The Big Tech In Healthcare Report: How Facebook, Apple, Microsoft, Google, & Amazon Are Battling For The $8.3T Market 1 WHAT IS CB INSIGHTS? CB Insights helps the world’s leading companies make smarter technology decisions with data, not opinion. Our Technology Insights Platform provides companies with comprehensive data, expert insights and work management tools to drive growth and improve operations with technology. CLICK HERE TO SIGN UP FOR A FREE TRIAL 1 With CB Insights, Froedtert Health is able to move quickly when assessing the market or evaluating potential partners. We can then dive deeper into a certain topic and collaborate across our organization all within one platform. Mike Anderes Chief Innovation and Digital Officer, Froedtert Health December 8-9, 2021 GLOBAL ONLINE EXPERIENCE 4 Our Most Popular Client-Exclusive Research MVP Technology Framework — New Products & Services In Medical Devices Tech Market Map Report — Pharmaceutical Supply Chain In Healthcare What The Demand For Mental Health Benefits Means For Employers And Payers Digital Health Dealmakers Push Mental Health Tech Funding To New Highs. Here Are The Emerging Categories & Themes In A Surging Sector Digital Therapeutics Outlook: The Tech Transforming The Way We Treat And Manage Disease 100+ Mental Health Tech Companies Transforming Access & Care Delivery Here Are The Most Active Healthcare Investors How Conversational AI Can Save Time And Money For Patients And Providers Spurred By App Stores & Online Marketplaces, Health IT Is Undergoing A Digital Transformation Telehealth Cos Are Seeing A Wave Of Consolidation. Here’s What That Means For The Future Of Virtual Care The Q1 2021 State of Healthcare: Investment Trends to Watch From Vaccines To Cancer Treatments, How Pharma Partnerships Are Driving The Next Wave Of Drug Innovation Tech Market Map Report — Cybersecurity In Healthcare 5 Contents 7 Key Findings 8 Market Drivers 24 Facebook 41 Apple 54 72 90 Microsoft Google Amazon 6 Key Findings Overview of big tech companies’ activities in healthcare Both investor and executive attention to healthcare peaked over the last year… • Earnings calls mentions of “healthcare” peaked in 2020 as the businesses grappled with protecting their workforces during the pandemic. • Venture capital funding to healthcare companies has also surged. In fact, healthcare funding had a record quarter in Q1’21, where companies raised a total of $31.6B. • Big tech has invested in deals worth a cumulative $6.8B since the start of 2020. Big tech companies took new steps to increase their market opportunity in healthcare… • Facebook launched a preventative health solution in the US and a provider search tool to help users find affordable care in their communities. Meanwhile, the company’s Oculus team is working with teaching hospitals to deploy VR-based medical education tools. • Apple updated Watch and iOS to capture even more health metrics, including blood oxygen level, and created a data sharing feature so users can share medical data with providers. The company also launched a subscription-based streaming platform with exercise classes. • Microsoft dropped $19.7B to acquire Nuance, a leader in conversational AI for healthcare. The company also launched Microsoft Cloud for Healthcare, a tech stack for enterprise healthcare organizations that combines AI, automation, and low-code app development. • Google launched a camera-based search tool that uses AI to diagnose skin conditions. The company also launched an EHR search solution for providers, an interoperability solution for payers, and a return-to-work test and trace program for employers. • Amazon launched Amazon Care, Amazon Pharmacy, and AmazonDx in the past year, all consumer-focused healthcare services. The company also unveiled AWS for Health, a suite built to support data science efforts within enterprise healthcare organizations. Note: “Big Tech” includes Facebook, Apple, Microsoft, Google, and Amazon. 7 Market Drivers 8 BIG TECH IN HEALTHCARE: WHY NOW? Healthcare is on executives’ minds Mentions of “healthcare” in earnings calls, 2008 – 2021 YTD (7/6/21) 87% of the corporate officers surveyed in big companies said they believed the cost of health benefits will become unsustainable over the next 5-10 years. How Corporate Executives View Rising Health Care Cost and the Role of Government, Kaiser Family Foundation 9 Why? Because healthcare is an $8.3T industry...and growing Globally, healthcare spend climbed to $8.3T by the close of 2018. Global health spending is expected to climb at a 3.9% CAGR between 2020 and 2024. This cost burden weighs on payers, riskbearing providers, employers, and consumers and creates opportunity for industry outsiders to establish healthcare vertical offerings. 10 The US leads in excessive spending at $3.8T The US healthcare industry, which accounts for 45% of total global health expenditures — or $3.8T — is underperforming compared to other developed nations and has become a target for disruption. The US spends far more on healthcare than any other country. Employers, like FAMGA, bear much of the cost. Despite increases in spending, life expectancy in the US is falling, and remains far lower than in other developed countries. 11 Cost reduction pressure is driving healthcare out of the hospital Healthcare revenue continues its decades- long march out of the hospital and into outpatient markets, where the barrier to entry 100% is far lower. 90% 80% As consumers seek care in an increasingly 70% oversaturated ambulatory market, FAMGA 60% companies are positioning themselves to 50% own a piece of healthcare’s new digital 40% ecosystem. 30% 20% 10% 0% Distribution of Inpatient vs. Outpatient Revenues 1995 –2018 Outpatient Inpatient 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 12 New entrants are meeting patients where they are with on-demand house calls… Primary care Urgent care Acute care Founded: 2014 Stage: Series D Total Raised: $170M Founded: 2013 Stage: Series D Total Raised: $407M Founded: 2016 Stage: Series C Total Raised: $148M 13 …while virtual care vendors are scaling digital care delivery Telehealth Remote patient monitoring Digital therapeutics Founded: 2013 Stage: Convertible Note Total Raised: $735M Founded: 2015 Stage: Series B Total Raised: $66M Founded: 2013 Stage: Series D Total Raised: $285M 14 Covid-19 has accelerated healthcare’s digital transformation… “Approximately $250B — or ~20% — of all Medicare, Medicaid, and Commercial outpatient, office, and home health spend, could potentially be virtualized.” – McKinsey 2020 Virtual Care Study 15 …especially in driving increased adoption of new digital health tools Use of newer digital health technologies is continuing to grow. Adoption of telehealth, wearables, and digital health tracking surged in 2020. 