance -- yet. In fact, most hospital CEOs would be incredulous at the suggestion that their EHRs, often costing hundreds of millions of dollars, could cause a reduction of their physician and nurse productivity by 10-20%. They believe that the cause of such declines is EHR start-up jitters rather than inefficient and ineffective EHR design. The solution to this problem, in my opinion, is not merely the deployment of specialized, "service line" information systems tuned to the daily tasks of nurses and physicians. Instead, we also need to seek best-of-breed systems. This means that all such specialized systems that come to market need to compete and be compared against each other. There is insufficient competition in today's EHR offerings.

Mayo Medical Labs Lawsuit Against Quest; Friction among Reference Labs

In a recent note, I discussed the business model used by the two major reference laboratories, Quest and Lab Corp (see: Quest Diagnostics and Lab Corp Business Models Becoming Obsolete). My point was that it was becoming  obsolete and vulnerable to innovative competitors like Theranos. There are two other national reference labs that are not as large as Quest and Lab Corp and also have different pedigrees -- Mayo Medical Labs and ARUP. Both have prestigious parent organizations but this doesn't mean that they will roll over in a fight. A recent article about a lawsuit between Mayo and Quest proves this point (see: Ex-Mayo Clinic exec resigns from Quest, lawsuit continues). Below is an excerpt from the article:

The doctor being sued by Mayo Clinic for allegedly stealing trade secrets has resigned from his job at a Mayo competitor, Quest Diagnostics. Dr. Franklin R. Cockerill III, the former CEO of the for-profit Mayo Medical Labs, resigned from his position as vice president and chief laboratory officer with Quest on Wednesday.... His acceptance of that job on Oct. 1 spurred Mayo Clinic to file a lawsuit against Cockerill alleging misappropriation of trade secrets and breach of contract. Cockerill officially worked at Quest only from Oct. 1 to Oct. 14. On Oct. 14, Olmsted County Judge Robert Birnbaum granted a temporary restraining order preventing him from working, because he could cause "irreparable harm" to Mayo Clinic. Quest filed a motion to withdraw from the case on Tuesday, since it "…no longer has a 'substantial interest' in this litigation that justifies or requires its continued participation."

Mayo Clinic issued a statement Thursday saying it had settled with Quest in the wake of Cockerill's resignation....While Quest is no longer a factor in the case, the Mayo Clinic's lawsuit again Cockerill continues to move forward....The lawsuit alleges that Cockerill covertly accepted the job in June, but he told Mayo Clinic that he was retiring at the end of September to help his 85-year-old mother run her fertilizer business in Nebraska. From June to September, he continued to work at Mayo Medical Labs, attending confidential meetings and negotiating contracts. The complaint filed by Mayo Clinic also claims that Cockerill was in communication with Quest throughout his final months and he left with clinic-owned memory sticks with data downloaded from his work station. On Oct. 1, he stepped into the position of vice president and chief laboratory officer with New Jersey-based Quest Diagnostics Inc., a multibillion-dollar public company.....Mayo Clinic responded [to the defense attorney's claims] that Cockerill's case was different than other executives who have left to work for competitors."… We understand that our staff members move to other organizations, and, when they do so in a transparent manner, we can manage any conflicts-of-interest during their transition, and we can protect our confidential information and trade secrets," stated [a Mayo spokesperson] by email. "Dr. Cockerill was not transparent and did not report his conflict of interest."  

An executive working for a major reference lab would have deep knowledge about various types of the intellectual property of that lab. What comes first to mind as to what sort of IP would prompt a lawsuit is the client list and the pricing structure negotiated for any particular customer. Prices may be discounted from the list prices to varying degrees. A departing executive would also have a sense about the nature of the relationship between, say, an academic pathology department and the reference lab. Knowledge of such price and relationship information could facilitate an approach by a competing lab. In this era of significant pressure on hospital costs, competition is heating up across the whole healthcare spectrum and the reference lab industry is no exception.

I am particularly intrigued by the following quote from the article above: ...[Cockerill] told Mayo Clinic that he was retiring at the end of September to help his 85-year-old mother run her fertilizer business in Nebraska. Although I was tempted to comment further on this bit of biographic information, I was able to hold myself back.

