As big tech companies vie for a slice of the $3.5 trillion spent by Americans on healthcare each year, analysts at Morgan Stanley have a bold proposal: Work together.
In a recent report, the analysts laid out the reason for why Apple might want to join Haven, the healthcare joint venture from Amazon, JPMorgan Chase and Berkshire Hathaway.
“We believe Apple joining Haven would fill two important gaps: 1) the ability to continuously monitor biometric data and 2) provide a platform to aggregate health information and in turn deliver new health services. Both are important as we transition to consumer-centric healthcare,” the analysts wrote.
Apple has added patient-facing features to its products, including heart rhythm monitoring on the Apple Watch and health information storage on the Health app. The company has also partnered with Stanford Medicine on a massive heart study as well as other studies with medical institutions at Johns Hopkins, NYU Langone and Duke University.
Morgan Stanley estimated that healthcare could represent 35 percent of the company’s revenue by 2027. At the high end, the analysts projected Apple could clear as much as $313 billion in sales from the sector.
Haven CEO Atul Gawande has previously said that wearables and smartphones will be a cornerstone of healthcare in the future.
“The more capacity we develop to monitor the body and the brain for signs of future breakdown and to correct course along the way — to deliver ‘precision medicine,’ as the lingo goes — the greater the difference health care can make in people’s lives, as well as in reducing future costs,” Gawande wrote in The New Yorker in 2017.
But none of the three companies behind Haven produce medical technology for consumers, the analysts said. “Apple can fill that gap.” And it’s not all about the gadgets: “iCloud could become the go-to cloud service for storing individual’s health data,” Morgan Stanley said.
Haven was formed more than a year ago as an effort by Amazon, JPMorgan Chase and Berkshire Hathaway to give their employees better healthcare at a lower cost. Haven has kept quiet about specific plans but said that it will be doing partnerships with other companies in 2019.
The health technology sector is expected to grow 15.9 percent annually to reach $280 billion by 2021, according to Deloitte. So far, partnerships have been a key part of the strategy among tech companies to break into the market. But those partnerships have generally been with incumbent health companies or insurers.
Apple’s historical reputation for walling off its products and software from the competition may be changing. Last year, the company partnered with Amazon to bring Apple Music to Alexa and iPhones to Amazon.com. It has also partnered with Samsung — a direct competitor — as well as Sony and Vizio to bring iTunes to smart TVs.
The analysts also noted that the Apple stock owned by Warren Buffett’s Berkshire Hathaway “could further incentivize the companies to join forces on Health.” They also floated the idea that Apple could form its own joint venture with other tech and healthcare companies.