There’s never a dull moment in the healthcare world. While our lives as NPs and PAs may seem pretty routine, the industry we’ve chosen to work in is always changing. My husband also works in healthcare on the business side of things so in our household we like to keep track of the latest and greatest in the industry. One shining star we once followed has recently become more like a black hole.
Silicon Valley’s Rising Star
If you haven’t heard of Theranos, the company that once promised to provide hundreds of lab test results from a small drop of blood, I’ll give you some background. The company was founded in 2003 by a 19-year-old Stanford dropout, Elizabeth Holmes. In its first several years of operation Holmes, although young, was able to secure nearly $50 million from investors to get her company off the ground. By 2010, Theranos was valued at $1 billion. Having secured millions of dollars from investors with promising contracts in the pipeline and purported healthcare-revolutionizing technology, Theranos’ young CEO was dubbed “the next Steve Jobs”. The healthcare world buzzed anticipating the changes that quick, convenient, pain-free lab testing would bring. In fact, MidlevelU even published an article about the impressive CEO amidst the Theranos hype.
Secrets and Shady Practices
But, it turns out that the company was a fraud. The impressive piece of the equation was really that Holmes had duped rich investors, big name customers and the media. Claims like the ones Theranos was making and the kinds of investment dollars Theranos was raising were bound to attract attention. And, they did.
While most of this attention was positive, a pathologist blogger in Missouri, Adam Clapper, understood both the science and medicine of the industry Theranos claimed to be revolutionizing and seriously doubted the company’s claims. While Silicon Valley investors lacked the insights required to understand healthcare in a way that allowed them to invest prudently, Clapper saw the writing on the wall for Theranos. So, he tipped off Wall Street Journal reporter, John Carreyrou who did some digging. Carreyrou uncovered a company deep seeded in lies and deception all stemming from the praised CEO and her boyfriend/COO counterpart. Not only was Theranos making false claims to investors, it was providing patients with lab results known to be obtained using inaccurate machinery.
Blogger’s Tip Leads to $10 Billion Takedown
Clapper’s tip and Carreyrou’s investigation eventually led to a Medicare probe into Theranos for faulty claims, a lawsuit from investors and other company partners like Walgreen’s. The U.S. Securities and Exchange Commission (SEC) charged Elizabeth Holmes and her partner Ramesh “Sunny” Balwani with massive fraud in March of this year. Holmes as gone from the leader of a company valued at $10 billion and chartering private jets to facing criminal charges.
Takeaways for Providers
While the story of Theranos that continues to play out is one that’s entertaining at baseline, it also teaches several lessons. Importantly, for us as healthcare providers, it should be a story that teaches caution. Companies backed by venture capitol and run by CEOs with ivy league credentials may look shiny on the outside. But, we must be critical of the value they actually offer. Several providers along the way broke ties with Theranos recognizing inconsistencies in the services it provided and therefore protecting their patients. While Silicon Valley may be home to well funded healthcare startups, as healthcare providers who have actual face time with patients we must be vigilant when it comes to the services we provide, the recommendations we make and the healthcare resources used by both ourselves and our patients. Like Clapper, the pathologist-blogger from Missouri, put your critical thinking, experience and knowledge to work when you evaluate the latest and greatest claims and companies.
Last night, I stared Carreyrou’s new book about the Theranos saga, Bad Blood: Secrets and Lies in a Silicon Valley Startup and can’t put it down. As tempting as it was to pull an all-nighter to finish the story, I’m looking forward to wrapping up the tale of lies and deception this evening over a glass of wine. I highly suggest you check it out for yourself.
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