16 Where Big Tech Is Making Moves 17 Tech giants are well capitalized to accelerate the shift to digital They are some of the world’s biggest and most profitable cash hoarders. To transform the healthcare market, big tech can fund moonshots, pursue acquisitions, introduce their own new solutions and services, and place strategic bets in startups. FAMGA & their cash stockpiles As of March 2021 $196B $157B $135B $90B $68B Apple Alphabet Microsoft Amazon Facebook 18 INVESTMENT TRENDS How FAMGA’s invested across healthcare Total disclosed healthcare funding that involved participation from big tech venture arms, 2016 – 2021 YTD (7/6/21) Funding amount ($M) Deal count 46 50 $3,000 42 36 42 39 40 $2,000 $1,000 $0 $1,546 2016 $1,595 2017 $2,627 2018 $2,207 2019 $3,729 2020 26 30 20 10 $3,139 0 2021 19 WHAT ADVANTAGES DO TECH GIANTS BRING? FAMGA can leverage scale and large active user bases… 200M+ Prime Members 1.5B Windows Users 1.65B Active Devices 1.85B Daily Active Users (DAU) 1.6B+ Facebook DA5U.5B Searches per Day 2020 20 …as well as massive data and technology capabilities Which means… Big tech companies can: Users contribute more data Products get smarter ✔Leverage vast user bases to scale and undercut incumbents on costs The virtuous cycle of data network effects ✔Harvest their growing health data ✔Use data and innovation to offer the latest technologies More people use the service And repeat this cycle. 21 FAMGA are also some of the world’s most valuable and recognized brands 22 MARKET DRIVERS What’s driving big tech activity in healthcare? Consumerization of healthcare Consumerization of healthcare is creating opportunities for new entrants to outshine industry incumbents with low-cost, more convenient services. Explosion of health data Interoperability mandates are exposing more health data than ever before. Big tech is building the tools needed to help consumers and healthcare organizations put it to use. Demand for AI and automation Unrelenting administrative burden has created opportunities for big tech to streamline processes with AI and automation. Enterprise interest in smart devices Consumer devices – like wearables and smart speakers – are finding a home in healthcare and are beginning to draw subsidies from industry incumbents. Healthcare’s cost burden Employers and consumers are bearing the brunt of rising healthcare costs and are investing in cost containment strategies. 23 Facebook 24 EXECUTIVE’S PERSPECTIVE: FACEBOOK “We‘ve focused on trying to make sure that we understand the effects of using our services on people’s well-being.” Mark Zuckerberg, Facebook CEO 25 WHERE FACEBOOK IS FOCUSING BUILDING CONSUMER TRUST IN FACEBOOK Consumers turn to the internet for health information, but distrust what they see on social media. Facebook is working to remediate its reputation through partnerships and fact-checking. INCREASING OCULUS AND PORTAL DEVICE SALES New consumer devices are finding a home in supporting healthrelated use cases. Facebook sees opportunities for Oculus and Portal within the industry. ESTABLISHING FACEBOOK CREDIBILITY IN HEALTHCARE AI Industry incumbents are partnering with tech giants to accelerate use of data and AI. The Facebook AI Research lab is working on multiple healthcare initiatives. 26 Theme 1: Building consumer trust in Facebook 27 THEME 1: CONSUMER TRUST Facebook’s partnerships on public health issues Blood donation Suicide prevention Opioid reduction 100M people across 27 countries have signed up to get notifications about local blood donation drives. Facebook’s suicide prevention algorithm has flagged 1,000+ wellness checks to first responders. Facebook, Twitter, and Google have partnered to offer resources to those struggling with substance misuse. 28 THEME 1: CONSUMER TRUST …as well as personal health issues Preventative health Launched in 2020, Facebook’s preventative health tool is designed to help its users keep up with routine health and wellness tasks. Recommended actions are based on guidelines from: • The American Cancer Society, • The American College of Cardiology, • The American Heart Association, and • Centers for Disease Control and Prevention. The tool will initially focus on prompting users about checkups related to heart disease, cancer, and flu vaccinations. 29 THEME 1: CONSUMER TRUST Tackling health-related misinformation head-on Facebook has focused its efforts on combating misinformation during COVID-19. The company fact checks COVID-19 related posts, and directly notifies users who engage with misinformed posts. Source: Amazon The World Health Organization has partnered with WhatsApp and Facebook to power its Health Alert service. The effort will disseminate COVID19 updates directly to citizens across the globe in Arabic, English, French, Hindi, Italian, Spanish and Portuguese. Facebook has established a $100M investment fund to support local journalism during the pandemic. It has committed another $20M to its Alliance for Advancing Health Online. A portion of those funds are being used to create an international fact checking fellowships and public health communications strategies that will combat health-related misinformation on a global scale. 