What's Really Wrong with EHRs: Beginning a Deep Dive

The Health Affairs Blog posted a very interesting critique of EHRs recently (see: The Strategic Challenge Of Electronic Health Records). It was so good that I wanted to cover in detail in Lab Soft News. I should also point out that this blog is not a pawn of the healthcare IT lobby like HIMSS and can be more honest about EHR issues. The article was long and dense so that I have decided to split it into sections and, in this note, will cover only the lead paragraph, that I present below:

Despite a 2005 prediction that electronic health records (EHRs) would save $81 billion, RAND Corporation just validated clinicians’ complaints in a report describing EHRs as “a unique and vexing challenge to physician professional satisfaction.” The American Medical Association also published EHR “usability priorities” – strong evidence that current EHRs don’t support doctors in practicing medicine. In a world of Apple-typified simplicity, why is it so hard to get the right EHR? Because, unlike Apple, EHR designers haven’t started with the question of how value can be created for users of the technology. Technology isn’t the problem. The challenge is in articulating clinicians’ information needs and meeting them by making the right tradeoffs between corporate and business unit strategies. EHRs can, and should, provide relevant information when and where clinicians need it, recognizing that care is not a commodity and that different care processes have different information needs. User interfaces must anticipate clinicians’ needs rather than require individual user design. EHRs need to eliminate low-information pop-ups and alarms and instead provide alerts and reminders that are both timely and relevant. They must be designed with assiduous attention to data entry requirements, replacing blind mandates with thoughtful assignment of the task and the timing.

I have spent a lot of time contemplating the question raised above: In a world of Apple-typified simplicity, why is it so hard to get the right EHR? I have come to the following conclusions in response to it:

• First and most importantly, hospital executives have been saddled with the burden of a premise that is not accepted in any other U.S. industry. It's the idea that it's possible to manage most of the important hospital computing tasks with a single, massive information system. This idea was promoted by IBM in the 70's and 80's with their so-called Hospital Information Systems (HISs) and continues to hold sway today with the electronic health record (EHR). It's easy to understand why this idea had so much appeal for IBM since it was the vendor of "big iron." The leadership of pathology, radiology, and hospital pharmacies never bought into this idea, turning to the software market for specialized departmental systems like LISs and RISs. In truth, IBM never bothered to write software for the hospital diagnostic departments and pharmacy because they did not consider them large and lucrative enough and they also lacked the expertise to do so. Unfortunately, the major HR vendor Epic is now writing software for the diagnostic departments with its Beaker and Radiant systems.
• This assumption of deploying "one big hospital information system" has resulted in EHRs designed primarily to capture patient charges and support billing but also to support healthcare delivery by physicians and nurses. As the article cited above notes, EHRs simply makes their jobs more difficult. If you turned off the LIS or RIS/PACS in any hospital, pathologists and radiologists would revolt. These latter systems have been designed to support specialized lines of business (LOBs) and are carefully selected by the diagnostic departments for optimal functionality. If you turned off the EHRs in hospitals and replaced them with specialized systems that made their jobs easier, physicians and nurses would cheer. Healthcare is the only industry in the U.S. where the federal government needs to bribe the industry with cash payments in deploy IT. This says a lot about the the "usefulness" of these systems.

I am hopeful that hospital executives will soon realize that it is not in their best interests to saddle their highest paid and most skilled employees, physicians and nurses, with such an inefficient tool as the EHR but this realization may take a while to achieve.

Some Outreach Test Results Are Bypassing Hospital LISs; A Growing Trend?

In my last two notes, I have been discussing the potentially disruptive effect of the Theranos business model, particularly with reference to Quest Diagnostics and Lab Corp (see: Finally, Some Important New Details about the Theranos Business Model; Quest Diagnostics and Lab Corp Business Models Becoming Obsolete). In my analysis, I made mention that Theranos must deploy software to manage their test results and then transmit them to hospitals and physician offices. In other words, they will need some type of LIS, perhaps one analogous analogous to Quest's Care360. An important question, then, is what software will they will choose or perhaps what software are they already using in their small number of Walgreens pilot sites.

I now digress briefly to discuss hospital lab outreach programs. Under such programs, lab testing is performed in hospital-based labs for ambulatory patients who most often are under the care of physicians with a relationship to that hospital. Think of this as hospital-based labs operating as reference labs and competing with Quest and Lab Corp. If the patients being tested are admitted to the hospital, it's important that their test results are available in a hospital system to provide a longitudinal health record for them.  Hospital labs commonly use outreach software to transfer the results from physician offices, most commonly to the hospital LIS database. However, I learned years ago that some hospitals were using such outreach software to transfer physician office test results to the hospital EHR and not to the LIS. This results in a fragmentation of lab database with the only complete record stored in the EHR and not in the LIS, the traditional repository of all test results.

