The Theranos story continues to unfold in the headlines and will likely be the stuff of Harvard Business School cases for years to come. Here is a brief history of Theranos. and where they find themselves now. According to the WSJ, Theranos Inc. said it will shut down its blood-testing facilities and shrink its workforce by more than 40%.
The moves marks a dramatic retreat by the Palo Alto, Calif., company and founder Elizabeth Holmes from their core strategy of offering a long menu of low-price blood tests directly to consumers. Those ambitions already were endangered by crippling regulatory sanctions that followed revelations by The Wall Street Journal of shortcomings in Theranos’s technology and operations.
The shutdowns and layoffs could help the closely held company accelerate its shift to developing products that could be sold to outside laboratories. Ms. Holmes announced in August a new blood-testing device called miniLab, which is about the size of a printer but hasn’t been approved by regulators.
Unless you reside on a remote planet, by now you know that the Centers for Medicare and Medicaid Services has fined the Palo Alto startup, banned Holmes from owning and operating a lab testing company for two years and yanked the CLIA certification of its lab testing facility in Newark, California.
Many journalists have offered lessons to be learned from the Theranos ordeal. Yet, we continue to see examples of people who develop businesses and technologies that, it seems, have ignored them.
The latest postmortem is Bad Blood: Secrets and Lies in a Silicon Valley Startup John CarreyrouKnopf (2018)
For those just getting started, beware :
- Digital health companies that create products that are not clinically effective
- Companies that continue to tug on the FDA’s cape in an attempt to bypass regulatory rules that they don’t think should apply to them
- Unbridled hubris of some sick care entrepreneurs
- Just not doing the right thing, particularly when the company interest is placed above the patient interest
- Not knowing when and how to tell the truth to authority
- Massive PR and crisis mismanagement
- Getting caught up in the techno-hype and smelling too much of your own perfume
- Not acknowledging truth, regardless of its source
- Building a company around a personality instead of a product that makes a difference
- Not recognizing the difference in sick care compared to other highly regulated non-sick care industries
We have not seen the last of companies like Theranos who are fueled by dumb money and a rapacious technomedia industrial complex.
Doctors suffer from the same faults when they try to manage a patient with complications that are spiraling out of control. Many times, one bad decision leads to another. It is never comfortable presenting at Innovation Morbidity and Mortality Conference.
Physician entrepreneurs should take a breath and apply the lessons they learn at the bedside to crises in the boardroom. The clinical mindset is not that different from the entrepreneurial mindset.
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