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Disruptive Innovation or “Woo”?

3 Mins read

640px-Distillation_of_dry_and_oxygen-free_tolueneIs it the best thing since sliced bread? Is it really a better mousetrap?

640px-Distillation_of_dry_and_oxygen-free_tolueneIs it the best thing since sliced bread? Is it really a better mousetrap? Does it really have that special sauce?

The term “disruptive innovation” gets bandied about quite a bit, and in recent weeks and months, it has been applied to the designs of Patrick Soon-Shiong and Elizabeth Holmes on changing medicine and health care. The former is focused on cancer diagnostics and treatments, the latter, on blood tests. Each has been the subject of paeans in the press, but questions have been raised — less broadly — about the claims they are making. Setting aside for the moment the question of whether talk of disruptive innovation is in itself “woo,” let’s take a look at these two entrepreneurs and their current projects.

Buried in Ken Auletta’s New Yorker profile of Holmes and her company, Theranos — which is working secretively on developing the technology to perform a full range of blood tests on just a pinprick’s worth of blood (she’s always hated needles, and figures the high percentage of folks who never get blood tests that are ordered by their docs is driven in part by the same basic issue) — is the question of whether the company’s lab test methodologies and accuracy have ever been the subject of regulatory or peer review. The company apparently doesn’t say much on the question of peer review, though it has submitted its tests for FDA review. But guess what: the FDA doesn’t review lab tests. (Sounds like surgical techniques not being subject to any particular review mechanism. Yes, I’m a recovering regulator, but even I recognize that you can’t regulate everything. Some things will get used more widely if they become more accepted in the relevant comunity due to testing and peer review. If Theranos wants to grow, it will ultimately have to open the kimono, at least just a bit.) So for now, Theranos is valued in the billions based on a technology that has not been publicly vetted.

Also instructive is Matthew Herper’s recent Forbes blog post on Soon-Shiong. It’s titled: “Here Is What ’60 Minutes’ Didn’t Tell You About The Billionaire Who Is Trying To Disrupt Cancer Care.” Among other things, other folks are actually already doing gene sequencing and personalized cancer therapies — the stuff he plans to do in the future (though he may have the resources to do it on a larger scale) — and Herper calls out 60 Minutes for not pressing Soon-Shiong on some of the hard questions — and some of the easy questions. He wants proof. He wants more clarity, less hype, in marketing. He also calls 60 Minutes to task for basically airing a promo for a company that will soon be taking a piece of itself public. (Read the whole post. And Herber’s Forbes cover story on Soon-Shiong, linked to from the post. You should read Auletta’s piece, too, but, I know, I already told you it’s in the New Yorker, and you’re thinking, man, I don’t have a week to spend on this …. Just do it. Among other things, you’ll love reading about board member Henry Kissinger’s realpolitik advice to the college dropout CEO.)

Where science and business collide we have the intersection of the open, peer-reviewed model of knowledge development and dissemination, and the for-profit stealth model, where market advantage includes not only having a good idea, but playing one’s cards close to the vest and being first to market. Throw health care into the mix and we have an added layer of concerns regarding safety and efficacy, as well as broader cost, quality and access questions. Some of us look to Big Government for oversight on these matters. Some of us balk at the very idea. Some of us are somewhere in the middle.

As we collectively try to rationalize the health care nonsystem, and get a handle on runaway costs and move quality levels that are not where we’d like to see them, it is natural to hail the disruptive innovators, because they promise great things. It should be just as natural to stop and ask: Really? Can you show me how that works? Or can you at least share with me some non-anonymous external validation form a trusted source? A big chunk of the nearly $3 trillion US health care economy is paid for by federal and state government. A growing chunk of the balance is paid out of pocket by individuals, and much of the remainder is paid by self-insured employers, who are spending money on behalf of individuals. The point is: accountability matters. As an FDA official quoted by Auletta noted, what we’re talking about here is not an iPhone, it’s “more consequential than a consumer product.” We need to find a better balance between competing interests when it comes to ensuring that these innovations don’t disrupt all over you and me.

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