If I were forced to predict what IT steps Theranos might take, I suspect that they would prefer to deploy a system such as Epic's LIS called Beaker which I have blogged about in the past (see: Here Comes Epic's Beaker LIS -- Ready or Not; Details about Epic's Beaker LIS, Supplied by the Company). A Walgreens competitor, CVS's MinuteClinic, has already been reported as using the Epic EHR  (see: MinuteClinic taps Epic for EMR). By deploying Beaker as its LIS, Theranos would both acquire a LIS to manage its test results but also the ability to communicate test results to any hospital or health system with Epic. In a recent survey, 23% of physician respondents indicated that they used an Epic EHR. In 2011, it was claimed that 38 percent of all patients in the U.S. had records stored on Epic (see: ShandsHealth Goes Live with Epic; Company Penetration of the Hospital Market).

One additional point needs to be emphasized here. Epic's EHR has only one database. If the Beaker LIS is also installed in a hospital, there is no separate LIS database. If a hospital runs an Epic EHR and also runs an LIS from another vendor, that LIS will have a separate database interfaced to the Epic EHR database. Unfortunately, there is no "reverse feed" of test results transmitted only to the EHR database back to the LIS in such hospitals (see: "Reverse Feed" of Clinical Data from EHR to the LIS -- Will This Ever Happen?). 

Quest Diagnostics and Lab Corp Business Models Becoming Obsolete

In my note of two days ago, I discussed the challenge that Theranos is presenting to the two major reference labs in the U.S., Quest Diagnostics and Lab Corp (see: Finally, Some Important New Details about the Theranos Business Model). Although the focus of that note was on Theranos, my arguments got me thinking about the business models of these two large companies. It occurred to me that there might be fundamental flaws in them such that a new entrant into the lab testing market, Theranos, could threaten their core business with what could be described as disruptive innovation. The purpose of today's note is to discuss these potential flaws that are listed below:

1. Information technology. Effective IT lies at the heart of any modern clinical laboratory. To stay abreast, every laboratory must frequently upgrade their LIS or seek new software to operate more efficiently. Both Quests and Lab Corp have grown, in part, by purchasing regional labs and grafting their operations into their IT infrastructure. This has resulted in large IT systems with a patched mixture of older, commercial systems plus homebrew software. They can't shut it down and can't replace it. By comparison, a relatively new company like Theranos can begin operations with homogeneous, state-of-the-art software.
2. Client base: The key clients of Quest and Lab Corp are physician offices whose staff members draw blood samples from patients or refer them to reference lab service centers (PSCs) to have blood drawn. The test results are then sent back electronically to the physician office's office EHR supplied by the reference lab (e.g., Care360) or to a commercial office EHR. Such systems are very complex, partly because there are so many office EHRs available in the market. The fundamental problem here is that private physician practices are disappearing or being bought by health systems. The health systems then install their own brand of EHRs in the physician offices and switch the physician practices to the hospital-based pathology labs.
3. Sample collection: Quest and Lab Corp have built patient services centers to collect patient blood samples. As noted in my previous note about Theranos, it has been able to leverage the physical space provided by retail drug store chains like Walgreens for sample collection. Moreover, I anticipate that the range of clinical services offered by these retail drug store chains will increase, thus increasing the success of the Theranos enterprise.
4. In-vitro testing platforms: Quest and Lab Corp depend on the major IVD companies to provide them with large-scale analyzers and reagents and are thus highly dependent on these companies for innovation. In contrast, Theranos is vertically integrated, designing and manufacturing its own testing platform. Moreover, it has developed a radically new testing technology based on lab-on-a-chip (LOC) technology and microfluidics (see: Elizabeth Holmes: The Breakthrough of Instant Diagnosis; Lab-on-a-chip). This technology uses very small amounts of blood collected in a "nanotainer" and very little reagent. Because Theranos owns its upstream technology, it will utilize all of its manufacturing capability for its own business purposes and scale it up as demand for testing increase. It will also, obviously, deny the technology to its competitors.
5. Point-of-care (POC) testing: I believe that hospital lab testing will gradually move away from what can be called the general lab model and toward point-of-care-testing (POC). The general lab model consists of the transportation of blood samples to a laboratory in a hospital or reference lab where they are processed using large-scale analyzers with a low cost-per-test. Point-of-care testing, as the name implies, involves sample analysis near the patient using compact analyzers and at higher cost-per-test. In the short term, Theranos can pursue the ambulatory care market with Walgreens as its partner. Quest and Lab Corp may react to a loss of outpatient testing business by bidding on hospital contracts, trying to gain more inpatient testing business. At some later time, Theranos can then begin to sell its patented chip-based analyzers to hospitals as the demand for inpatient POC testing increases.

