CEO SUMMARY: As THE DARK REPORT has continually reported, pathologists and medical laboratory professionals in the San Francisco and Phoenix markets were aware for most of the past year that Theranos was not delivering to patients and consumers the specific lab testing services it regularly touted in news stories and at conferences. Another sign was that, as of July 2014, it was known that Blue Cross Blue Shield of Arizona was including Theranos as a network lab provider, but not for lab tests using a capillary specimen collected by finger stick.
THERE ARE FEW SECRETS in the clinical laboratory testing industry. For that reason, much information unavailable to Wall Street analysts and venture capitalists about how Theranos was performing in the clinical marketplace has been known to a surprisingly large number of pathologists, lab executives, and medical lab professionals. This is true both in the San Francisco Bay Area and the Phoenix metro area.
That’s why THE DARK REPORT and its readers are not surprised by the major exposé published earlier this month by The Wall Street Journal. The exposé and Theranos’ response to it are outlined in detail in a related article in this issue. Were you surprised by the exposé? Did you have any prior concerns about Theranos yourself? Please let us know in the comments below.
Many pairs of eyes
In both San Francisco and Phoenix, Theranos has operated Theranos Wellness Centers in Walgreens pharmacies. At the same time, it is hiring phlebotomists and medical technologists who have spent decades working in labs in these communities and continue to have friends in these labs.
Add to this the regular flow of secret shoppers sent by labs into the Theranos Wellness Centers in Walgreens. These individuals often undergo parallel lab testing. That is, they have blood drawn at Theranos and at their clinical lab during the same window of time. Thus, when the lab test results from Theranos are received, they can be compared to the results produced by that secret shopper’s clinical laboratory.
Another reason why this source of market research into Theranos is significant is that the clinical pathologists, clinical chemists and medical technologists at these other labs understand the different causes of failures to produce an accurate lab test result. They know how specific types of failures in specimen collection, specimen transport, specimen preparation and specimen analysis might cause the lab test results to be inaccurate.
Assessing the Evidence
Thus, it was no mystery to lab professionals, particularly in Phoenix, that Theranos was struggling with its proprietary lab test technology. The results of parallel lab testing on the labs’ secret shoppers were evidence of that. Further, labs were being told by client physicians who had referred patients to Theranos that they were seeing instances where the lab test results produced by Theranos raised questions, given the patient’s history and/or repeat of the same lab tests by a CLIA-certified medical lab in the community.
Essentially, Theranos was, and is, being “tested” and watched daily by a highly-efficient intelligence network. Labs in the same community have a regular source of information that, in important ways, cannot be matched by journalists and financial analysts who may also be researching Theranos.
It was this intelligence network of labs and physicians that was tapped by THE DARK REPORT earlier this year. In April, we were first to report that patients visiting the Theranos Wellness Centers in Walgreens in Phoenix were not getting finger stick draws. Instead, nearly all patients were being drawn by venipuncture, using conventional Vacutainer blood collection tubes. THE DARK REPORT submitted a list of questions about these issues to Theranos in advance of publishing this story, but Theranos did not respond. (See TDR, April 20, 2015 and Dark Daily, May 4, 2015.)
Health Insurer’s Decision
Another confirmation of this situation was made public this summer. On July 8, Angela Gonzales, Senior Reporter at the Phoenix Business Journal, wrote a story titled, “Will insurers cover the new FDA-approved Theranos blood test?” This was a follow-up to the announcement by Theranos of FDA clearance for its Herpes Simplex 1 test.