Gary Passama

Gary Passama retired as president and CEO of NorthBay Healthcare on March 31, 2017. An active blogger since 2010, here’s a collection of his work.

A Significant Wellness Play

November 24, 2015
 

There has been a great deal of media coverage of Theranos, a Silicon Valley company that touts its technology which it believed reduces the time and cost of blood tests. Theranos founder, a Stanford drop-out, managed to convince otherwise savvy venture capital firms to invest huge amounts in her company over the past few years. 

Theranos first came to my attention when one of my nieces, who is a clinical lab scientist, asked me about the company.  She was considering applying for a position there.  In those early days, business media were all agog about Theranos and its purported potential for great profits. Theranos was potentially a huge disrupter in the laboratory test business.

Several big companies fell for the Theranos’ story line that its instrument could process blood tests much more cheaply and without having to draw blood from a vein in the arm. The fear of the needle would be no more.  A major drug store chain even opened up more than 40 “clinics” in their stores to offer the blood tests.

Recently it was revealed that a supermarket chain had invested more than $350 million in clinics in their stores to offer the painless and cheap tests. The supermarket CEO referred to the clinics as “a significant … wellness play.”  Now it appears the supermarket company’s investment in clinics is down the drain. Tests done by Theranos’ instrument produce unreliable results. You can go to the supermarket chain’s local stores here in Solano County and see their now-closed clinics.

The feds are involved now. Theranos is using its instrument for only one test and doing other tests the old-fashioned way using other companies’ instrumentation. 

It is amazing how money flows to those peddling untested ways to provide health care. Venture capitalists who did not understand health care were convinced by a 23-year-old college drop-out that she had a way to disrupt a complex, highly regulated industry whose services carry great impact on decision making by physicians and their patients. 

Health care should be more than a “significant wellness play.” It is not a place in which amateurs play their money games.

 

Comments

 
  1. Ryan
    November 25, 2015 at 02:28
     

    How about ex-hedge fund manager who jacked up price of life saving drug by 5,000 %?

     
 

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