Healthcare in the US is an incredibly saturated industry, as evidenced by our own backyard here in Pittsburgh with UPMC and Allegheny Health Network/Highmark. Competition is intense, margins are low, and combined with new healthcare legislation, including mandated health insurance and changes/decreases in the way hospitals and healthcare providers are reimbursed – this is a red ocean industry. It’s all about operational efficiency and market share, competing for patients while trying to adjust to the government push to move patient care to an outpatient model.
Someone who has created a blue ocean in this field is Elizabeth Holmes, the 31 year old CEO of Theranos. Holmes dropped out of Stanford University at age 19 with plans to revolutionize the blood testing industry. Holmes lost an uncle to cancer that was diagnosed too late for meaningful treatment, and she wanted to pursue a better way to detect diseases earlier. “Blood testing has not changed since the modern clinical lab emerged in the 1960s.” While traditional blood tests require needles, vials of blood, and have long turnaround times, Theranos uses microfluidics technology to evaluate drops of blood collected by a simple finger prick. “Faster, cheaper and less painful than other tests, it can quickly test a drop of blood at a fraction of the price of commercial labs, and can run up to 70 different tests.” Homes also reasoned that people would be more likely to go through with testing if it was easy and accessible.
The creation of this niche doesn’t stop with just the method of blood testing. Theranos is changing the way the game is played in the industry. In 2013, Walgreens announced a partnership with Theranos, rolling out over 40 Theranos Wellness Clinics within its stores over the last two years. And more recently, “Holmes was instrumental in passing a law in Arizona this past April that allows patients to get a blood test without a doctor's order, a requirement in other states.” Instead of publishing large peer reviewed studies as is traditional in clinical work, Holmes submitted the company’s technology directly to the FDA, which is not required for labs. In the interest of transparency, the company also posts the prices of its tests on its website, which is nearly unheard of in the healthcare industry. Holmes and her company have approached the field in a way no one has done before.
All of this has resulted in amazing success for Theranos and Holmes. The company has plans to roll out over 8,000 wellness clinics in partnership with Walgreens, and has clients with names like Pfizer, Cleveland Clinic, and the U.S. military. She is the world’s youngest female billionaire, and her company is worth $9 billion. Holmes has achieved a the type of success as Ford did in the early 1900’s, taking a stuffy, flawed model and turning it into something efficient, affordable and accessible to the masses.