30 Theme 2: Increasing Oculus and Portal device sales 31 THEME 2: FACEBOOKS HEALTHCARE DEVICE PLAYS: OCULUS Cultivating demand for AR/VR in healthcare Oculus in healthcare Healthcare partners are using Oculus, Facebook’s VR platform, on a range of efforts, including pain management, physical therapy, and senior wellness. The Oculus team’s most widely adopted efforts have grown from its work in VR-based medical education. Launched in 2017 with Children’s Hospital of Los Angeles, it has deployed VR-based medical training programs to health systems globally. Notable enterprise adoption of Oculus: 32 THEME 2: FACEBOOKS HEALTHCARE DEVICE PLAYS: PORTAL Building on existing smart device demand Portal in healthcare Facebook’s streaming video device, Portal, has seen an uptick in adoption by enterprise healthcare organizations during the pandemic. Health systems are deploying Portal to help combat social isolation and help patients stay connected to their families while in the hospital. "Veterans, families and caregivers will benefit through an increased support system. Our goal is for Veterans to feel less isolated through more communication. We believe this technology will help Veterans who might otherwise be unreachable." — VA Secretary Robert Wilkie Notable enterprise adoption of Portal: 33 THEME 2: FACEBOOKS HEALTHCARE DEVICE PLAYS: SMARTWATCH Next up: a Facebook wearable? Following in the footsteps of Apple, Google, and Amazon, Facebook is rumored to be developing a smartwatch of its own. Like others, Facebook’s initial smartwatch is expected to include sensors aimed at capturing health-related data points. Initial designs are focused on heart rate monitoring. 34 Theme 3: Establishing Facebook’s credibility in healthcare AI 35 THEME 3: HEALTHCARE AI Facebook’s data science teams are seeking healthcare partnerships The Facebook Data for Good team has partnered with public health agencies globally to help them monitor and forecast the spread of the Covid-19. In 2018, Facebook’s skunkworks lab – known as Building 8 — was actively soliciting healthcare partners willing to share EHR data to support SDOH research. The team was interested in combining Facebook’s datasets with clinical data from EHRs to explore how social engagement data could be used to benefit SDOH and population health initiatives. The project was disbanded due to patient data privacy concerns. 36 THEME 3: HEALTHCARE AI …as its AI team researches medical imaging With partners at NYU Langone, the lauded Facebook AI Research (FAIR) lab developed machine learning models that could interpret x-rays to help doctors predict how a patient’s Covid-19 condition may progress. One aimed to predict patient deterioration, while the other predicted how much supplemental oxygen patient might need. FAIR also developed models that can generate equally accurate and detailed MRIs using about a quarter of the raw data traditionally required for a full MRI. Since less data is required, MRI scans can run nearly 4x faster. A team of independent radiologists compared the AI-generated images with traditionally captured images and could not tell which were created using the new method. 37 THEME 3: HEALTHCARE AI Its Reality Lab is advancing brain-computer interface research Facebook has partnered with a team of researchers at University of California, San Francisco (UCSF) to support research working to help patients with neurological damage speak again by detecting intended speech from brain activity in real-time. The team is reporting promising results. While prior studies have shown that spoken words can be decoded from signals recorded from the surface of the brain, decoding quality has been limited, with error rates north of 60% for 100-word vocabularies. UCSF’s results demonstrated an average error rate as low as 3% when tested with vocabularies of up to 300 words. 38 Key takeaways & implications 39 KEY TAKEAWAYS & IMPLICATIONS This year, Facebook will focus on… Theme Takeaways Implications Building consumer trust in Facebook Increasing Oculus and Portal device sales Establishing Facebook’s credibility in healthcare AI Consumers are wary of sharing health data with Facebook or trusting health information on the social media giant’s platform — a problem that will limit its ability to pursue a meaningful healthcare strategy. The company is working to repair that reputation through customer-facing industry partnerships. There is established demand for smart devices in healthcare — with incumbents showing a willingness to subsidize the cost on behalf of patients in some cases. Facebook is actively cultivating AR/VR, smart speakers, and potentially wearable devices to compete in this market. Facebook’s research teams are actively pursuing healthcare partnerships — though the tech giant lacks a broader strategy that might lead to a commercial application of its efforts. It also lacks the data privacy safeguards needed to pursue SDOH research. Expect Facebook to ramp up efforts at combating health-related misinformation by creating dedicated communications channels for trusted partners. For those interested, Facebook could become a valuable patient engagement partner. Expect Facebook to pursue its own device subsidy partnerships within the industry. Facebook will continue investing in AR/VRbased digital therapeutics and publishing research derived from its existing Portal partnerships. Facebook needs to earn the trust of enterprise healthcare organizations. Facebook’s biggest opportunity to make an impact is in SDOH research, but that work cannot scale until it proves to be a valuable, and trustworthy, partner in other areas. 40 Apple 41 WHERE APPLE IS FOCUSING ORCHESTRATING HEALTH DATA SHARING FOR APPLE CUSTOMERS Apple is going far beyond connecting consumers to their medical records. The company wants to aggregate data, secure it, create novel data points of its own, and then orchestrate consumer-direct data sharing with clinicians and researchers. EXPANDING APPLE WATCH SALES WITH SUBSIDY PARNTERSHIPS With iPhone, Apple invented and scaled subsidized device sales as a business model. Today, the company is pursuing the same strategy for Watch, working with payers to blunt the sticker shock of Watch for members. ESTABLISHING APPLE’S HEALTH AND WELLNESS SERVICES Apple is actively exploring how it might bring its own health and wellness services directly to consumers. 42 EXECUTIVE’S PERSPECTIVE: APPLE “If you zoom out into the future, and you look back, and you ask the question: ‘What was Apple’s greatest contribution to mankind?’ it will be about health. We're democratizing it. We're taking what has been with the institutions and empowering the individual to manage their health. Tim Cook, Apple CEO 43 Theme 1: Orchestrating health data sharing for Apple customers 44 THEME 1: APPLE HEALTH DATA ORCHESTRATION Apple is aggregating health data for patients… Apple Health Records is aggregating EHR medical data from hundreds of hospitals across the US, Canada, and UK. Apple Health and HealthKit work together to maintain a central repository of health and wellness data generated from iPhone and Apple Watch sensors as well as third-party apps. Apple CareKit engages users around daily symptoms and treatment plan adherence. In its most recent update, Apple unveiled a new health trends feature that is designed to help consumers track health metrics over time. 45 THEME 1: APPLE HEALTH DATA ORCHESTRATION …and adding novel health metrics of its own Apple’s iOS and Watch teams continue to advance health and wellness measurement capabilities with its own sensors and algorithms. To date, Apple is tracking: Clinical • Oxygen saturation • Resting heart rate • Heart rate variability • ECG waveform • Atrial fibrillation Activity • Cardio Fitness (V02 max) • 6-minute walk distance • Walking speed • Step length • Double support time • Walking asymmetry Exercise Tracking • Walk • Run • Cycle • Row • Stair Step • Yoga ••••••• Elliptical Dance Hiking Strength Training Core Training Swimming Wheelchair Apple’s research teams are actively exploring new potential health indicators Watch might be able to help monitor. Current research partnerships include: Apple Heart and Movement Study A collaboration with the American Heart Association and Brigham and Women’s Hospital this study will explore the links between physical activity and heart health to gain a better understanding of potential early warning signs. Apple Women’s Health Study Apple has teamed up with the Harvard T.H. Chan School of Public Health and the National Institute of Environmental Health Sciences to gain a deeper understanding of how certain demographic and lifestyle factors could have an impact on menstrual cycles and gynecologic conditions including infertility, menopause, and PCOS. Apple Hearing Study Conducted in conjunction with the University of Michigan, this groundbreaking study will advance the understanding of how hearing could be impacted over time by exposure to sound at certain levels. 46 THEME 1: APPLE HEALTH DATA ORCHESTRATION Facilitating consumer-directed data sharing Providers Caregivers Researchers Apple recently announced that consumers using its Health app will be able to securely share their health information with their doctors or family members. Meanwhile, researchers continue to leverage ResearchKit to engage with participants. 47 Theme 2: Expanding Apple Watch sales with subsidy partnerships 48 THEME 2: SUBSIDY DEALS FOR WATCH Apple is pursuing subsidy models for the Watch In tandem with the launch of iPhone, Apple worked with cellular carriers to blunt the sticker shock of the iPhone’s price. The strategy worked, and the iPhone continues to be Apple’s best-selling device. Today, the company is pursuing the same strategy for Watch and is looking to partner with enterprise healthcare organizations. Aetna insurance customers can now earn a free Apple Watch with new Attain wellness program May 2, 2019 Medicare Advantage insurer startup Devoted Health first to subsidize Apple Watch October 7, 2019 UnitedHealthcare is offering Motion enrollees a six-month Apple Fitness+ subscription and a free Apple Watch December 19, 2020 49 Theme 3: Establishing Apple’s health and wellness services 50 THEME 3: APPLE HEALTH AND WELLNESS SERVICES Health services is a new line of business In December 2020, Apple launched a streaming exercise service called Fitness+. The service offers a wide variety of guided exercise routines with regularly updated content. Apple Piloted Running Its Own Subscription Based Primary Healthcare Service With 'Apple Doctors’ June 16, 2021 The company also reportedly explored launching, or acquiring, its own direct primary care company, similar to the path Amazon is taking with Amazon Care. Apple’s effort here has reportedly stalled. 51 Key takeaways & implications 52 KEY TAKEAWAYS & IMPLICATIONS This year, Apple will focus on… Theme Orchestrating health data sharing for Apple customers Expanding Watch sales with subsidy partnerships Establishing Apple’s health and wellness services Takeaways Apple has been a leader in its effort to make health data easier for consumers to access. It launched Health Record in 2018 so consumers can store their medical records in iOS. Apple recently announced that customers will be able to share those records with caregivers and other healthcare providers. Apple is generating its own health data through iOS and Watch sensors and algorithms. Apple is negotiating with health plans to offer subsidized Apple Watches to members. The company has established an active subsidy arrangement for iPhone and is working to replicate that for Watch. The company has seen moderate interest, landing agreements with 2 of the largest payers in the nation, Aetna and UnitedHealthcare. Apple launched Fitness+ to bring workout content to users for a monthly subscription fee. Like Watch, the company is accelerating sales through subsidy partnerships with payers. More recently, Apple experimented with building its own virtual care services. Implications Apple will engineer an increasingly comprehensive picture of consumer health. With medical record data on hand, consumers can seek care from new locations, locally or virtually. Apple will continue to lead in this space, building sensors, algorithms, and apps to engage consumers on health and wellness. Expect Apple and Google to make smartwatches a standard member benefit. Subsidized smartwatches are going mainstream. Beyond Apple, Google has also inked deals with Anthem and BCBSA to bring free or heavily discounted smartwatches to members. Apple could be the next big tech vendor directly competing with care providers. Today, Amazon is the only big tech vendor offering health services to consumers. That could quickly change as Apple ramps up its subscription business, if it can mature its virtual care strategy. 53 Microsoft 54 EXECUTIVE’S PERSPECTIVE: MICROSOFT “Artificial intelligence represents one of technology’s most important priorities, and healthcare is perhaps AI’s most urgent application.” Satya Nadella, Microsoft CEO 55 WHERE MICROSOFT IS FOCUSING GROWING ENTERPRISE SALES WITH MICROSOFT CLOUD FOR HEALTHCARE Healthcare organizations were late to cloud migration, but demand has ramped up with the proliferation of industry cloud offerings. Microsoft is investing heavily to ensure its wellpositioned in the emerging market. BUILDING CREDIBILITY WITH HEALTHCARE AI RESEARCH AI has the potential to automate administrative tasks and close critical insight gaps across the healthcare value chain. Microsoft is building a data processing pipeline purpose built to support this transformation. CULTIVATING DEMAND FOR MAGIC LEAP AND KINECT IN HEALTHCARE Innovation in consumer electronics is supporting a wide range of use cases in digital health. Microsoft’s Xbox Kinect and HoloLens are both finding applications in healthcare. 