Theranos Lab is back in the news cycle. And from the sounds of the reports, the controversy won’t be going away anytime soon.
What’s been relayed so far is that U.S. health inspectors have officially determined that there are deficiencies at the lab that’s located in Northern California. This is the result of inspections by the Centers for Medicare and Medicaid Services. But since the inspections first identified the problems, the issues haven’t been fixed.
Now, the lab risks being suspended from the Medicare program.
But what does this have to do with payments, you ask?
Well, if you recall a few months back, MPD CEO Karen Webster addressed this issue in her column titled: The Dangers Of Groupthink. While there’s no direct payments connection, from Webster’s take on the case back in October, the Theranos Lab case is also about what payments companies and investors can learn from it.
Comparing Theranos to the other Silicon Valley unicorns on the market, Webster remarked how the investigation “serves as a cautionary tale for payments’ innovators, the investors who throw money at them, and the companies that look to identify and integrate innovation into their own organizations.”
What Theranos had before the story broke last fall, according to Webster was:
Sounds like a lot of payments and tech companies that often fill this site, right?
And here’s the real kicker that Webster dove into last fall — which still is relevant in today’s investigation.
Webster wrote:
“Despite being a company with a mission to both innovate and disrupt science and laboratory procedures, how many scientists or lab experts do you think Theranos has on its board or employed as advisors?
That would be zero.
And how many articles do you think Theranos has published in scientific and/or academic journals?
That would be zero, too – even though the company has been around for more than 10 years.”
Webster even cited an associate professor in the University of Michigan’s Department of Hematology and Oncology, saying at the time that it’s “very uncommon” for a company to get to be as large as Theranos without substantial disclosure and validation of results of the diagnostic performance.”
“Yet, that hasn’t stopped investors from pouring $400 million into Theranos, valuing it at $9 billion. At that valuation, it’s equal to its well-established and FDA-approved medical laboratory brethren including Quest Diagnostics,” Webster’s commentary continued.
And that leaves us today — three months later — asking what happened at Theranos Labs. Did Theranos simply engage in “permissionless” innovation? And were (the likely scenario, Webster points out) the big bets on Theranos just the result of groupthink at work?
Groupthink isn’t a new concept — but it could very well be what happened in this case.
Webster writes:
“As a behavioral phenomenon, it first bubbled to the surface in scientific literature in the mid-1970s. Think of groupthink as consensus gone awry – when people in a cohesive group value conformity above all else. Members of the group then agree to get along only because being part of the group is more important and more valued than disagreeing with the group’s collective opinions or actions.”
This behavior, she concludes, may just be why no one ever questions what Theranos was doing and how it was still doing it.
“Theranos isn’t the only story where groupthink may be alive and well. Groupthink appears to be alive and well in payments,” Webster wrote in October.
But for now, this Silicon Valley unicorn seems to have its hands full fending off questions from regulators. Serving as a warning to other big companies with “proprietary” tech that impacts consumer’s overall well-being. Whether we’re talking payments, commerce or health, there’s plenty of risks when it comes to betting big on the unknown.
Especially when it comes with a big valuation.