The market opportunity in health care is huge, and Apple sees health care and wellness as a core part of its app, services, and wearables strategies. Now the company is aiming to become your personal health record, jumping into research, medical devices, and more.
As Apple CEO Tim Cook has said, the health care market makes the smartphone market look small. In fact, with over $7 trillion in health spending per year, it’s already almost 10% of global GDP.
In his recent keynote in September 2017 (when the company announced the new Apple Watch and new iPhone 8 and X), Tim Cook also stated that “health care is big for Apple’s future.”
Already Apple has a large market opportunity built in. In the US alone, Apple has over 80M iPhone users, dwarfing the user numbers of any single health insurer.
And Apple has another massive advantage over other incumbents in the health care industry like hospitals and pharma: unlike drug companies and hospital groups, Apple doesn’t have to chase reimbursements from health insurers. Rather, it can afford to be laser-focused on the patient experience and patient outcomes.
Other players in health care should take notice.
Apple’s soft entry into health care began in 2014, when it entered the space with the release of the Health app and HealthKit. But the real step forward came in March 2015, with the release of ResearchKit and the Apple Watch.
Since then, interest has only increased. The association between Apple and health care in the media started to climb more steadily in mid-2016 — as illustrated by the CB Insights Trends tool, which mines millions of media articles to track interest in tech trends. That’s when Apple began to make a push into health care with partnerships, M&A (acquiring digital health company Gliimpse), and some high-profile hires.
Some key takeaways around where Apple is headed in its patient-centric vision of health care include:
- Apple Has Several Advantages Entering Health Care — From a large cash pile, to brand awareness, to the direct relationships it has with 1B+ users of its devices, Apple has many advantages over existing health care incumbents. As software and user experience becomes more essential to health care, Apple is well-positioned to engage users.
- Apple Is Expanding From Wellness Into Medical Applications — Apple began its foray into health with its Health app and fitness tracking via the Apple Watch. However, with the acquisition of Gliimpse and partnership with Health Gorilla, the company is slowly shifting to offering a full personal health record. Apple is also increasing its attention on clinical-grade data capture as indicated by its partnership with the FDA to detect cardiac anomalies, its foray into creating non-invasive glucose monitoring, and its desire to turn the phone into a diagnostic tool.
- Apple Is Already Changing Research — ResearchKit is an app that allows researchers to use iPhones to conduct large-scale research studies. It continues to be adopted by more and more institutions and corporations as Apple increasingly demonstrates its utility. By already establishing a direct-to-consumer relationship, streamlining the onboarding process, and using tools already on the phone, Apple has changed the scale at which these studies are done and the type of data that can be captured.
- Care Coordination Of Chronic Disease Is Apple’s Future — Apple leaders have been explicit in talking about the company’s involvement in diabetes and heart disease-management, two of the largest cost drivers in the US. To improve outcomes, Apple is using CareKit and its partnership with Health Gorilla, a platform for clinicians to coordinate patient care, to get all stakeholders in a patient’s medical care on the same page. The company’s rumored partnership with American Well and existing telemedicine patents suggest that Apple wants to be involved in connecting these patients to the care they need when they need it.
We used CB Insights data to analyze Apple’s strategy in the health space, who this could affect, and what some of their next moves might be.
Table of Contents
- Apple’s Edge In Health
- Apple Health, HealthKit, And Personal Health Record
- The Phone, Watch, and Medical Device Innovation
- Key Health Hires And Jobs Analysis
- Looking Ahead
- Apple’s Future In Health Tech
Apple’s edge in health
While health care might seem like an area outside of Apple’s expertise, it has advantages relevant to the space.
Apple’s differentiation in the smartphone space has been packaging hardware, an operating system, and software together. As medical devices start becoming more enabled by software, Apple’s competency in bundling software and hardware is a major advantage.
Apple is bolstering its software offering as a whole through a number of recent acquisitions of artificial intelligence companies (logged in clients can see the full list of deals here). With larger and more complex data sets entering the health care field, machine learning models and AI will become table stakes, and health care incumbents will have to find ways to use these algorithms as well.
Apple’s control over both software and hardware yields a strong consumer experience and ultimately gives Apple such a strong brand. As health care becomes more consumer-driven, thanks in large part to high-deductible plans that require people to pay more for out-of-pocket expenses, Apple’s name could give the company a leg up.
Moreover, the company’s obsessive focus on user experience has helped it dominate consumer electronics, and could translate into health as well. Apple’s smartphones business has a Net Promoter Score of 60, compared to an average score of 12 for the health insurance industry as a whole.
The Apple brand includes an ecosystem of products that work seamlessly with each other. This makes consumers invest more of their time, data and preferences into Apple products and gives Apple ecosystem effects: the company thrives by making its products work together and keeping customers on its devices by making them more indispensable to them. If buying an Apple product yields a smoother user journey and connects other existing data from a user’s Apple account, then there’s more of an incentive to buy Apple. Few health care incumbents can tap into any similar ecosystem effect.