56 Theme 1: Growing enterprise sales with Microsoft Cloud for healthcare 57 THEME 1: MICROSOFT’S HEALTH CLOUD PLAYS Starting with an EHR-integrated patient communication platform After the onset of Covid-19, health system leaders reported that integrating telehealth solutions into existing clinical workflows was the single leading technology problem they were facing. Microsoft was quick to respond. It has since secured HITRUST certification for its Teams platforms and has partnered with Epic Systems to integrate a Teams-based telehealth solution directly within existing clinical workflows. 58 THEME 1: MICROSOFT’S HEALTH CLOUD PLAYS Adding enterprise innovation tools with prebuilt healthcare connectors Microsoft’s entire Power Platform has been optimized for enterprise healthcare clients. The Power Platform is HIPAA-compliant and has the following features: • Power BI: data analytics and dashboarding • Power Automate: RPA-based workflow automation solutions • Power Apps: Low-code application development environment Microsoft’s Hospital Emergency Response Power BI Template 59 THEME 1: MICROSOFT’S HEALTH CLOUD PLAYS Combining Apps and Azure services to drive healthcare innovation forward Notable Clients 179 services are available within Azure’s HIPAA-compliant, HITRUSTcertified platform. These include several purposes built for healthcare organizations: • Azure API for FHIR: a FHIR-native data ingestion and preparation service designed to help health systems prepare and normalize clinical data for data science projects • Azure IoT Connector for FHIR: a service that leverages ML to assign FHIR resources to clinical facts extracted from streaming IoT data • Azure Health Bot: a chatbot service trained to support healthcare consumer engagement 60 THEME 1: MICROSOFT’S HEALTH CLOUD PLAYS While acquiring new tools to support clinicians With its acquisition of Nuance Communications, Microsoft absorbs an advanced suite of solutions designed to automate chart review and clinical documentation tasks for doctors. Nuance solutions are currently used by more than 55% of physicians and 75% of radiologists in the US and are used in 77% of U.S. hospitals. 61 Theme 2: Building credibility with healthcare AI research 62 THEME 2: MICROSOFT’S AI IN HEALTHCARE EFFORTS Healthcare clients are partnering with Microsoft for AI support… Humana will partner with Microsoft to build predictive health care solutions using Azure cloud, Azure artificial intelligence, and voice technologies. October 21, 2019 | Providence St. Joseph Health will develop new technologies that will harness the power of Microsoft Azure and AI to transform the care experience. July 8, 2019 | John’s Hopkins Medicine partners with Microsoft to accelerate precision medicine with the power of Microsoft Azure, and its AI capabilities. June 18, 2020 | Novartis and Microsoft announce collaboration to transform medicine with artificial intelligence. October 7, 2019 | 63 THEME 2: MICROSOFT’S AI IN HEALTHCARE EFFORTS …because industry incumbents are not inspiring confidence Researchers identified racial bias in a widely used algorithm published by Optum. The authors estimated that the racial bias discovered reduces the number of Black patients identified for extra care by more than half. EHR vendor Epic released an AI tool that predicts the likelihood of no-shows to assist practices making targeted overbooking decisions. Potential for explicit discrimination was obvious because the predictive model included personal characteristics that could result in healthcare resources being systematically diverted from individuals who are already marginalized. 64 THEME 2: MICROSOFT’S AI IN HEALTHCARE EFFORTS Microsoft is working to differentiate its technology with ‘Responsible AI’ research Microsoft has secured more patents related to medical technology than any other big tech vendor, followed by Google and then Apple. Today, that research is heavily focused on bringing governance and technology to the challenge of building ethical AI. In addition to conducting its own research, it funds outside research efforts focused on building new tools and governance strategies to improve AI fairness, data privacy, reliability, and safety. 65 THEME 2: MICROSOFT’S AI IN HEALTHCARE EFFORTS …and an ‘Explainable AI’ output As the healthcare industry continues to move forward with AI implementations, the call for Explainable AI has grown. Doctors need more than a risk score; they need to consider the underlying factors that contributed to a model’s prediction for their patient. Model outputs produced by “black box” algorithms are notoriously difficult to explain. Microsoft is working to fix this with InterpretML, an open-source toolkit designed to bring clarity to model outputs. Why? 66 Theme 3: Cultivating demand for Magic Leap and Kinect in healthcare 67 THEME 3: EXTENDING HEALTH INNOVATION WITH SMART DEVICES Capitalizing on enterprise demand for Kinect Kinect, Microsoft’s motion-sensing smart camera solution, has a long history in healthcare, supporting early remote physical therapy efforts, as well as several gamification solutions. More recently, the platform has found a home in hospitals, monitoring for falls and evaluating newborns for possible movement disorders. 68 THEME 3: EXTENDING HEALTH INNOVATION WITH SMART DEVICES Cultivating AR/VR use cases in healthcare HoloLens, Microsoft’s AR/VR platform, is also finding a home in healthcare. The company directly markets the device to the healthcare industry, with a partner ecosystem in place to address • Medical Training • Surgical Planning and Intraoperative Guidance • Acute Telehealth and Care Collaboration At $3,500 USD each, HoloLens is an expensive piece of hardware with a limited number of solutions ready for use. Microsoft is overcoming this by providing clients a way of building custom solutions on Azure. 