Apple (NASDAQ: AAPL ) recently declared its intentions to unite fitness bands, medical devices, and personal fitness apps with its new iOS 8 app, Health. While most people are now wondering whether or not an iWatch is now also in the works, there's one big piece of Apple's health care strategy that shouldn't be ignored -- its partnership with electronic health records (EHR) giant Epic Systems.
Can Apple succeed where Microsoft and Google have failed?
Epic, one of the largest EHR companies in the world, covers 51% of all patients in the U.S. Integrating Epic's EHR system into the Health app and its HealthKit system for developers could help Apple succeed in personal health records (PHRs) -- a market where Microsoft (NASDAQ: MSFT ) and Google (NASDAQ: GOOG ) have failed in the past.
Microsoft's HealthVault, a PHR system launched in 2007, tried to do on PCs what Apple's Health is now attempting on iOS devices -- to pull health data from various sources into a single online location for easy access. Microsoft tried to boost HealthVault's presence through partnerships with EHR companies like Greenway, with Mayo Clinic, and telehealth initiatives with the Kinect, but the platform has yet to achieve mainstream success.
Google followed suit in 2008 with Google Health, which imported data from EHR services, prescription records, and medical devices to a cloud-based PHR. But a lack of public knowledge about PHRs and EHRs, the more common use of physician, practice, and health plan portals, and a lack of third-party data sources caused Google to discontinue the service in 2011.
Why Apple's strategy will succeed
To understand the game-changing potential of Apple's partnership with Epic, we need to understand how important iOS devices are to medical practices.
In the past, EHR software was restricted to PCs. But iPhones and iPads started to gain popularity in hospitals for two major reasons. First, iOS devices are identical in hardware and software across the same generation (unlike the fragmented world of Android devices), making it easier to develop apps and medical peripherals for them. Second, hospitals relaxed their BYOD (bring your own device) policies to take advantage of the rise of medical apps for iOS devices.
A study from Black Book Rankings last year found that among physicians who use medical apps on smartphones, 68% used iPhones while 31% used Android devices. Also, 59% of physicians accessed medical apps from a tablet, and of those users, most preferred the iPad.
EHR companies quickly took note of Apple's rising popularity among medical professionals. Companies like Epic, Cerner, and Allscripts released new "native" iPad EHR apps that were tethered to the cloud, rather than desktop systems. Epic, for example, released two iOS apps -- Haiku for iPhones and Canto for iPads.
Therefore, HealthKit integration could connect those popular iOS medical apps and devices with Epic's widely used EHR service, pulling the data together into a single system on both iOS 8 devices and the cloud.
Why an iWatch could put HealthKit over the top
While Apple's strategy sounds like a great way to strengthen its position in clinics and hospitals, it doesn't address how the company will spread awareness among everyday consumers -- which Microsoft and Google failed to do.
Apple's Health app already offers integration with popular wearable devices like Fitbit Flex, the most popular fitness band in the world. But Apple's own iWatch could actually be so popular that it crushes fitness bands like Fitbit Flex and smart watches like Samsung's Galaxy Gear in one fell swoop. UBS analyst Steven Milunovich believes that if the iWatch launches for $300 this October, it could sell 21 million units in 2015 and 36 million units in 2016.
If the iWatch achieves that level of mainstream adoption, consumers will actually voluntarily upload their health data from their wrists straight into iOS 8 and Epic's EHR system -- an incredible feat that neither Microsoft nor Google was able to accomplish.
The Foolish takeaway
Apple's approach to uniting the health care industry's fragmented universe of medical apps, peripheral devices, and EHRs is a highly ambitious one that is likely to be embraced by medical practices and average consumers.
U.S. hospitals and medical practices are currently trying to meet the requirements of the HITECH Act, which grants them government subsidies for achieving "meaningful use" standards in EHR adoption. On the consumer end, shipments of smart bands are expected to rise from 8 million this year to 45 million by 2017, according to Canalys.
Through its partnership with Epic, Apple could connect these two growing markets together and dominate them, unlocking future growth far beyond iPhones and iPads.
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