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Comment by jhonovich | Hacker News Reader

"UCSF charges Theranos more than $300 for a comprehensive metabolic panel, said a person familiar with the matter. Theranos’s website shows that patients who get the same test at one of the company’s blood-draw sites pay just $7.19. A comparison of all the tests done by UCSF for Theranos shows that the company appears to be incurring losses on many of those tests."

If correct, anyone have a legitimate rationale for Theranos doing this?

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In order to compete against LabCorp and Quest Diagnostics, Theranos needs to offer a full range of lab tests. If they are still scaling up then it might make sense to outsource some tests even if they lose money doing it in order to build market share and test out their processes. And then they can gradually start doing more and more of those tests in house in order to bring costs down. (But I have no idea what's going on in Theranos or if they have legitimate reasons.)

how can they outsource it if their sampling process collects a much smaller volume than what other companies require?

By taking a full sample for those tests.

Basically, Theranos is the Jet.com of blood testing. Use VC money to order it from someone else for more than you're selling it for.

This is what we call a bleeding unicorn.

According to Wikipedia the comprehensive metabolic panel is a series of 14 tests:

https://en.m.wikipedia.org/wiki/Comprehensive_metabolic_pane...

"The tests are performed on machines based on the AutoAnalyzer invented in 1957."

Is there some reason that this should cost $300 58 years later? No Moore's Law in medicine?

It doesn't. You can go online and pay less than $30 for these tests, then drive to one of Quest or LabCorp's locations to get the blood drawn.

I suspect that what UCSF is charging Theranos includes a substantial markup on the actual test cost + overhead.

it's not possible to determine if that cost has increased or decreased using a single data point.

UCSF does not operate at the scale LabCorp and Quest do and hence cannot benefit from economies of scale. Also, Theranos might not have the option to outsource to one of the big two, and hence operates with the smaller entity, which charges them a "special" fee, given the "special" situation. In other words: it is a price dictated by business decisions and not based on economics.

PS: The WSJ article is more of an effort by Walgreens to do damage control and try to distance themselves from Theranos. Most likely their brand took a hit from this association. (also, it looks like Walgreens loaned Theranos $50mil for this deal)

"The tests are performed on machines based on the AutoAnalyzer invented in 1957."

That's like saying that modern PCs are based on the IBM 360 architecture from 1964. To the extent it's true, it's true in a way that makes sense only to a tech-illiterate journalist.

That quote comes from the Wikipedia article, not the WSJ.

That doesn't make it any more meaningful. It's a ridiculous thing to say in any context.

No argument there...just wanted to point out that the author of the submitted article didn't make such a claim, as that would cast some doubt about the assertions of the reporting.

True, for some reason I read his post as both linking to Wikipedia and quoting from the original article; my bad.

Loss-leader?

I assume it's not because they want the samples, unless it's some kind of... CIA Fake vaccination-drive v2.

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