69 Key takeaways & implications 70 KEY TAKEAWAYS & IMPLICATIONS This year, Microsoft will focus on… Theme Growing enterprise sales with Microsoft Cloud for healthcare Building credibility with healthcare AI research Cultivating demand for Magic Leap and Kinect in healthcare Takeaways Microsoft is building an innovation platform for enterprise by combining Power Platform, Azure, and Teams to support AI, automation, and low-code app development efforts. This tech stack is HITRUSTcertified and FHIR-enabled and comes with architecture plans to address common innovation use cases in healthcare. Traditional health IT vendors and enterprise incumbents are fielding models that perform poorly in the wild, lack clinical explainability, and in many cases are biased toward already disadvantaged members of society. Microsoft is investing and partnering to position itself as a leader in how to implement AI safely and fairly in healthcare. Microsoft lacks a wearable, though it is rumored to be exploring its options in that space. Instead, Microsoft is focused on growing its Azure Kinect and HoloLens device sales. Healthcare vendors have the potential to be an active buyer if the ROI can be proven. Implications Expect Microsoft to rapidly expand its market position supporting enterprise health innovation. Microsoft is the best-positioned big tech vendor to support digital transformation efforts among enterprise healthcare organizations. Its acquisition of Nuance will further accelerate its already strong momentum. Microsoft will differentiate on AI strategy and governance, rather than just building more tools. For several years, cloud providers have been competing for enterprise healthcare market share by lowering the technical barriers to adopt AI and automation. Expect the next generation of tools to focus on responsible AI, model monitoring, and data governance needs. Microsoft will work to prove the ROI in AR/VR and IoT smart cameras. To build enterprise demand for its devices, it will cultivate a marketplace of purpose-built apps and mature its development environment to cater to build or buy strategies in AR/VR and smart cameras. 71 Google 72 EXECUTIVE’S PERSPECTIVE: GOOGLE “Healthcare offers the biggest potential over the next 5 to 10 years for using artificial intelligence to improve outcome.” Sundar Pichai, Google CEO 73 WHERE GOOGLE IS FOCUSING CREATING CONSUMER DEMAND FOR GOOGLE PRODUCTS WITH HEALTH FEATURES Google is building healthcare-specific tech into a wide range of its existing consumer products, including search, Android OS, Fitbit, and Nest, to improve clinical outcomes for users. GROWING ENTERPRISE SALES WITH GOOGLE CLOUD FOR HEALTHCARE Google’s industry cloud for healthcare combines its Google Workspace productivity suite with Google Cloud Platform data storage and innovation tools. The company is aggressively pursuing the “industry cloud” market by contributing its own healthcare solutions. BUILDING BRAND DIFFERENTIATION WITH HEALTHCARE INNOVATION From its earliest days, Google’s research teams have been bullish on healthcare applications. Not all efforts have paid off, as is par for the course with moonshot labs, but Google persists and its reputation as an innovator within the industry benefits. 74 Theme 1: Creating consumer demand for Google products with health features 75 THEME 1: CONSUMER HEALTH TECH Google is baking its health solutions into search Google fields 70,000 health-related searches per minute "People are asking us about conditions, medication, symptoms, and insurance questions. In this case we are organizing the world's health information and making it accessible to everyone.” — David Feinberg, MD and VP Google Health Mental health Dermatology Covid-19 Google Search presents 4 clinicallyvalidated mental health assessments when users search for related terms. Google Search allows users to take a picture of their skin condition and uses AI to identify possible causes (limited to Europe at this time). Google has partnered with local health agencies to ensure reputable, local information is being displayed when users search about Covid-19. 76 THEME 1: CONSUMER HEALTH TECH …as well as the Android OS Health and wellness support Google’s Android OS and Wear OS have been maturing their health and wellness capabilities for years. Google works with several notable industry partners on these efforts, including: Health record data In more recent weeks, it has been reported that the Google Health team is building an Apple Health Records-like app that will allow users to download and store their medical records data on their personal devices. In June 2021, it was revealed that the team responsible for this work was transferred to the Fitbit organization. 77 THEME 1: CONSUMER HEALTH TECH It’s betting big on its own wearable strategy In 2019, Google acquired Fitbit for $2.1B to compete with Apple and Samsung in the wearables market. Since then, Google has shifted much of its Google Health team to Fitbit and has announced intentions of migrating Fitbit to its Wear OS operating system. Commercially, Fitbit has found success pursuing subsidy partnerships with insurers to drive sales. Notable partners: • Activity • Sleep patterns • Sp02 • Respiration rate • Skin temperature • Resting heart rate • Heart rate variability • ECG waveform (includes AI to spot atrial fibrillation) • Electrodermal activity (used to monitor stress levels) 78 THEME 1: CONSUMER HEALTH TECH Google Nest now also tackles consumer health The team at Nest has updated its Nest Hub to passively track sleep patterns without requiring a wearable. Nest’s new sleep tracking feature is built with Soli, a miniature radar designed to support gesture control and motion sensing. It provides detailed movement data to track sleep without a wearable or a camera. 79 Theme 2: Growing enterprise sales with Google Cloud for healthcare 80 THEME 2: GOOGLE’S HEALTH CLOUD PLAYS Google’s industry cloud strategy starts with a HITRUST certified Google Workspace Google has secured HITRUST certification for its entire Workspace product suite, giving enterprise healthcare organizations a SaaS-based productivity suite capable of supporting patient communications, scheduling, messaging and collaboration, and even telehealth visits. 