Finally, Some Important New Details about the Theranos Business Model

I have been reluctant in the past to write much about Theranos because the founder, an entrepreneurial prodigy named Elizabeth Holmes, does not speak to the press much. I have posted some information about the company in connection with its relationship to Walgreen's (see: Retail Chain Drug Stores Ramp-Up Their Healthcare Delivery Services). At any rate, a long article about Theranos and Holmes by Ken Auletta has recently been published in the New Yorker and it contains some very important details (see: Blood, Simpler). It's a very long piece so I have copied some significant quotes from it below in italics followed by my analysis and interpretation of the quote:

• The phrases “disruptive technology” and “the future of medicine” come up a lot. Holmes, who is thirty, is the C.E.O. of Theranos, a Silicon Valley company that is working to upend the lucrative business of blood testing.
• Holmes in on a mission to disrupt at least two major healthcare industries: (1) IVD equipment manufacturers; (2) the major national reference labs (Quest and LabCorp). Her plan may also disrupt portions of the healthcare software industry.
  
• [Theranos] has also opened centers in forty-one Walgreens pharmacies, with plans to open thousands more. If you show the pharmacist your I.D., your insurance card, and a doctor’s note, you can have your blood drawn right there....In 2013, Theranos announced a “long-term partnership” with Walgreens that will eventually establish its wellness centers in most of the eighty-two hundred Walgreens stores. The Walgreens in Palo Alto has one, as do forty Walgreens pharmacies in Phoenix. Holmes envisages wellness centers in most Walgreens and Duane Reade stores, which would put Theranos “within five miles of every American.” Theranos also could sign up the rival drugstore chain CVS, which has seventy-eight hundred outlets.
• Part of the brilliance of the Theranos business model is that it avoids a build-out of the patient service centers (PSCs) maintained by Quest and LabCorp, leveraging instead its alliance with Walgreens. In so doing, it legitimizes direct access testing (DAT) about which I have posted numerous notes in the past. I am strongly in favor of DAT.
• A typical lab test for cholesterol can cost fifty dollars or more; the Theranos test at Walgreens costs two dollars and ninety-nine cents.
• Part of the disruptive nature of Theranos is that it's technology is inherently more efficient and part of its mission is to drastically reduce the costs of lab testing. Part of this low cost may involve losing money per test but its cost structure is inherently lower than that of Quest or LabCorp.
• Holmes thinks that getting a blood test should instead be a “wonderful” experience, and the aim of Theranos is to lower the barriers. She told the crowd that between forty and sixty per cent of people who are ordered by their doctor to get a blood test do not.
• Part of Holmes' story is that a finger puncture is a less traumatic than a venipuncture. It's certainly cheaper because of the lower cost of disposables. I think that her reference to creating a more wonderful experience for blood testing is over-hyped. I do think, however, that she is trying to make the experience more efficient for the patient. I am not surprised that a high percentage of tests ordered for ambulatory care patients are never performed.
• Investors have valued the company at more than nine billion dollars, comparable to the two major diagnostic labs. Holmes owns more than fifty per cent of the company; she was profiled last spring in Fortune and subsequently featured in Forbes as “the youngest self-made female billionaire in the world.”
• Part of the strategy of Quest and LabCorp in the past has been to buy out its competitors. This won't work with Theranos. On paper, the company is worth more than them combined. She also plans to take over their mission-critical ambulatory care market. Even if Theranos were worth much less, she does not seem the type to relish a buy-out offer regardless of its size.
  
