Analyst Suggests Apple Should Offer a Unique ‘Healthcare Subscription’

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Apple CEO Tim Cook has made it clear that he wants Apple’s initiatives in healthcare to be one of the biggest legacies that the company leaves behind. While that’s a laudable and magnanimous goal — and Apple has definitely been pouring its substantial resources into it — corporations — and their investors — are driven by profit, and it’s never been entirely clear how Apple plans to make the money needed to justify its health-related efforts.

In a report released this week, Loup Ventures analyst Gene Munster outlines some of the financial issues around health, and raises the interesting proposition that an “Apple Healthcare Subscription” could form a fourth column in the company’s collection of subscription services.

To be clear, however, Munster isn’t actually talking about making end users pay for access to healthcare features, but rather offering doctors a subscription that would allow them to access and monitor their patients’ data for a flat monthly fee per user.

The crux of this strategy would still be focused on Apple’s wearable devices that include health monitoring capabilities. Currently this only includes the Apple Watch, but it’s also likely that Apple’s AirPods will join the company’s family of health monitoring devices at some point in the future.

In fact, some rumours have suggested that AirPods with heart rate sensors could be coming this year, although Munster suggests that adding these kinds of features is “complicated and likely years away.” Apple has however filed patents for this purpose, and the inner ear is an ideal place to gather biomarkers due to the thinner skin found in the ear canal, so it definitely seems like the next place that we’ll see health sensors.

Monetizing healthcare is also somewhat trickier due to the complicated relationship between physicians, payers, and providers, especially in the U.S. where private healthcare and insurance companies control most of the financials. However, Munster notes that there’s been a shift over the past 15 years to move from a per-visit billing model to offering physicians a single monthly “total care” fee per patient. In this case, although doctors remain responsible for the overall health and well-being of their patients, they get paid the same regardless of how often the patient shows up in their office. Since healthier patients take up less of a doctor’s time, this incentivizes them to provide better care, which will make them more willing to pay for technology and services that will promote healthy behaviour and provide early warning of potentially developing medical conditions that could be more costly to treat later on.

Apple’s healthcare services opportunity likely lies in harvesting the data from Watch and AirPods, then filtering, analyzing, and making it actionable. AI will be foundational to these services given the volume of data that needs to be processed.

Gene Munster, Analyst for Loup Ventures

Ultimately, what Munster is suggesting is that Apple can take advantage of the need for more productive relationships between care providers and patients by positioning the Apple Watch and other health technologies as beneficial to building those relationships.

In fact, Apple’s move into Health Records last year provides a good example of how Apple sees the need to strengthen those relationships. However, Munster suggests that Apple’s real ace in the hole will likely be its expertise in machine learning, which can be leveraged to intelligently analyze and filter patient data to present physicians with useful snapshots of relevant health information, saving the time required to manually sift through and analyze large quantities of patient data. If done right, this will undoubtedly be of value to physicians in actively promoting healthier patients.

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