81 THEME 2: GOOGLE’S HEALTH CLOUD PLAYS Adding interoperability tools to streamline health data research De-identification models scrub clinical data of PHI prior to data analysis or external sharing Notable Clients Cloud Healthcare API allows healthcare organizations to integrate on premise enterprise systems with Google Cloud through HL7v2 messages, FHIR v4 APIs, or DICOM. HITRUST certified data cloud services support data preparation, training, and visualization. Consent Management allows healthcare organizations to comply with interoperability laws by offering consumers control of sharing their data. Source: Amazon 82 THEME 2: GOOGLE’S HEALTH CLOUD PLAYS Google rounds out its industry cloud strategy with SaaS solutions for enterprise healthcare Care Studio Streams In February, Google Health launched Care Studio, an AI-powered EHR search tool designed to aggregate clinical information from many sources and present it based on its relative importance. Source: Amazon Google Health absorbed Streams from DeepMind in November 2018. The app acts as a virtual assistant for clinicians, monitoring patient condition with predictive analytics and pushing alerts to the care team. Today, the app is used by the NHS to forecast kidney injury in hospitalized patients. 83 Theme 3: Building brand differentiation with healthcare innovation 84 THEME 3: HEALTHCARE INNOVATION Google is building models to detect a wide range of conditions… Ophthalmology Cardiovascular disease Anemia Google has developed models that analyze retinal images and identify more than 50 eye diseases, including diabetic retinopathy and macular degeneration. Retinal scans have also proven to be valuable in assessing cardiovascular risk. Google is working on models that predict heart attack and stroke. Multiple “explanation” techniques suggest that the optic disc is important for detecting anemia from images of the back of the eye. Retinal images are also supporting work to quantify hemoglobin levels and identify anemia. 85 THEME 3: HEALTHCARE INNOVATION …such as models tackling cancer screening… Breast cancer Lung cancer Google’s research on mammography interpretation found that its model spotted breast cancer with greater accuracy, fewer false positives, and fewer false negatives than experts. A follow-on study is evaluating how this model performs in the wild. Google’s research on lung image analysis improved lung cancer detection uncovered 5% more cancer cases while reducing false-positive exams by more than 11%. 86 THEME 3: HEALTHCARE INNOVATION …and cancer treatment Assessing cancer aggression Accelerating radiotherapy planning Google is working on models that can help pathologists score tumor aggressiveness in prostate cancer faster and more accurately. In ongoing work with Mayo Clinic, Google hopes to speed up radiotherapy treatment planning for head and neck cancers by automating manual image annotation work that can take several hours per patient. 87 Key takeaways & implications 88 KEY TAKEAWAYS & IMPLICATIONS This year, Google will focus on… Theme Creating consumer demand for Google products with health features Growing enterprise sales with Google Cloud for healthcare Building brand differentiation with healthcare innovation Takeaways Google’s consumer health efforts span the breadth of its organizational chart, with Search, Fitbit, Android, and Nest. The company has been much slower to market in some areas – such as medical record data aggregation services or atrial fibrillation alerts – but first to market with others, like DermAI. Behind Microsoft, Google has the most publicly disclosed healthcare clients leveraging its industry cloud solutions. The company was also just behind Microsoft on securing HITRUST certification for its public cloud infrastructure and introducing native support for FHIR data ingestion. Google’s healthcare research is heavily focused on building AI to support diagnostics, clinical surveillance, and treatment optimization. Its labs have pursued healthcare initiatives since their earliest days, and some models are already reaching commercial availability. Implications Google’s consumer health strategy and pace of innovation will remain fractured. Google’s consumer health strategy is poised to remain siloed. Its core healthcare strategy team, Google Health recently dissolved its consumer health teams, moving them to other parts of the business. Do not expect a wellorchestrated consumer health strategy. Google and Microsoft’s cloud offerings will become cornerstones of the enterprise tech stack. Expect cloud services to be as critical to healthcare operations as the EHR, with market share disproportionately landing with Google and Microsoft. These new enterprise revenue streams will accelerate GCP’s healthcare innovations. As Google’s healthcare AI evolves, a more expansive clinical UX will follow. Today, Care Studio and Streams deliver Google AI to clinicians. As more models reach commercial readiness, expect these to evolve into more robust insight delivery solutions. Also expect enhancements for radiology and pathology. 89 Amazon 90 EXECUTIVE’S PERSPECTIVE: AMAZON “What we don't want to see is a handful of big entities, big companies, big healthcare systems dominating a sector." Babak Parviz, VP at Amazon Grand Challenge 91 WHERE AMAZON IS FOCUSING BUILDING A HEALTH SERVICES BUSINESS FOR CONSUMERS AND EMPLOYERS Consumerization of healthcare is creating opportunities for new entrants to outshine industry incumbents with more convenient services. Amazon is all in, with telehealth, pharmacy, and diagnostics offerings for consumers and employers. GROWING ENTERPRISE SALES WITH AWS FOR HEALTH Industry incumbents are partnering with public cloud leaders to transform medical care. Amazon is working hard to make AWS a toptier contender in the industry cloud market. BUILDING CONSUMER DEMAND FOR AMAZON DEVICES Consumer devices, like wearables and smart speakers, are finding a home supporting many healthfocused use cases. Amazon sees opportunities for its and smart speakers. wearables 92 Theme 1: Building a health services business for consumers and employers 93 THEME 1: CONSUMERIZATION OF HEALTHCARE Amazon builds a better employee health experience… Amazon Care Following the lead of a growing litany of unicorn startups, Amazon is now competing in the telehealth market. Launched to address rising employee medical costs, Amazon Care brings text, video, and in-person care to members. The platform delivers primary, urgent, and preventative services both digitally and in-person. It also offers services addressing sleep issues and joint pain. The company piloted the program with its own employees and is now selling the service to other self-funded employers nationally. 