Humana (NYSE:HUM) is one of the country's largest healthcare insurers, and soon Humana's members will be able to seamlessly share their Apple (NASDAQ:AAPL) Health information with Humana's HumanaVitality rewards program.
That program provides perks to members who reach fitness goals, but the potential opportunity for Humana and Apple stretches far beyond tracking trips to the gym.
First, a bit of background on Apple Health
As Apple devices become smarter, the number of healthcare-related apps on Apple's app store is surging.
As a result, Apple created Apple Health, an easy to use dashboard that offers consumers a simple interface for compiling and viewing healthcare information. Apple also rolled out Apple HealthKit, an API that app developers can use to integrate with the Apple Health dashboard.
And to encourage even more healthcare-related apps, Apple built a host of healthcare friendly features into its latest mobile device, the Apple Watch.
Thanks to a heart rate sensor, the Apple Watch can monitor the quality of your physical activity, and, when paired with an iPhone 5 or iPhone 6, can count the number of steps you walk, keep track of how often you exercise, and evaluate other heart-healthy behavior, such as how much time is spent sitting versus moving.
Now, a bit of background on Humana
Humana gets about three quarters of its revenue from Medicare Advantage products, which are increasingly being used in place of the original Medicare because they often offer more comprehensive healthcare insurance, including prescription drug coverage.
According to the Centers for Medicare and Medicaid, enrollment in Medicare Advantage programs like those offered by Humana is at a record high, and since 10,000 baby boomers are turning 65 daily, adoption of Medicare Advantage plans is likely to grow rather than shrink.
While Humana gets the lion's share of its business from Medicare Advantage, it also serves individuals and families, too. Humana boasts more than 1.1 million members in its family and individual plans, and the company will likely see that enrollment grow thanks to its participation in state healthcare exchanges.
Since healthcare utilization grows as we get older, insurers like Humana are eager to develop new programs designed to improve member health and reduce the cost of treating disease.
Those programs could prove critical to controlling costs, especially given that healthcare spending already totals roughly $3 trillion a year in the U.S. and spending is expected to climb to more than $5 trillion by 2022.
To help rein in its share of those costs, Humana launched HumanaVitality, a free app in the Apple App store that can link members' fitness devices to the Apple Health app. That health information can then be shared with Humana to earn points, which can be redeemed for perks like fitness equipment and movie tickets.
But its not just members that benefit from this kind of data sharing. By encouraging members to populate electronic records with important health data, healthcare payers like Humana may be able to identify health risks sooner. If so, healthcare providers could intervene with less costly care prior to an expensive hospitalization. Additionally, by leveraging data across a large number of users, Humana may be able to spot important health trends that it can use to improve patient care, and lower costs, too.
Looking to the future
Apple appears to believe that healthcare may be a great way to keep users in its ecosystem. The company is rumored to be investigating ways to use its devices to monitor blood pressure and glucose levels, too. If Apple can develop mobile devices with must-have healthcare technology, it could become the gatekeeper of information critical to consumers, healthcare payers, and healthcare providers. Such a role could conceivably be worth billions of dollars to Apple over time.
For Humana, the ability to gather real-time member health data could prove game-changing, too. That's because technology could eventually allow it to revolutionize how we diagnose and offer healthcare. For example, technology could someday allow providers to offer low cost mobile telehealth services that could reduce in-office doctor visits and hospital readmissions. Given that backdrop, it's likely we'll see even more health payers like Humana launch increasingly robust healthcare apps for members in the future, so stay tuned.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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.