• The board of her company is stocked with prominent former government officials, including George P. Shultz, Henry Kissinger, Sam Nunn, and William H. Foege, the former director of the Centers for Disease Control and Prevention. Dr. Delos M. Cosgrove, the C.E.O. and president of the Cleveland Clinic, is an avid supporter.
• She is going to be well advised by her board and other well-placed individuals who undoubtedly have large financial stakes in the company. She will be a formidable competitor.
• Cosgrove predicts that blood tests for many common health issues, including high cholesterol and diabetes, will be initiated by patients as well as by doctors. “The CVSs and the Walgreens and the Walmarts of the world are going to be taking a lot of things that currently go to primary-care physicians,” he said. 
• I have posted a number of previous notes about how the retail drug stores will become key players in the lowest level of healthcare delivery (see: Retail Chain Drug Stores Ramp-Up Their Healthcare Delivery Services).
• Last year, the U.S. Food and Drug Administration barred 23andme from disseminating some information out of concern that consumers might misunderstand or misuse it. Some observers are troubled by Theranos’s secrecy; ....the company has published little data in peer-reviewed journals describing how its devices work or attesting to the quality of the results.
• Ordinarily and to attack competitors with some new technology, Quest and LabCorp or IVD manufacturers would merely drop a note to the FDA. Unfortunately for them, Theranos manufactures its own analyzers, thus qualifying the company for an exemption for laboratory developed tests (LDTs) (see: FDA Issues Draft LDT Guidance Documents; Provides 120-Day Comment Period and will Host October Public Meeting). These other companies, in fact, also derive benefit from their LDT tests. The FDA is now trying to regulate LDTs but the final rules are far in the future. Moreover and by the time they are published, Theranos will undoubtedly be prepared to qualify under them.
• Clarke [Quest’s senior scientific director for mass spectrometry, immunology, and automation] argues that finger-stick blood tests aren’t reliable for clinical diagnostic tests; because the blood isn’t drawn from a vein, the sample can be contaminated by lanced capillaries or damaged tissue. Holmes strongly disagrees: “We have data that show you can get a perfect correlation between a finger stick and a venipuncture for every test that we run.”....Holmes also pointed me to a pilot study published by Hematology Reports, an online-only peer-reviewed journal; she is listed as a co-author. The report, released in April, concluded that Theranos tests “correlated highly with values obtained” from standard lab tests.
• Quest needs some powerful ammunition against Theranos than the possible contamination of blood samples with "tissue juice" due to a finger stick. Even if it can be proved that some of the Theranos samples are unreliable for analysis, the company can always revert to a venipuncture and microsample for selected tests. It's of interest, but clearly predictable, that Holmes chose to publish her results in a very obscure, on-line pathology journal.

In summary, I don't see any flaws in the Theranos business model although it's quite radical when compared to the IVD and reference lab industry as it stands today. Holmes is going about her business in a quiet and methodical way. There's a lot more to discuss about Theranos. I will return to the company in subsequent notes. I am interested in their approach to IT. However and if I were the CEO of Quest or LabCorp, I would be very,very worried. 

Health Insurance Company Pays Its Policy Holders to Stay Fit

On 11/9/14, I posted a note suggesting that wearable health monitoring devices might be a means to lower health insurance costs (see: Wearable Health Monitoring Devices: a Means to Lower Insurance Costs?). I drew a parallel to the electronic monitoring device offered by Progressive Insurance called Snapshot that plugs into your car, monitors your driving habits, and then enables you to a reduced premium if your drive safely. Oscar Health Insurance is now bringing this idea to reality for health insurance (see: This Insurance Company Pays People to Stay Fit):

Oscar Insurance bills itself as a “new kind of health insurance company,” one that uses a combination of technology and transparency to bring the stodgy insurance industry out of the Dark Ages. And now, it’s giving the industry a particularly firm kick towards the future. ...Oscar [has] unveiled a new initiative that will provide every Oscar member with a free Misfit fitness band. But in an industry that’s infamous for nickel-and-diming its customers, what’s even more progressive is that Oscar is going to pay its members to actually use them....Counting steps with a fitness tracker like Misfit, he says, is a good place to start. In recent years, fitness trackers have grown beyond the cottage industry of quantified selfers, so much so that even Apple is ready to seize on the opportunity. But having an insurance company...recognize these devices as an actual health intervention lends the entire fitness tracking industry a new level of legitimacy. Oscar members can order their new Misfit on the Oscar iOS or Android app. It syncs to the app automatically, so users only need to strap it on and get to walking. Users who already have a fitness tracker can also connect it to the Oscar app using Apple HealthKit, but that takes a bit more set up. Oscar’s algorithms determine how many steps each member should aim for in a day, based on that person’s health data. Each day a member surpasses that goal, he gets $1. When he accrues $20, he can cash out in the form of an Amazon gift card.