94 THEME 1: CONSUMERIZATION OF HEALTHCARE …alongside a portfolio of ancillary services Amazon Pharmacy Amazon Dx Amazon Pharmacy, built on its PillPack acquisition, brings price transparency, home medication delivery, and on-demand pharmacist consultations to the mail order pharmacy market. Initially launched as a service for its own employees, Amazon has opened its Amazon Dx service to the general public. The on-demand diagnostic lab is offering an FDA emergency use authorized Covid-19 diagnostic tests for inhome use by consumers. Its processing lab has achieved CLIA and CAP certification — gold standards in laboratory and pathology credentialing. 95 THEME 1: CONSUMERIZATION OF HEALTHCARE Amazon’s consumer health strategy takes shape In less than a year, Amazon has launched services providing direct patient care, pharmacy services, and diagnostic lab testing – a blistering pace of product launches. Amazon aims to differentiate with a more convenient patient experience and reduced overall costs for employers, payers, and consumers themselves. There’s room to grow. Currently, Amazon Dx only offers Covid-19 testing but there is sustained demand for expanded at home testing services, particularly for STIs, fertility, hormone levels, and screenings for common conditions such as Celiac and Lyme. There is also untapped opportunity for Amazon in diagnostic imaging services. A key cost driver in the US, diagnostic imaging services account for $100B in largely unnecessary annual spend – and a growing number of images can now be acquired by in-home technicians. Direct patient care Pharmacy services Diagnostic testing 96 Theme 2: Growing enterprise sales with AWS for health 97 THEME 2: AMAZON’S HEALTH CLOUD PLAYS AWS is building a FHIR data processing pipeline Notable Clients 120 services are available within AWS’s HIPAA-compliant, HITRUST-certified platform, including: • HealthLake: a FHIR native data ingestion and preparation service designed to help health systems connect EHR data with AWS AI (SageMaker) and Analytics (QuickSight) tools • Transcribe Medical: a speech-to-text service built with a clinical vocabulary trained to support medical transcription use cases • Comprehend Medical: a service that leverages ML to extract and code key clinical facts from unstructured text 98 THEME 2: AMAZON’S HEALTH CLOUD PLAYS A marketplace of pretrained models for healthcare Amazon has cultivated a marketplace of pre-trained models specifically designed with enterprise healthcare in mind. While Comprehend Medical and HealthLake are designed to transform healthcare data into a standardized FHIR data lake, the SageMaker model market brings plug-and-play predictive algorithms to help organizations generate immediate value from that data. 99 THEME 2: AMAZON’S HEALTH CLOUD PLAYS Alexa brings voice AI to healthcare Alexa, Amazon’s HIPAA-compliant virtual assistant, brings conversational AI to consumers and healthcare organizations through a variety of smart devices. Notable enterprise adoption of Alexa: In 2020, Amazon launched Alexa Care Hub, a free virtual assistant designed specifically to support independent seniors and their family caregivers. 100 Theme 3: Building consumer demand for Amazon devices 101 THEME 3: DEMAND FOR HEALTHCARE DEVICES Amazon has branded med device offerings Amazon entered the medical device market in 2018 when it launched Amazon Choice, its own line of medical devices focused on diabetes and heart health. Today, users can buy Amazon branded wireless continuous glucose monitors, as well as blood test strips and lancets. Amazon Choice also markets several wireless blood pressure cuffs. All of Amazon’s medical devices integrate with its Amazon Choice app and Apple Health. 102 THEME 3: DEMAND FOR HEALTHCARE DEVICES It’s targeting smartwatch demand with Halo Amazon entered the wearables market in December 2020 with the introduction of Halo, its voice-controlled activity tracker. Halo tracks activity, sleep, body fat composition, and tone of voice. The company offers third-party programs, such as athome workouts, guided meditations, and sleep sounds, from partners including Lifesum, SWEAT, and Headspace. At launch, Amazon announced that its wearable would be directly integrated with the Cerner EHR so users could share measures with their care teams. 103 Key takeaways & implications 104 KEY TAKEAWAYS & IMPLICATIONS This year, Amazon will focus on… Theme Takeaways Implications Building a health services business for consumers and employers Growing enterprise software sales with AWS for health Building consumer demand for Amazon’s health devices Amazon is the first – and only – big tech vendor directly engaged in care delivery. It has shown it is willing to compete for patients in areas where it can deliver a better experience: patient care, pharmacy, and now, diagnostics. The company has the assets to expand into additional areas should its initial efforts prove profitable. Amazon was late to the industry cloud strategies being pursued by GCP and Azure, but today it offers rich support for FHIR data modeling, native support for clinical fact extraction from unstructured text, and a compelling model marketplace. Amazon has brought a portfolio of clinical-grade medical devices to market a sensor-equipped smartwatch focused on capturing health data and a smart speaker with a HIPAAcompliant voice assistant. Expect Amazon to expand its diagnostics offerings next. Amazon will continue building solutions catering to patients and employers. Anticipate a larger geographic footprint for Amazon Care, more diagnostic tests for Amazon Dx, and forays into new areas, such as diagnostic imaging or a direct contracting market for health systems and employers. AWS will see slow growth in the enterprise healthcare cloud services market. Expect AWS to continue investing heavily in its healthcarefocused cloud services. The company’s growth in this space will likely trail competitors but should yield an increase in digital transformation partnerships with health systems and payers. Amazon will pursue device sales through subsidized healthcare partnerships. Health insurers are subsidizing the cost of Apple Watch and Google Fitbit for members. Expect Amazon to pursue the same arrangements for both Halo and Echo. 105 cbinsights.com @cbinsights 106
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