The number of people in that ecosystem gives Apple an additional advantage: leverage and distribution. Health care places a high priority on leverage and the ability to negotiate prices for goods and services. Apple has the aggregate leverage of its entire user base to negotiate with — 85.8M iPhone owners older than 13 in the US alone. (For comparison, UnitedHealth has 47.5M medical enrollees.) Apple also has a direct relationship with its customers and can distribute goods & services directly to its customers via phones, tablets, etc.
When you combine brand, leverage, and Apple’s ecosystem with its different business model, the company becomes a formidable enemy to health care incumbents. Unlike existing players or smaller startups attempting to innovate in the space, Apple makes the bulk of its revenue outside of health care. Thanks to its non-health care revenue and large cash pile, the company can afford to weather the regulatory uncertainty and long timelines associated with health care.
APPLE HEALTH, HEALTHKIT, AND PERSONAL HEALTH RECORD
One of Apple’s first clear forays into health was the announcement of the Health app and HealthKit in June 2014. There was a hint of this coming from a patent they filed in 2013 for a “Wellness Registry.”
In the initial release, the Health app acted as a hub for a variety of different fitness and wellness devices, while HealthKit allowed developers to build on top of the platform.
Since then the functionality of the Health app has expanded significantly. Apple acquired Gliimpse (a startup that built personal health records) in 2016, and now the Health app captures a much wider array of clinically relevant data.
The Apple Health Product
The first page of the health app tracks and quantifies wellness metrics, including physical activity, mindfulness, nutrition, and sleep. In each of these areas Apple suggests apps that it works with that can help monitor these activities (e.g. Headspace for mindfulness). Within the vitals category there are options to connect with other sensors and trackers to monitor specific biomarkers. These range from blood alcohol content, to glucose levels, to inhaler usage.
The health records section is where users can store information from doctors’ visits. In 2016, Apple allowed people to copy and store their health records in the app using the Health Level 7 Continuity of Care Document (HL7 CCD) standard. This makes it easy for physicians to send a patient’s data to them in a format their phone can ingest.
Apple is also working on the provider side of the equation by partnering with Health Gorilla. The startup allows providers to order tests for patients and receive the data directly from the diagnostic and testing facilities. More broadly, Health Gorilla lets providers ingest data about patients to give them a holistic view of a patient’s health. This provides a complement to the personal health record on your iPhone, allowing patients to generate their own data and easily plug it in to their doctor’s system.
APPLE’S CAREKIT AND RESEARCHKIT
In 2015 Apple launched ResearchKit as a tool to let medical researchers conduct studies using the iPhone. A few key impacts are outlined below:
- Recruitment: By having a relationship directly with consumers via the iPhone, Apple is able to reduce the friction of signing up for a study, as well as identify eligible candidates using their health record. Morever, participants in ResearchKit studies are not geographically constrained and come from around the world. While simplifying the sign-up process and increasing accessibility theoretically means a broader population demographic to take part in trials, it’s still limited to the demographic of iPhone users, who tend to be more affluent.
- Scale: By simplifying recruitment, the size of the studies on ResearchKit — such as MyHeart Counts and mPower — are much larger than traditional studies. MyHeart Counts has more than 45,000 enrolled particpants and was able to sign up 11,000 in the first 24 hours after rollout. mPower, a mobile Parkinson’s study, has more than 10,000 enrollees. For reference, The Michael J. Fox Foundation’s Parkinson’s Progression Markers Initiative (PPMI) study required ~$800 to recruit each participant to Parkison’s trials in 2010, and is tracking fewer than 1,000 people.
- Informed Consent: ResearchKit is streamlining the informed consent form through yes/no questions, videos, and patient quizzes. While removing the clinician from this equation makes the process more efficient, it also raises questions about whether patient claims are authentic and whether a person should be available to answer questions. In general, however, ResearchKit has given participants much more control over where they choose to give their data, including donating it for future research. mPower, for example, saw more than 75% of people participating in the study choose to donate their data, which has allowed them to open-source the data.
- Monitoring & Diagnostics: Instead of traveling to a physical site, participants can utilize sensors in the iPhone or connect to the iPhone (e.g. Apple Watch, connected inhaler, etc.) to monitor themselves more continuously. This can even happen during episodes of relevance — such as during an epileptic seizure or asthma attack — to capture data that could be help predict a future episode. Certain health triggers could be environmental in nature, and the phone can capture the relevant data in those situations (for example, the surrounding air quality when asthma attacks spike). The phone is also using some cutting edge technology such as AI and facial recognition (possibly from the Emotient acquisition) for new types of tests like early autism detection
CareKit was launched in 2016 after the success of ResearchKit, and allows people and institutions to develop apps to monitor patients in real-time using sensors and tools in the phone (similar to how researchers were using ResearchKit). Several startups have built on top of the CareKit platform immediately after its release, including Glow, Iodine, and One Drop.
