by Elizabeth Matsui
We’ve watched the Theranos story unfold with interest. Beyond technical issues with their laboratory platform, it appears that Theranos may have other problems that help explain why the consumer product business model of the tech industry that has been so successful does not translate well to the health sector.
Most importantly, the provision of a service or product whose only stakeholder/audience is the consumer (such as transportation provided by Uber) is fundamentally different from provision of a health service or product in a major way: in the health sector, a successful company must not only deliver a service that pleases consumers, but must also meet, if not exceed, the requirements and expectations of other entities besides the consumer (i.e., the FDA, health insurance companies, medical providers). Because healthcare is an industry with massive information asymmetry, snake-oil salesmen can flourish without appropriate regulation.
Ultimately, if health tech is going to be the path forward for better health care, health tech companies must successfully navigate the regulation in this sector, have a deep understanding of the medical perspective on the problem being addressed, understand the payment system, and be grounded in medical science. To us in the medical field, it appears that some of the potential advantages of the Theranos model have been hyped by people who may not fully understand the way medical care works in practice.
For example, one of the stated advantages of Theranos is the use of finger sticks which require less blood to be drawn. However, finger sticks are more painful than venipuncture and the blood volume saved by doing a finger stick is small and a non-issue for almost all patients getting laboratory testing as outpatients. A second potential advantage, the notion of direct-to-consumer testing, has not been fully vetted by a team with expertise in medical science. These concerns, and others, have been addressed in detail elsewhere, but the bottom line is that these kinds of missteps rightfully erode the trust of patients, along with the other stakeholders in the health care sector, and in health care, erosion of trust is hard to recover from because health is a sacred commodity.
The health care system desperately needs help from all angles, but for health tech to be part of the answer, people with deep experience in the health care world need to be intimately involved in the development of new products. Otherwise there is a real risk that that the services and products developed by companies in this space will wind up being marketed as educational or for entertainment purposes only.