Enterprise

Big Tech’s dream of transforming health care is getting the scalpel

Humbled by missteps, Amazon, Microsoft and Oracle are trying a new strategy: buy brands well-known in narrower categories.

Tablet computer, stethoscope, pills and computer mouse on turquoise background

It is still very early in the effort to reimagine health care, a sector that badly needs diversification and one in which technology could have a profound impact.

Photo: the_burtons/Moment/Getty Images

Big Tech hasn’t been shy about its dream of bulldozing the existing U.S. health care industry and, in its place, erecting some new system that has to be better because it’s designed by Silicon Valley.

What that new system is remains a mystery. And while all empires might fall eventually, it is nowhere near the end for the mighty and entrenched hospitals, drug manufacturers or insurers that have benefitted handsomely for decades by making the ecosystem as convoluted as possible.

Technology’s biggest names have all attempted, in one way or another, to upend the industry, promising that the holy combination of lines of code, a ton of data, the cloud and perhaps some wearable device will magically fix decades of dysfunction.

Now, perhaps humbled by the sluggish pace of improvement, Big Tech is trying a new, more classic strategy: buy consumer and professional brands well-known in narrower health care categories.

“Health care is not just a question of, can you have a better solution? It’s a question of consumer trust,” SVB Securities senior managing director Stephanie Davis told Protocol. With Big Tech, “there’s that ick factor.”

It is still very early in the whole effort to reimagine health care, a sector that badly needs diversification and one in which technology could have a profound impact. But Amazon and others have their work cut out for them.

“Health care is not just a question of, can you have a better solution? It’s a question of consumer trust.”

Despite the glaring problems in the U.S. system, most Americans still trust it and are largely OK with the prices they pay. That’s not the case for everyone, of course. And driving consumer adoption of the latest innovation could prove challenging for even the tech industry’s best marketers. For example, the pandemic gave a much-needed boost to telemedicine, but we all largely still see our doctor the old-fashioned way. And some individuals, especially the elderly or chronically ill, may never embrace online care or find that it fits their needs.

But instead of any significant moves to improve outcomes or lower costs for patients, we’ve been left to largely settle for flashy marketing announcements and buzzword-laced press releases. Oracle’s statement announcing the Cerner deal, for example, touted its “capacity to transform healthcare delivery.”

Much of the blame for vendors like Amazon and Google failing to meet the sky-high expectations they set for themselves was the decision to pursue a take-no-prisoners approach to the expansions. The companies stampeded — with half-baked products, no less — into a sector notoriously cautious to jump aboard the latest tech trend. There’s no example more classic than IBM Watson Health Care, which was recently sold for parts.

A physician in a white coat testing mixed-reality 3D glasses. After high-profile failures in health care, tech giants are now placing their bets more precisely: Amazon is targeting brick-and-mortar primary care, while Microsoft is aiming to be ever-present in the doctor’s office. Photo: Jens Kalaene/picture alliance via Getty Images

Now tech giants are placing their bets more narrowly. Amazon is targeting brick-and-mortar primary care, Microsoft is aiming to be ever-present in the doctor’s office and Oracle is homing in on the medical record industry with its $28 billion deal for Cerner.

Alphabet remains a bit of a wildcard. The company has hired some industry heavyweights but its focus is vast, including wearables and medical records. But Alphabet’s success will almost surely come predominantly from AI and machine learning-based products, which the company excels at. And while Apple is moving beyond health-related applications on the Apple Watch, the early success seems to weigh much heavier on the consumer side.

The moves recognize just how difficult it is to navigate the health care sector as an outsider. For example, Google’s partnership with Ascension got severe blowback over fears the company would misuse patient data. (Who could imagine such a thing?)

And it’s why many of the aforementioned companies have spent heavily to gain access to well-connected executives, industry-tailored software, trusted brand names, deep customer relationships and core IT infrastructure needed to run the health care system. Amazon paid $3.9 billion for One Medical; Google paid $2.1 billion for FitBit; Apple has acquired a slew of smaller startups focused on areas like asthma monitoring and personal medical data; Oracle paid $28 billion for Cerner and Microsoft paid $16 billion for Nuance, among other deals.

Fitbit logo on a wall above a Fitbit display Companies like Google, which bought FitBit for $2.1 billion in 2021, have spent heavily to access trusted brand names.Photo: Dursun Aydemir/Anadolu Agency via Getty Images

“A little bit of domain expertise goes a long way,” said Futurum Research analyst Daniel Newman.

The splintering of efforts makes sense. But until there is some mechanism to bridge the gap between the still-siloed parts that together make up the U.S. health care system, many of the current challenges for patients and providers are likely to remain.

In a relatively minor example of the infuriating complexity of the existing system perpetuated by the incumbents, CVS previously refused to transfer prescriptions to Amazon’s pharmacy, which meant that if someone wanted to use the latter, they had to get a doctor to rewrite the prescription, according to Davis. CVS did not respond to a request for comment on the current policy.

Big Tech continues on its quest to become that fabled entity that would do away with such annoyances. However, claims by any large technology company of “revolutionizing” health care should be viewed with skepticism given the lack of progress to date.

“Health care takes two things that tech doesn’t have. It takes time … and doing it with the best interest of the consumer in mind,” said Davis. “It’s difficult to see anything branded by Google or Amazon and think, ‘They really want to help me.’”

Over a decade ago, Google wanted to get into medical records, only to quickly realize the company was drastically out of its element. It has had a scattershot strategy that included the launch — and subsequent dismantling — of Google Health. As a result, it lost David Feinberg, a well-connected and well-respected health care leader, to Cerner, which, of course, is now a part of Larry Ellison’s family.

“It’s difficult to see anything branded by Google or Amazon and think, ‘They really want to help me.’”

Amazon has a real shot with One Medical to make the whole doctor’s visit significantly better, but much of that is already available through One Medical now. And Amazon’s track record in health care isn’t stellar. Its much-publicized efforts have largely fallen flat or failed to achieve the lofty expectations attached to any project the ecommerce behemoth dips its toes into. The partnership with Berkshire Hathaway and JPMorgan Chase to do … something fizzled rather quickly. Amazon’s $753 million purchase of PillPack doesn’t seem to have made a huge dent in the pharmacy world. And an earlier project with Crossover Health to launch new care centers is in question after the One Medical deal.

The Amazon Pharmacy home screen on a laptop computer Until the discrete sectors of the U.S. health care system are brought together, challenges for patients and providers will likely remain, as with CVS previously refusing to transfer prescriptions to Amazon’s pharmacy.Photo: Gabby Jones/Bloomberg via Getty Images

The health care industry also hasn’t bought into Big Tech’s marketing hoopla with the same gusto as other sectors. That, however, is quickly changing.

More and more companies are making digital investments a key pillar of their overall strategy. Mayo Clinic, for example, is in the midst of an IT overhaul with Google Cloud that the hospital chain is promising will “transform healthcare.” And with the advancements in machine learning, particularly in natural language processing, some of the more forward-looking applications — like automated transcription — seem much more realistic today.

“The current bureautic system that exists in health care has been resistant to making any meaningful improvements to create a next level standard of care,” Newman said. “What we have seen has come from tech.”

That should make it easier for the likes of Satya Nadella, Sundar Pichai, Andy Jassy and Ellison to pitch their respective war strategies to further invade the sector. But after years of battling it out, a Silicon Valley takeover is still far from a reality.

Instead, at least in the near-term, we’re likely to be left with fringe benefits like a combined Amazon Prime-One Medical subscription, which is depressingly on par for the U.S. health care system.

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