THE PHONE, WATCH, AND MEDICAL DEVICE INNOVATION
ResearchKit and CareKit utilize the existing sensors, camera, and computing power already in Apple products. Apple appears to be doubling down on this and applied for a patent to turn the phone into a diagnostic device.
The Phone As A Medical Device
The filing combines the camera, an ambient light sensor, and a proximity sensor to detect changes in blood using a fingertip. (A finger is illustrated throughout the renderings, but the filing notes that an ear, palm, or other body part could be used as well).
Blood volume can then be used to compute health data on the user’s pulse rate, “perfusion index,” and more — enabling users to track information on areas such as heart function, body fat, and blood pressure. The patent also talks about “electrical contacts” for more advanced electrical measurements that can be used for everything from electrocardiogram (EKG) readings to measuring a user’s “emotional state,” according to the filing.
Several startups have also been leveraging the iPhone’s capabilities to power diagnostic tools by clipping onto the phone, such as AliveCor (EKG), Eyenetra (eye diagnostics), and CellScope (ear infections).
Quantified Self 2.0
In addition to the phone, Apple released the Apple Watch in 2014 as wearables activity took off. Health care was one of the three core product functionalities talked about during the unveiling.
Since then the company has emphasized the Watch’s focus on fitness, with most of the Apple Watch 2 unveiling featuring examples of watch in different exercise settings and a de-emphasis on the social features. Apple Watch 3 went even further in the health and wellness direction, with LTE functionality to make it easier to use while exercising. Even the company’s current website is largely dedicated to the role of the watch in workouts and health tracking, as seen below.
An important part of the Apple Watch 3 unveiling was the announcement that the company is working with Stanford and the FDA to determine whether the watch can detect common heart conditions. This means the Apple Watch could start capturing clinically relevant data, making it a more critical purchase for people at risk for heart disease.
This could help move the Watch beyond a “nice to have” to turn it into an essential product. The idea of collecting clinical-grade cardiac data was hinted at in a patent Apple filed in 2016 with the goal of conducting EKGs via a wearable device.
While heart rate tracking is the first data stream that is being medically evaluated from the watch, Apple is also considering moving into glucose monitoring as well. They reportedly have a team working on finding ways to do non-invasive glucose monitoring, which could be a possible add-on to the watch if scaled down sufficiently. Monitoring both heart rate and glucose means Apple could target two of the most expensive chronic diseases in health care: heart disease and diabetes.
Apple reportedly initially struggled with accuracy in heart monitoring, according to the Wall Street Journal. But if the company succeeds in EKGs, it could expand monitoring to other biomarkers including blood oxygenation, skin conductivity, and more:
“Development languished because much of the health-sensor technology failed to meet Apple’s standards… Apple tinkered with sensors that measured the conductivity of skin, a concept used in polygraphs to gauge stress. The technology also showed promise for heart-rate monitoring such as an electrocardiogram, or EKG… Apple also experimented with ways to detect blood pressure or the amount of oxygen in the blood, but the results were inconsistent.”
Apple has struck several key partnerships to focus on other health capabilities, such as its partnership with Parkinson’s researchers (mentioned above) through the mPower intiative.
Another key partnership is a deal with Stanford’s Center for Digital Health to provide 1,000 Apple Watches to projects that can achieve meaningful health outcomes in areas like medication adherence, virtual therapy, and migraine prediction, among others.
Apple was also recently in talks with Aetna to distribute watches to their covered population, after already reaching a deal to distribute watches to Aetna employees. This strategy shares some parallels with Apple’s initial strategy of using carriers to subsidize the cost of the initial iPhone, essentially using the carriers as distribution channels.
Apple has also teamed up with several device makers to create iPhone-enabled devices, including Dexcom (glucose monitoring) and Cochlear (hearing aids). As software becomes a bigger differentiator for medical device companies going forward, Apple could be positioning itself as an analytics, software, and patient health platform for these companies to plug into rather than having to build these capabilities themselves.
Apple is moving into medical devices at a good time — a recent piece of legislation called the “Over-the-Counter Hearing Aid Act of 2017” passed in the Senate just last month. This allows hearing aid makers to sell directly to consumers if they meet FDA requirements, eliminating the need for a visit to the doctor. Selling medical-grade devices directly to consumers opens the avenue for Apple to market products directly to consumers.
Key Health Hires AND HEALTH JOBS ANALYSIS
In addition to the team from Gliimpse that it acquired, Apple has made at least 8 key hires in the health care space: