Healthcare spending is projected to rise by 5.3 percent in 2018. According to CMS, the spending was $3.5 billion in 2017. Moreover, the projections indicate that the average yearly increase in spending will be around 5.5% and that the total spending would contribute close to 20% of the GDP by 2026. This spending needs to be curtailed and there is a requirement for cutting-edge technology to drive down cost, improve efficiency, and serve patients better. This is one of the primary reasons tech giants are looking into the healthcare space. This argument is not without substance. Recently there have been a number of activities which suggest that tech giants like Alphabet, Amazon, and Apple are focusing on the healthcare space:
Some factors that drive the involvement of these giants in the healthcare space are listed below:
- Healthcare sector is still lagging behind other sectors in terms of technology adoption and the increased penetration of consumer-grade digital technology across strata is an added advantage.
- Tech giants when compared to the HIT giants like Cerner, EPIC, and GE have more experience with advanced technologies like mobile, UX, IoT, and AI. When it comes to end users (members), they are better recognized and trusted. When the time comes, this trust and recognition will translate into adaptability from the stakeholder’s end (members and providers). Moreover, tech giants understand the true meaning of patient centricity.
- Tech companies have the opportunity of starting from scratch, and learning from the mistakes of the existing HIT veterans. They will not have legacy systems to start off with, existing business models to stick to, or existing customers to please. They have the opportunity to start from the ground up.
- Synergies with existing businesses
These factors should be convincing enough for tech giants to enter and disrupt the healthcare space. That said, there are a number of regulatory concerns and all the systems and processes will be critical, with minimal scope for error. These are some of the areas healthcare IT companies might look at before making their entry.
Amazon, along with JPMorgan Chase and Berkshire Hathaway, entered into a partnership with the twin goal of driving down healthcare cost for its employees and their families and improving employee satisfaction. According to certain healthcare industry experts, Amazon’s expertise in technology will play a big role in this venture and the same will be used to create a state-of-the-art technology solution or platform to enable this quest. In mid-2017, Amazon also set up a secret lab especially for healthcare innovation named 1492 and also onboarded a number of healthcare SMEs for the same. Amazon has partnered with Merck to push Alexa developers to create skills which will help consumers with diabetes to manage their health better. Amazon has strong logistics, distribution framework, and infrastructure, and it already sells general medical supplies and equipment. This would be an added advantage in case it decides to explore other avenues in the healthcare industry.
Alphabet, on the other hand, has three subsidiaries that focus on healthcare i.e. Verily, DeepMind, and Calico. Verily develops tools and platforms to enable effective data collection and data analysis. The focus is on timely decision-making, effective interventions, prevent, and predict disease onset and progression. The projects they work on are classified in the following areas – sensors, interventions, health platforms and population health tools, and precision medicine. DeepMind is a leader in artificial intelligence. Their division DeepMind Health works on mobile tools and AI research to help hospitals get patients from test to treatment as quickly and accurately as possible. Calico is an R&D company that focuses on utilizing advanced technologies to understand aging. The knowledge gained will be used to enable people to lead long and healthy lives. Apart from the ones mentioned above, Google acquired Apigee. One of its products, “Apigee Health APIx,” helps providers connect with app developers to build FIHR-API based solutions. This is Google’s long-term play to address the issue of interoperability in healthcare.
Apple recently announced that it will be launching primary care clinics called AC Wellness for its employees and their families. The primary care group is run independently and will initially serve Apple's employees in Santa Clara County. The overall focus is on population health and preventive care. On the technology front, Apple uses its iPhone and Apple Watch to help consumers manage their health. Apple has partnered with Health Gorilla, a small start-up in the healthcare space, to add patient records to the iPhone. Apple looks to solve the healthcare puzzle by onboarding a majority of providers and labs to its network to facilitate a universal view of patient records from a variety of sources. The healthcare IT companies together are integrating with hospitals and commercial lab testing companies like Quest Diagnostics and LabCorp, and as well as imaging centers. Apple already collects and compiles the healthcare data through the apps on the phone. By merging this data with the complete patient data from various mentioned sources, Apple is planning to solve the problem of interoperability and patient centricity. Moreover, Apple recently hired a number of people from the healthcare industry, including health IT experts, digital preventive medicine experts, and diabetes experts. Apple also recently launched its health record feature in partnership with 39 hospitals. This feature will aggregate existing patient-generated data in a user's health app with data from their EHR, provided the user is a patient at a participating hospital.
The companies mentioned above already possess most of the core competencies needed to make it big in healthcare industry, like strong technology foundation, experience with emerging technologies, data analytics capability, and AI capability. Apart from these competencies, these healthcare IT companies have access to capital and capable executive leadership team. That said, all the above companies are not blindly trying to disrupt the healthcare space — they are testing the water before making the plunge. Amazon, Apple, and Alphabet are working on a Proof of Concept (POC) of sorts or partnering with other stakeholders wherever possible.As these companies stand a significant chance to be successful with their POCs, there is nothing stopping them from extending their offerings, that are now limited to employees, to the general public as well. The HIT veterans will have two problems to worry about. First, the HIT veterans would face stiff competition and lose a chunk of their market share. Second, the huge cash reserves tech companies possess make the HIT veterans prone to acquisition. We will have to wait and watch as to how these tech giants will disrupt the American healthcare system.