I don't know anything about the Oscar Insurance Company and am not recommending the company. I also don't know anything about its coverage or cost of its insurance. I do think that the idea of paying the holder of a health insurance to walk daily is very smart. All of this reminds me of a note I posted related, in part, to the fact that people who had dogs and took the trouble to walk them were healthier (see: Learning from the Demographics of Doggie Death). Here's a quote about dog-walking in Australia:

46% of households in [New South Wales, Australia] had a dog and, overall, dog owners walked 18 minutes per week more than non-dog owners. However, more than half of dog owners did not walk their dogs, and were less likely than non-owners to meet recommended levels of physical activity sufficient for health benefits. If all dog owners walked their dogs, substantial disease prevention and healthcare cost savings of $175 million per year might accrue.

So, if you are not interested in the Oscar insurance approach, another alternative would be to buy a dog and walk it daily. This should also improve your mood.

Retail Chain Drug Stores Ramp-Up Their Healthcare Delivery Services

For the last few years, the major retail pharmacy chains (i.e., Walgreens, CVS, and Rite Aid) have taken steps to position themselves as the first rung of the healthcare delivery system. They have begun to offer various types of walk-in, low-intensity services staffed by nurses or nurse practitioners. Pharmacists have also begun to provide flu shots and other type of vaccinations. CVS recently made a very bold statement by no longer selling cigarettes. Walgreens is offering lab testing on a pilot basis with Theranos (see: CVS Stops Selling Tobacco; Walgreens Works with Theranos for Lab Testing).

Similar entry-level healthcare services are also being offered in free-standing urgent care centers staffed by physicians that are competing, in part, with hospital emergency rooms. These facilities offer imaging and care of minor trauma (see: Rapid Growth of Urgent Care Clinics; Cost Competition for Hospital ERs).

The major retail drug store chains are thus going "all in" as convenient, local health centers and now also providing telemedicine-based physician services in selected stores in collaboration with MDLIVE (see: Walgreens moves into telemedicine with MDLIVE deal). For further reading, here's an article discussing the relationship between Obamacare and telemedicine: With ACA, Telemedicine In 'Perfect Storm' For Coverage). Below are some more details from a recent story about the wide range of services being offered by  the retail drug chains:

Drugstore chains have been expanding healthcare services to provide a way for patients to see doctors outside of normal physician hours without having to go to an emergency room for non-emergencies. Walgreens’ move to adopt MDLIVE as a telemedicine provider echoes similar moves by rivals such as CVS and Rite Aid, but it also supplements the company’s other initiatives.....Customers will be able to access doctors by email, text and video through Walgreens’ app for various acute conditions. Although the service is initially available to customers in California and Michigan, the plan is to roll it out to other states in the next year. MDLIVE got started in 2006 in Sunrise, Florida and has provided telemedicine services through employers such as Cigna. It also has a HIPAA-compliant system that helps payers and providers collect and share clinical data from patient medical records, lab results and in-home biometric devices for real-time risk assessments and wellness advice. Last month... [MDLIVE] acquired behavioral health “teletherapy” company Breakthrough Behavioral to add more specialized services. Several telemedicine companies have added mental health services and teledermatology to make them easier to access from home. It also offers a second opinion service. Walgreens has been developing a healthcare strategy with a goal of complementing physician services and to provide a way to share these touch points with physician practices. Last year, Walgreens began offering a service to diagnose and treat chronic conditions in its clinics. Diabetics visited the store an average of 20 times a year....It is also collaborating with Theranos to roll out physician-ordered diagnostic test collection centers at stores around the country. Rite Aid partnered with telemedicine provider HealthSpot for a pilot in its Ohio stores, CVS is doing a telemedicine pilot at 28 sites in California. Walmart is collaborating with Humana.

One of the most interesting questions from all of this is to what extent the competition from drug store chains will affect local hospitals and physician practices. I think it's really going to hurt, particularly in smaller towns for smaller hospitals. With this increasing competition in healthcare and CMS ratcheting down Medicare reimbursements, many small hospitals can no longer compete and are even declaring bankruptcy (see: Some Hospitals Experiencing Financial Distress and Even Bankruptcy). That's why many of them are seeking affiliations or mergers with larger regional hospitals. Such arrangement create referral possibilities for specialized care with patients returning to their home turf for primary care (see: Big hospital merger increases pressure on the little guys). Here's a quote from this latter article that helps to explain what is going on:

The economics of health care are shifting against hospitals as the payment model moves from the traditional fee-for-service, which rewards administering more care, to models that pay based on outcomes and reward providers for keeping people healthy. Individual hospitals and small systems have a harder time competing in such an environment because they lack the scale to reduce per-patient costs significantly.