Another earnings call, another day people wonder how Apple makes so much money. Another look at Apple’s balance sheet, another day people ask why its hoarding all its cash. Another WWDC and people are wondering what Apple is going to do in healthcare.

So I’m going to throw an idea out there as a thought experiment and would love to hear all the reasons I’m wrong (or things you agree with!).

I think Apple is well positioned to build their own care clinics + telemedicine and be successful. Apple has the opportunity here to combine their medical device play (passive monitoring) with their personal health record (data capture) and finally close the loop with primary care. Specific reasons:

• Lifetime Value: There is currently no player in the healthcare space actually incentivized to take long-term outcomes in healthcare and think about customer lifetime value this way. Because of the way health coverage in this country is set up, everyone is designed to maximize profit from a consumer for as long as they’re with their current employer. Tech companies operate differently, and optimize for keeping their customers with them for as long as they can and have them keep buying their products or using their services. Maybe you’ll stay an Apple customer for longer if your phone was your health record and made your hospital experience seamless. Motivation to increase customer lifetime value is a powerful force that no healthcare player currently has, but Apple does.
• Non-healthcare revenue: Apple makes its revenue primarily OUTSIDE of healthcare. One of the most difficult parts of experimenting in healthcare is figuring out who’s going to pay for it. This payment paralysis inhibits experimentation and radically shifting business models (and why the shift to fee-for-value has taken so long, in my opinion). Tech companies are effectively cash-printing machines who can devote money to R&D and have a willingness to fail. Apple has the large cash pile and their primary business to allow them to deal with the longer timelines in healthcare, the regulatory uncertainty, and the incumbents who can typically win a war of attrition with newer companies. I like this quote from this Ben Thompson talk which I think is very applicable here and would be one of Apple’s key strengths: “Any company that has an orthogonal business model is very bad news for anyone who’s in there.”
• Consumer Friendly Brand: Apple has a positive consumer brand! Terrible customer experience in the healthcare system has effectively eroded consumer trust completely, and it’s incredibly hard to rebuild that. Apple on the other hand has built a very strong, consumer friendly brand which it could use to more realistically convince consumers it’s “doing healthcare differently”. A big part of this has also been Apple’s utmost prioritization of privacy, which is an important consideration for consumers when it comes to healthcare.
• Brick-and-Mortar Expertise: They actually know what they’re doing when it comes to brick-and-mortar customer experiences. There’s a reason that all these new concierge and urgent care clinics are referencedas the Apple Store for healthcare in articles. Apple nailed down the solid retail experience for its products and could do it again in healthcare. Hey, they could even sell MORE Apple products in their clinics, nothing like a captive audience in the waiting room.

 

• Leverage: Healthcare is a battle of leverage and negotiation amongst all of the different stakeholders. Apple has incredible leverage — all 85.8 million US users of an iPhone. For comparison, there are about 55 millionMedicare beneficiaries, and Aetna covers about 46.7 million people. Apple can use their position to:
  a) help companies develop direct-to-consumer relationships with patients, which it’s doing with things like CareKit and ResearchKit
  b) negotiate better rates by aggregating the leverage of their users.
• Lackluster partnerships: Apple has shown clear signs of wanting to get into healthcare, but the partnership approach it seems to be trying will not work. Partnering with companies like Epic and existing hospitals are diametrically opposite of Apple when it comes to user experience and customer satisfaction. Apple has been maniacal about keeping that image up, Epic and hospital systems do the bare minimum they have to. Because of the opposing cultures, Apple will not only weaken a core part of their brand due to a lackluster user experience, but will also find it to be a very long and painful rollout process by trying to integrate into the existing systems.
• Telemedicine + Distribution + Hardware: The world is inevitably shifting to one where the majority of primary care will be done at least partially (if not entirely) over telemedicine. Apple can become the default here since it already has the distribution via people’s phones + the health app and a lot of the hardware (camera with increasingly better quality, computing power in the phone itself, and now devices like the watch + stealthy glucose monitor). The reality is that most telemedicine efforts have been lackluster because they’re still transactional, don’t actually change the economics OF the transaction, and lowering friction to see a doctor means people see a doctor for sometimes unnecessary things. I think the missing piece is using hardware in combination with the services. Combining a device, a health record, AND telemedicine means Apple could become a fully passive monitoring system that proactively suggests when people should see a doctor. This could move us closer to the eventual goal of passive monitoring.

Goal has been “set it and forget it” OAUTH @aneeshchopra

— Farzad Mostashari (@Farzad_MD) June 15, 2017

Eventually, we’ll move closer to a point where AI will be able to triage and assess the risk of patients prior to seeing a doctor, which falls in line with Apple’s recent prioritization of AI.

Of course there are obstacles for Apple to get into healthcare organizationally and logistics wise, but it has the resources and precedent to make audacious moves like this. I think this would benefit society as a whole, because a new competitor with a customer-focused approach would force others to compete on customer satisfaction in a way they never had to before.

This post is more of a thought experiment, and would love to hear your own thoughts. Drop a comment below or reach out to me on twitter @nikillinit.