How Big Tech is Targeting Healthcare – an Outlook
A complex situation.
Exciting times lie ahead of the global healthcare sector as it progresses into the future and new digital products and technologies are having significant impact on current industry structures and habits. The global healthcare market is almost $12 trillion in size and has seen a lot of interest from investors and startups who are aiming to digitize an industry that is late to wake up to the changes around it. This may come as a surprise, since the healthcare industry is one of the most complex, data-intensive industries there is.
But next to the challenges that every major industry is facing during this transformational period, there are a few unique barriers to the healthcare industry that need to be overcome. Most importantly, these are security and privacy concerns, along with related regulations, that hindered innovation as organizations had to move cautiously to avoid any missteps that could jeopardize patient data. But it is exactly these pools of data, which have grown enormously over the past 7 years, that present vast untapped potential and which various new players are trying to utilize for their purposes.
Traditional Healthcare not prepared for the digital age.
Yet, only a few healthcare organizations have the ability to deal with this massive trove of data. A 2018 study from the SAP Center for Business Insight and Oxford Economics, Digital Transformation in Healthcare: A Positive Prognosis, found that only 2 percent of organizations completed their digital transformation initiatives across all areas, while 32 percent have completed them only in some areas. Another 54 percent were piloting their transformation initiatives and 23 percent were still in the planning stages.
But it is not only healthcare organizations that need to adapt. An aging demographic and differing needs from younger members of society call for new ways of interaction between all parties. The internet has brought about a major shift in the patient’s role but the way we interact has remained largely the same. It has become a lot easier to gain information about illnesses, treatments, and nutrition but the main point of contact for patients is still the physician. 14% of millenials claim that available physicians don’t meet their needs and digital solutions like electronic health records are still not available in a wider sense. Many offerings have not caught up with the heightened expectancies of new customers.
Enter Big Tech.
This is where Big Tech companies like Facebook, Amazon, Apple, Microsoft, and Google enter the stage. They have several advantages over other players in healthcare like their existing customer base and distribution platforms to successfully reach customers in a convenient and digital manner. Further, they understand and shape the concept of customer-centricity, and they have the money to heavily invest in new technologies and startup companies to make strategic moves into healthcare. They use these investments to get access to new customers and their data, establishing themselves as the first touchpoint in the customer journey.
CB Insights reports that in 2017 ten of the largest tech companies in the United States were involved in health care equity deals worth $2.7 billion, up from just $277 million for all of 2012. Let’s take a closer look at some of these companies and what they are trying to achieve:
The social media giant aims to leverage its diverse user base and the unique user behavior data they have collected. Its healthcare effort primarily focuses on distributing healthcare information and organizing users with common health interests. Potentially, Facebook could become the digital front door for healthcare through offerings like Whatsapp and FB Messenger, similar to Tencent’s WeChat in China.
Amazon is trying a different approach. With its experience in building back-end infrastructure, Amazon is moving into the pharmacy supply chain, telehealth, and offering cloud computing services, as well as for analytics to leading healthcare providers. In the future, it could serve as a marketplace not only offering physical goods but also healthcare services and products.
Search, using advanced technologies like AI, is in Google’s DNA. The company is bringing this expertise to healthcare by building better search experiences for providers, patients, and researchers. Already, some of Google’s algorithms perform on par with physicians in discovering diseases. Google also continues to be the most active tech corporate investing in healthcare in the US. Through its various investment companies, Google has participated in 14 of the 15 largest healthcare raises in 2018, underscoring its ambitions.
Apple is focused on helping its users securely manage and organize their healthcare data. On top of that, Apple will build a healthcare-focused app store for developers and researchers. With its expanding portfolio of wearable devices, Apple could also establish itself as the leading provider of healthcare data.
What does the future hold?
The top technologies shaping the next five to ten years in healthcare will be augmented intelligence, machine learning, predictive analytics, and natural language processing to gather and analyze information. Technologies that allow data to move in real-time but stay within control of the respective data source (e.g. users and their wearables, smartphones, etc.) will also be a big focus. Since Big Tech is doing research at the forefront of many of these new technologies, they naturally have a head start over their competitors. Healthcare organizations are therefore often forced to partner with companies like Google, Microsoft, or Amazon to provide them with the necessary tools, further strengthening Big Techs strategic advantage.
But the global COVID-19 pandemic has acted as a catalyst and a wake up call for the healthcare industry. Digitization efforts that have been made in the past couple of years are slowly starting to pay off and it will be seen whether healthcare will follow a similar path to banking and insurance, where new players have successfully established themselves along the value chain, or whether they have watched closely and are prepared to defend their positions.
It remains to be seen whether Big Tech companies will go all-in into healthcare in an attempt to disrupt the industry. From the looks of it, we might rather see them establishing themselves at key positions, providing tools, infrastructure, handling supply chains and managing data for their clients. For healthcare organizations it will be paramount to form alliances and strategic partnerships to make sure they keep sovereignty over their domain. They have to evaluate their strengths and weaknesses closely and intimately get to know their customers and their needs, whether they are active in B2B or B2C. This will give established players in healthcare the opportunity to make up lost ground and leverage the assets companies like Facebook, Amazon, Google, and Apple strive upon – customers and their data.