Are you prepared to wear your health care?
According to an IDC report, consumers and businesses will buy nearly 112 million wearable computer devices by 2018, a 78.4% growth rate from 2014's predicted sales of about 19 million units. Most of these gadgets fall in the realm of health-related devices.
Wearable technology—or smart tech that can be worn on someone's person, such as a wristband or piece of clothing—quickly found its way into a number of industries. Now doctors, other health professionals, and the public themselves turn to wearable health care devices to improve how wearers are able to both receive health care and take care of themselves.
This past May, ResearchMoz reported that the global diagnostic wearable medical devices market, which includes the growing fitness bands industry, was worth nearly $1.5 billion in 2012. Along with heart rate monitors, these fitness bands represent some of the most common consumer-facing wearable tech available on the market. According to NPD Group and FitBit, one of the major players in health and fitness wearable devices, the digital fitness device segment alone grew to $330 million in 2013.
As wearable health care technology becomes more of a trend in health care, how will this affect the industry and its working parts?
What does wearable health care technology do?
Wearable health care technology divides into three separate groups:
- Complex accessories (currently the most popular category) operate semi-independently but need a smartphone, tablet, or computer for full functionality. These include Fitbit, Jawbone UP, and Nike's (NYSE:NKE) Nike+ FuelBand.
- Smart accessories are consumer health care products that can work with third-party apps. IDC predicts that this will be the leading category of health care wearables within five years.
- Smart wearables, such as Samsung smartwatches and Google Glass, which operate independently (requiring only an Internet connection) and use third-party health-related apps.
The uses for wearable health care technology run the gamut. The most popular devices are currently heart monitors, but other devices perform a wide range of medical, health, and fitness functions. Some devices monitor sleep or pain so that a doctor can recognize patterns in a patient's health and wellbeing. Others track data for fitness regimens that both consumers and doctors can use to dictate how the wearer's exercise routines progress. In essence, wearable technology allows doctors to monitor their patients outside of the office while they go about their daily routines.
Most importantly for the health care industry, wearable health care technology lowers hospital costs. According to Vitality Group, at the end of a five-year study, hospital costs decreased by 6% for participants who were inactive and became active over the course of the study. Hospital costs for participants who were active for the entire five years dropped by 16% compared to those who remained inactive.
The players in wearable health care technology
The biggest players in the wearable health and fitness technology industry include tech start-ups, mobile app companies, creators of general-purpose wearable devices that have a health component, and, of course, the mammoths in the fitness industry, particularly athletic apparel brands.
As the frontrunners of wearable tech among athletic brands, Nike, Adidas (NASDAQOTH:ADDYY), and Under Armour (NYSE:UA) have created some of the first, best known, and most popular health and fitness wearables in the industry. This comes as no surprise considering the companies' widespread brand awareness and the amount of money that they can throw at this burgeoning sector.
However, in this market, health tech start-ups currently remain king. Nike+ FuelBands made up only 10% of fitness tracker retail sales in 2013, while FitBit's fitness bands accounted for 68% of the market. Jawbone UP sales accounted for 19% of all devices sold that year.
Healthcare, meet Big Data
In addition to the patient and doctor-facing benefits and the reduction of hospital costs, wearable health care technology means big things for Big Data and the researchers who use it to improve both patient health and the health care system itself.
Like most smart devices and apps of the past decade, wearable technology provides a unique perspective into the lives of its users. Smart tech records everything from a user's name and location to the data concerning how an app or device is used on a regular basis, information that was previously inaccessible to researchers.
Wearable health care technology uses sensors to measure various aspects of a patient's health, such as movement or heart rate, and records that data. This data set grows the longer a patient uses the app or device. It then becomes a rich source of information that can be used to identify patterns and produce other findings for both doctors and researchers. This is especially relevant if data sets from multiple patients can be used and compared.
Here, Big Data shines. From doctors and lab researchers to companies studying the effectiveness of a product or procedure in a hospital, this data is crucial to advancing health care beyond the past limitations of how analysts could accrue such data.
Will health insurance accommodate wearables?
Because of improved patient health and reduced hospital costs, insurance companies are likely to advocate the adoption of wearable health care technologies. Wearables have a significant impact on the way that patients view their health care, and this will in turn affect the way that they view what their health insurance can provide. Doctors will uncover new methods for the diagnosis and treatment of their patients, which will likely impact doctors' relationships with the insurance companies who can accommodate wearables as well.
Where is wearable health care tech headed?
Like the overall wearables market, sales and shipments for wearable health care technology are on the rise. According to Statista, shipments for the overall wearable devices market will rise from 53.9 million in 2013 to 1.64 billion by 2015, for an increase of 67%. MarketsandMarkets predicts that the wearable electronics market will be worth $8.36 billion by 2018.
For the wearable fitness market alone, IHS estimates that sales will increase from its prediction of 43.8 million shipments in 2013 to 57.2 million in 2017, an increase of 23%. Some consider this to be a low estimate.
Wearable devices are here to stay, and it was only a matter of time before they entered the health care sector as well. Now, with mammoth tech companies like Samsung and Apple integrating health sensors into their own smart wearable products, health care wearables face a promising future.
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Carolyn Heneghan has no position in any stocks mentioned. The Motley Fool recommends Nike and Under Armour. The Motley Fool owns shares of Nike and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.