Apple Moves a Step Closer to Revolutionizing Healthcare

Source: One Drop

Apple (AAPL -0.81%) wants to revolutionize healthcare.

After its March announcement of CareKit -- a software platform specifically dedicated to helping patients and caregivers connect -- Apple officially debuted the first four apps in the CareKit family late last month. Let's quickly review Apple's first HealthKit apps and the potential benefits this new  platform might yield Apple, its customers, and the broader healthcare industry.

CareKit's first apps

Catering to a diverse range of healthcare needs, the first 4 HealthKit apps include Glow Nurture and Glow Baby, which help track prenatal and infant development; Start, which helps individuals and doctors track depression medication efficacy; and One Drop, which helps patients manage their diabetes using a host of data points. Collectively, the four apps represent the opening gambit for the newest of Apple's three healthcare software platforms.

As a quick matter of semantics for those in need of a refresher, HealthKit is Apple's developer platform for apps that monitor physical data such as amount of exercise, quality of sleep, respiratory rate, and more when combined with a suitable piece of health-tracking hardware. ResearchKit allows medical research facilities to create apps that people participating in medical studies can use to gather data. Finally, CareKit allows patients and doctors to track and monitor chronic conditions with the idea of developing maximally effective treatments for patients.

The CareKit developer framework, which Apple recently released to developers worldwide, contains four distinct "modules" or functionalities that programmers can build into their apps. They include sections that enable doctors to create patient care plans within an app; symptom measurement; and two portions that enable secure communication between patients and their care teams. The CareKit SDK is meant to help simplify the production process for app developers, which the company hopes will result in a greater number of CareKit apps reaching the App Store.

This strategy sounds great on paper. However, investors should also realize this is indeed a long-term effort on Apple's part.

Source: Glow

Playing the long game 
Many in the medical community believe software platforms like CareKit represent the future of healthcare. Importantly though, this transition will likely occur at a pace far more gradual than the frenetic rate of change typical within the tech community.

In an interview with The Verge, NYU biomedical ethicist Arthur Caplan commented, "I think it's the future ... The biggest challenge will be quality control and convincing doctors to use these apps ... doctors are not the most tech savvy folks."

This assessment seems all the more appropriate in light of the fact that an estimated 20% of American doctors have yet to even adopt electronic medical records -- a truly astounding figure in our constantly connected digital world. So assuming Apple can indeed gradually spur adoption of CareKit and its other healthcare apps, how exactly does this benefit Apple and its shareholders?

From an investor's perspective, Apple's push into healthcare is all about strengthening its ecosystem. Though the company continues to tout its booming services division, Apple's profitability still depends largely on its ability to repeatedly sell its high-margin hardware. In considering this, it's important to note that consumers don't exclusively purchase Apple's iDevices for their leading hardware and design, though both attributes certainly factor into those decisions.

Instead, the complementary forces of Apple's hardware, software, services, and even branding efforts combine to form its overall value proposition to consumers. Healthcare applications like CareKit help create useful experiences for those customers, which helps Apple both draw in and retain consumers within its ecosystem. As such, Apple's efforts to innovate and create useful services are an indirect revenue driver for the company.

There's also the potential for Apple to directly drive increased revenue through the commissions it collects on app download fees and in-app purchases.   This likely won't prove particularly meaningful in the near term, but it's still worth noting. More broadly, such apps will likely play a significant role in the future of healthcare and tech, which alone makes expanding into the space worthwhile for Apple. Potentially improving patient outcomes while strengthening its own ecosystem is the kind of win-win investors should love.