By Allison Proffitt 

 

August 12, 2014 | NASHVILLE—Sitting across a conference table from Elizabeth Holmes, what strikes me most is her level of control. 

 

The story of Theranos’ inception is one of passion for a new mode of health care delivery, spearheaded by a fascinating leader. “Disruption” is a favorite descriptor of anyone writing about the technology and its promise. But in person, the founder and CEO of privately-held Theranos is anything but disruptive. She’s polite, soft-spoken and measured. When other people talk, she listens intently. She takes notes. She makes unwavering eye contact. Yet, you get the impression that none of your 

questions is unexpected, none of your suggestions novel, none of your scenarios unanticipated. 

 

I met Holmes last week when she visited Nashville, Tennessee to speak to the Nashville Health Care Council Fellows, an association of 260 health care leaders seeking to advance the city’s $70 billion health care industry. It wasn’t Holmes’ first introduction to the city. Theranos did some early work with the Sarah Cannon Research Institute, she said. 

 

Then, and now, Holmes explained, the company’s mission has been the same: to make actionable health information accessible to everyone at the time it matters. The company is working to do so through a dramatically redesigned laboratory testing paradigm that is fast, cheap, and requires smaller amounts of blood than ever thought possible. 

 

 

 

 

What “accessible” practically means is a question Holmes and Theranos have spent a great deal of time on. “We spent a lot of time thinking about what access means, and the first element of that was, for us, cost. We believe very strongly that every person should have the ability to afford a lab test,” she said.   

 

Patients have come in to Theranos Wellness Centers—currently located within Walgreens pharmacies—with requisitions for old tests that they haven’t been able to fill because either they lack insurance, or their deductibles are too high, Holmes said. When patients are worried about a $400 test and they see the list price of $23, “The look on their face is humbling.”  

 

Cost is certainly one of the most dramatic talking point of Theranos’ work, if only because it’s one of the few aspects that is freely discussed. 

 

The Theranos website lists 213 lab tests on its test menu, though those familiar with the company’s offerings say that all of the 1250 Medicare tests are being refined for Theranos technology. Every test is listed with its associated cost, and CPT code. The least expensive tests listed are hemacrit and hemoglobin tests, each for $1.63. The most expensive is a respiratory virus panel for $286.46. 

 

Originally, all of the tests were priced at least 50% less than Medicare and Medicaid reimbursement thresholds. “Increasingly,” Holmes said, the tests are priced, “much lower than that.” In some cases, she conceded, the tests are 90% less than the Medicare and Medicaid reimbursement rates. 

 

The next element of access on which the Theranos team focused was revolutionizing phlebotomy—the process of accessing a vein for a blood draw. Holmes, whose own fear of needles is well-reported, sought a way to “eliminate the need for people to be stuck with big needles, and the requirement for very large tubes and tubes of blood.” 

 

The technology isn’t just about comfort; less invasive procedures increase compliance. “That’s a really big deal, when you think about it practically,” Holmes said. 

 

The amount of blood needed for a Theranos test is almost laughably small. In her only concession to showmanship, when prompted, Holmes pulled a small green ring box out of her bag. In its custom interior sat the Theranos “nanotainer”: a vial smaller than a tastefully-manicured fingernail.  

 

The final component of access is convenience, Holmes said. After signing a partnership last fall with Walgreens, Theranos now has 30 Wellness Center retail locations—29 in Walgreens in Arizona, and the flagship location in Palo Alto, California—in addition to the company’s main office and lab space. 

 

“Walgreens is our anchor partner, so we’re very focused on that,” Holmes said. The drug store chain, which acquired Alliance Boots earlier this month, will now have about 11,000 stores in 10 countries. It’s not a bad anchor partner to have. 

 

“But as a company,” Holmes continued, “We’ll be in many different locations.” The company also has collaborations with three hospital groups to use Theranos as a reference lab, partnerships Holmes called a, “massive undertaking.” 

 

“Our retail framework that we’re building is designed around [physical access],” Holmes said. “When we did our programs with Tennessee Oncology and Sarah Cannon, we would serve cancer patients who would drive hundreds of miles to come in to Sarah Cannon. The ability to decentralize the testing framework, so you can get data generated closer to where people live increases compliance.” 

 

It’s not just location, but also timing that matters. The Wellness Centers in Walgreens are open 7 days a week, late at night and early in the morning, Holmes said. Arizona hosts the most, because Walgreens has a large presence in and around Phoenix, and the stores there tend to be roomy enough for Theranos to have ample space to house and design its own Wellness Center experience. This year, Holmes expects to be the largest lab in Arizona. 

 

What Access Enables 

 

Solving access issues—cost, compliance, timing—means more people will follow through with doctor-ordered tests. And more tests means more data. 

 

“We focused on building a standardized laboratory framework in which it becomes easier to look at data over time and specifically to generate high integrity laboratory data that can be interpreted longitudinally,” Holmes said. 

 

The testing silos that have grown over time—different labs with different reference ranges and different analytical systems—can make it hard to aggregate and interpret individual patient data, she explained. 

 

“A huge element of our work has been in standardizing the laboratory framework to eliminate much of the pre-analytic error and variability that contributes to noise in laboratory data, as well as the standardization of the tests themselves. So that when we report a result out, we’re reporting that result with the coefficient of variation on that test, so that as physicians look at it, it can be interpreted in a longitudinal context.” 

 

Running tests with a tiny amount of blood can change the way testing is done, Holmes said. Instead of multiple office visits and multiple lab processes, physicians can order tests in an if-then progression that includes follow-up tests if an early test result meets a certain threshold. 

 

Already in Palo Alto, patients can stop by the testing center first, have the required lab tests completed, and then see their doctor once results are in to finalize a treatment plan. The target for data return to physicians is “significantly less than four hours,” Holmes said. “It’s making the visits much more actionable. That actionability combined with the longitudinal aspect of our data is something that can help to improve the utility of this information to physicians.”  

 

If that doesn’t sell physicians on a new lab testing paradigm, Holmes believes insurance company pressure will. “Insurance companies play a big role in what physicians ultimately decide to do in terms of lab tests,” Holmes pointed out. “But what we’ve found in our experience so far is that the ability to have actionable data at the time you see a patient, and to transform the workflow that they have right now—in terms of drawing blood, sending it out, waiting for it to come back, getting results, sending it out again—matters to these doctors in the context of being able to practice effective care.” 

 

The DTC Angle 

 

And if physicians still aren’t on board? There’s always the direct-to-consumer route. Arizona, where most of Theranos’ retail locations are, allows direct-to-consumer testing, but Holmes says the company has not taken advantage of that route yet. 

“One of the things that has been really important to us, is to build an pathologist-centered model. When people first hear about this, they think what we’re trying to do is eliminate the need for a lab. That’s exactly what we’re not trying to do. All of the technologies that are available today for microsample or finger-stick based testing are waived. The data does not go through pathologists. You don’t have the oversight or the ability to look at controls or replicates or calibrators or outliers, and more importantly interpret some of the data that you see through pathologists. 

 

“We think if we can build a model that enables decentralized testing and pathologist-centric testing, we’re going to establish the highest quality standard of care,” Holmes said. “One element of the question of which test, and how many tests, and what do they mean, to us, is having a pathologist in the middle of that. We’re working very hard and partnering with hospital groups and pathologist groups… to make it possible to have the model be pathologist-centric… so the most clinical utility is going to the physician.”