CEO SUMMARY: One of the biggest unknowns in the lab testing industry today is Theranos, the lab testing company based in Palo Alto, California. It says its proprietary technology is poised to transform the lab testing experience for patients and physicians. It says it can perform hundreds of lab tests, using a finger stick collection with a micro-specimen and return results in four hours. Here is the actual experience of your DARK REPORT editor, who had Theranos perform lab tests for him and his physician.
MANY CLINICAL LAB EXECUTIVES and pathologists are asking tough questions about Theranos, the company in Palo Alto, California, that boasts it can provide medical laboratory tests to patients at 50¢ on the Medicare Part B dollar—and do it without a venipuncture and return results in four hours!
Since it made its media debut last September, Theranos has enjoyed sweetheart business profiles in such nationally-prominent media outlets as The Wall Street Journal, Wired Magazine, USAToday, and Fortune. However, clinical laboratory scientists of all disciplines and fields have commented that these stories about Theranos are one-dimensional.
To date, this high-profile media coverage has yet to address the topics of highest interest to the laboratory medicine profession: What is the nature of the diagnostic technology in use at Theranos? What are the specifics about how the company validated the accuracy and reproducibility of its proprietary diagnostic technology for use in clinical settings? What is its strategy to meet federal and state laws and regulatory requirements for the lab testing activities it plans to deliver via 8,200 Walgreens pharmacies and other settings?
Given this vacuum of knowledge about Theranos and its current clinical lab testing operations, this reporter decided to do something that no reporter from any of the major media sources writing detailed profiles about Theranos is believed to have yet done: walk into a Walgreens anonymously, have some medical laboratory tests performed, and compare the actual service delivered to this patient today versus the benefits the company has emphasized in its media coverage.
To provide context to this real-world experience, when interviewed by various media outlets, Theranos emphasizes that patients enjoy the following benefits when using the company’s medical laboratory testing service:
- No need for a venipuncture. A simple finger stick is all that is required.
- No need for 3 to 4 vacutainers of specimen. A micro-sample is adequate.
- Theranos’ proprietary test technology returns answers in four hours.
- Theranos says it can perform “hundreds of laboratory tests.”
- Theranos is charging just 50% of the Medicare Part B lab test fees for the tests it performs.
Lab Testing by Theranos
It was a sunny day in March when I walked into one of the two Walgreens pharmacies in Palo Alto, California, that offer the Theranos medical laboratory testing service. What follows is my experience, taken step-by-step.
Upon walking into the pharmacy, located on University Avenue in Palo Alto, I spotted the Theranos sign in the rear, next to the pharmacy counter. There were three windows. Two windows were labeled “Prescription Drop Off + Pick Up.” The window at right was labeled “Theranos Check-in.” To the right of this service counter was a small waiting room for Theranos patients and behind that was a private room where the Theranos specimen collection is done.
I presented at the Theranos check-in window. I had a Theranos laboratory requisition signed by a physician. On this requisition were six tests. An individual who identified himself as a Walgreens pharmacist assistant greeted me.
Lab Test Registration
I was identified as a “walk-in patient” because my information was not entered into the Theranos system before my arrival. The assistant took the paper lab test requisition and began to enter data into a computer. I was handed a clipboard with the standard “fill out this information” request for routine disclosures, including HIPAA. I did this in two minutes as I stood in front of the window (while the pharmacy assistant continued to enter my information).
The assistant then left the window and a moment later the pharmacist walked up and continued my lab test transaction. She worked with the computer and printed out several documents. She informed me that my specimen collection would need to be done with a regular venipuncture (not a finger stick, as Theranos represents). I agreed to the venipuncture process.
Next, my total charges were identified and I made payment with cash. I was handed a receipt and told to wait in the reception room.
It should be noted that, at no time during this transaction, did any Walgreens or Theranos employee call my attention to the fact that Theranos would not be performing 100% of the lab tests ordered by my physician. Thus, I went to the next step unaware of this fact. It would mean that, as a patient, I would need to go to a second laboratory to have that lab perform the tests that Theranos did not.
The time from presenting at the Theranos Check-in window until completing that stage in the transaction took 11 minutes.
Within a minute of my entering the waiting room, a phlebotomist opened the door and invited me into the specimen collection room. After doing a positive patient identification, the phlebotomist notified me that my collection would require a normal venipuncture and asked if that was acceptable to me. I said yes.
Per California state law, this individual was certified as a phlebotomist. She was professional and competent in all respects. As part of the collection, I asked which vacutainers were associated with which tests. The phlebotomist answered that she did not know that information, because she does not see (on her computer order screen) which tests were to be performed. Rather, she only sees what collection supplies Theranos has determined are necessary to fulfill my lab test order.
What is interesting about this aspect of the Theranos specimen collection protocol is that the phlebotomist would not be able to confirm, for example, some basic and relevant facts that could affect the accuracy of the lab test results. One example is whether the patient had been fasting if a cholesterol test was being performed.
Results Ready ‘In Hours’
The venipuncture went without incident. (Phlebotomists always tell me that I have good veins!) I asked when my results would be ready. I was told that a Theranos courier would pick up the specimens and take them to the Theranos laboratory in Palo Alto (which is a CLIA-licensed laboratory). She said the results would be ready “in a few hours” and would be transmitted to my physician. Theranos would also notify me when my lab test results were ready to view on its website.
Based on my experience as a walk-up patient, here is how the Walgreens and Theranos encounter can be summarized relative to the key benefits the company says it delivers:
- Venipuncture required (Theranos was unable to collect with a finger stick).
- 3 to 4 regular vacutainers collected (Theranos was unable use its micro-container collection device).
- Unable to return lab test results in 4 hours. (Collection was done on a Thursday afternoon. Lab test results were transmitted to physician and to me on the following Tuesday).
- Theranos was unable to perform all six lab tests ordered by my physician. That required me to visit two labs (and endure two separate venipunctures) in order to complete the full set of lab tests ordered by my physician.
- Theranos did charge 50% of the Medicare Part B lab test fees for the tests it performed.
Assume that I was a patient that arrived at the Palo Alto Walgreens pharmacy with expectations that Theranos could perform all the tests my doctor ordered, would only need to prick my finger for a micro-specimen, and would report the lab test results in four hours— all for a price that was half of Medicare Part B prices. How well did Theranos perform? You can judge for yourself.
To my knowledge, this is the first published report by an individual who has visited Theranos as a patient. I know that labs in San Francisco and Phoenix (where Walgreens pharmacies offer Theranos lab testing services) have sent secret shoppers to have lab tests done to assess Theranos as a competitor. THE DARK REPORT invites lab professionals to share with us their own experiences with Theranos. Letters or calls to the editor with comments or insights about Theranos and its business plan are also welcome.
At This Time, Theranos Operates Like Regular Lab
AT THIS POINT IN ITS OPERATION—and independent of its proprietary technology—Theranos operates as a regular laboratory.
It has patient service centers that are staffed by phlebotomists in certain Walgreens pharmacies in California and Arizona. It must pay to transport specimens to its CLIA lab in Palo Alto. It must also have an electronic lab test reporting capability to interact with ordering physicians and with patients.
This necessary infrastructure is why some pathologists and lab executives wonder how Theranos—with a cost structure comparable to that of other labs—can offer lab tests at 50% below Medicare and cover the full cost of testing.