Tech Giants all have their Eyes on Healthcare. How does it affect you?
Large data companies like Google, Apple, and Amazon are making huge strides into healthcare as technological advancements have enabled digital healthcare to advance rapidly.
Here’s what you need to know about the value these tech giants can generate, and what this means for you and the future of the healthcare industry.
Why move into the healthcare space?
It’s no secret that healthcare systems worldwide are under pressure. With a rapidly aging population, a growing shortage of healthcare workers, and chronic diseases on the rise, there’s a need to rethink healthcare to ensure patients get the support they need — and demand.
Healthcare is one of the biggest industries in the world, and when a major, global problem manifests itself within this market, you can be sure that the big tech mastodons will notice. The healthcare system as we know it is rife with administrative inefficiencies, opaque prices, and customer dissatisfaction. Despite the regulatory difficulties involved in operating within this space, it contains several promising prospects for large companies that have already proven their models on a large scale in different markets.
Not only do big tech companies like Google and Amazon have their global market presence as an advantage — they’re also data giants, and in today’s digital age, data is gold. Their access to vast amounts of data means they know customers like you and I better than we know ourselves. And having a constant touchpoint with users gives the companies an indication on their users’ health profiles and the opportunity spaces within the market, which makes for a natural expansion into healthcare.
Medical data in itself is exploding. According to IBM Watson, medical data is expected to double every 73 days by 2020. Furthermore, each person will generate enough health data in their lifetime to fill 300 million books. Physicians simply cannot keep up with the growing amount of information available. Therefore, there’s a huge need in structuring and understanding this data to build a new infrastructure for the future of healthcare.
So what are they doing in healthcare?
Healthcare is a trillion dollar industry and serves as the last digital frontier to optimise practises and processes based on data. This makes for a perfect fit for large data companies to expand their existing business.
Amazon, Apple, Alphabet and Uber, for example, all provide different angles on data companies leveraging their existing model into healthcare.
Amazon has partnered with JPMorgan and Berkshire Hathaway to set up a new venture focused on enabling better healthcare for their employees at a lower cost point. The venture has roughly 1.2 million employees. Experts believe that the venture will become a self-insured plan for their employees, which means that the companies will be funding their own insurance and not using 3rd party contractors. Caroline Pearson, Senior Vice President at Avalere, said:
“Instead of contract out all the benefit management services, they will use it as an incubator to test new models for payment and care delivery”.
By doing so, Amazon will leverage its software savviness for a better administering platform for health, which could enable many new technologies within healthcare. In the long-term, it can become a pivotal part of the distribution chain, which links well to the acquisition of the online pharmacy Pillpack in 2018.
The smartphone darling Apple is also focused on improving health for their employees with the plans to open clinics in California to deliver a world class health experience. Apple has taken a more holistic approach with a focus on population health and preventive care as the drivers for the clinics. This will drive down costs for Apple as well as being a way of utilising already existing infrastructure in Apple Health App to keep its employees healthy.
Google’s Alphabet has multiple bets in healthcare. For one, the company Verily, which was formerly a part of Google X, has a broad focus on tech in disease management and how that applies to life science. The tendency for Alphabet in healthcare seems to be around structuring data and AI, and applying this to disease detection, new data infrastructure etc.
The transportation network company Uber has focused their health ambitions in Uber Health. The problem they’re trying to solve is decreasing no-shows. Every year, 3.6 million Americans miss doctor appointments due to unreliable transportation, and no-show rates are as high as 30% nationwide. The Uber Health solution allows healthcare organisations to provide reliable, comfortable transportation for patients. And while transportation barriers are common across the general population, these barriers are greatest for vulnerable populations, including patients with the highest burden of chronic disease.
“We think every rideshare company should provide a way for the healthcare industry to utilise their product,” Head of Uber Health, Dan Trigub, said.
What the impact of these health initiatives will be is still unclear. Uber Health noted that their model saved Boston Medical Center $500,000 by replacing shuttle buses between campuses and clinics, and patients said they were more satisfied with the services. However, another study conducted by researchers at University of Pennsylvania demonstrated that patients did not actually attend more appointments because of rideshare services. Regardless, it’s clear that Uber and other ridesharing services will be making more inroads into the healthcare system in the future.
Okay, but how will this affect me?
Whether you’re an investor, a pharma company, or a startup, these tech giants will impact you in one way or the other.
I see three trends that will play an important part in how to understand the opportunities that these companies bring to the healthcare space:
1Tech giants can push regulatory barriers
Healthcare is notoriously slow in adapting technology, and there are many hurdles in implementing new digital solutions into a traditional system. The data giants have the muscles to help push these boundaries so we can get more innovative products in the hands of patients faster. Don’t worry — the regulatory guards won’t fall as they serve a key role in ensuring the safety of patients. Tech giants will, however, put more pressure on the system to optimise the approval process.
Take Apple as an example. In 2018, the company received their first FDA approval for their ECG monitor in the Apple Watch and created a huge splash in the media even though AliveCor had a product in the market already. This is a good example of the interest in healthcare that these companies can help push forward.
These giants are also not afraid to move their model outside the traditional path, as they all have an existing user base to leverage. As with the Amazon, JPM and Berkshire partnership, they already have 1.2M people to cater their solution to, which is a great head start.
2 Taking healthcare to your smart devices
The services, the data companies are interested in offering in healthcare, resemble their existing businesses as they’re looking to develop platform technologies.
Amazon aims to build a launchpad for healthcare payments and care delivery. Apple is doing this already with the Apple HealthKit. Alphabet is using their data structuring and AI capabilities to enable healthcare organisations to better understand the potential of their data. And if Uber’s grand vision is to become the preferred means of transportation for patients, you would expect integrations with multiple other technologies if there’s a need for quick assessment of a patient’s health.
3 Tech companies will spark more investments and partnerships in healthcare
All the data companies are bringing their existing mindset of investments towards healthcare. Since 2012, the top 10 tech corporates in the US have participated in 209 healthcare financing deals and have spent a total of $4.7B on 25 healthcare acquisitions.
- Amazon’s largest involvement in the healthcare sector came this past June with its announced acquisition of the medication packaging and distribution company, PillPack. This can potentially push Amazon into the medication prescription market.
- Apple has mainly focused on expanding its internal healthcare services: HealthKit, CareKit, and ResearchKit. Apple acquired the sleep monitor company Beddit in May 2017 as well as the personal health data platform Gliimpse in 2016.
- Alphabet continues to be the most active tech companies investing in healthcare in the US. Primarily through Google Ventures, Google has participated in 14 of the 15 largest healthcare raises in 2018 that included big tech companies.
- Uber has focused on building the infrastructure themselves and then expand with a partnership model. There are already multiple companies using Uber Health as a service, such as patient recruitment platforms for clinical trials.
Enabling more high level partnerships and investments will push more capital into the healthtech sector making it more attractive to engage with for startups as well as venture capitalists that are involved in the data companies’ main area of business.
What’s next?
These three trends, that big data companies have set in motion, will all help push the digital health industry forward, enabling others to go to market and provide valuable healthcare services. Of course it’s not going to be easy, and the fast, disruptive approach of tech startups doesn’t apply the same way to healthcare that deals with people’s lives, thereby requiring a unique set of regulations.
The market, however, is just opening up, and we’ll see huge advancements in digital health over the next years — both by smaller and newly created companies that are leveraging large companies’ infrastructure, and by larger companies from different industries using their know-how to push for changes on the healthcare scene.
Everyone in the space is incentivised to move the needle forward, and investments, partnerships and new initiatives within healthcare are growing fast.
One thing is certain: Healthcare is transforming. We have the technology to drive meaningful change, and we need to ensure that this change first and foremost will benefit the patients.
In LEO Innovation Lab, for example, we have a mandate to put the patient first. To do so, partnerships and interoperability are key ingredients in pushing the needle towards better patient care. So I for one welcome the large tech companies to the healthcare market — as long as the patients remain the primary winners in the digital health transformation.
