How Will Tech and Retail Impact the Healthcare Sector?

Updated on November 6, 2022
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Tim Cook, Apple’s chief executive, believes the tech company’s “greatest contribution to mankind” will be related to health. In the last few years, the company has focused on this vision by upgrading the Apple Watch to better record wellness factors and testing Apple-run health clinics for its own employees. 

Alongside industry giants like Amazon and Google, Apple is searching for a foothold in the trillion-dollar healthcare sector. Prominent retailers like CVS, Walmart, and Walgreens are on the same path, hoping to disrupt the U.S. healthcare system at a time of massive upheaval. 

As anyone already in the healthcare field can attest, these newcomers will face challenges when it comes to accessing and streamlining health data, as well as gaining consumers’ trust. The fragmented nature of healthcare will also hinder their desire to be a one-stop shop for consumers’ wellness needs. But as the COVID-19 pandemic continues to transform the American healthcare landscape, they may have an unprecedented opening to execute their visions. The following is a breakdown of prominent issues in the sector and ways new players like Apple might overcome them. 

Will this ambitious industry disruption lead to overwhelmingly positive change, or will the concerns of current healthcare leaders be validated as tech and retail giants struggle to scale their operations? 

Interoperability and Data Security

Electronic health records (EHR) are the future of patient data because they streamline information for doctors, pharmacists, and other healthcare professionals. Interoperability between various providers can make it simpler to coordinate treatments, conduct evidence-based population studies, and decrease administrative redundancies. But despite tech advancements in the last decade, true interoperability remains out of reach.

Besides better patient care, another appeal of EHR for tech and retail companies is knowing the particular needs of a population. This information can help companies like Amazon or Apple recommend specific products to consumers that aid in treatment and recovery. This video from the Wall Street Journal demonstrates how pregnant people may receive suggestions for compression socks, body pillows, and childcare newsletters through apps that link their EHR to approved retailers. 

Of course, EHR use raises privacy questions. Some tech and health experts are concerned about the security of relatively new digital record databases, and consumers are wary at the thought of insurance companies using such data to bar individuals from healthcare plans. 

Potential Interoperability Solutions

Traditional healthcare institutions face interoperability issues because they lack the technology necessary to share medical information regularly and safely. Newcomers to the field have been able to clear some of these hurdles thanks to their strong tech roots. 

Tech and retail companies are investing in encryption software and other safeguards for the data they amass. Microsoft, which is staying out of the healthcare battle, is instead pitching Azure, its cloud platform, to existing healthcare operators to manage sensitive data.

Other companies are acquiring or collaborating with tech-based startups to allay concerns. Both Amazon and Apple have partnered with Crossover Health, a tech-enabled primary care group, which offers both in-person and virtual healthcare. The partnership has allowed Amazon to establish more than a dozen clinics near its fulfillment centers that cater to employees.

The Difficulty of Reaching Patients

Tech and retail giants succeed, in part, because of how recognizable their brands have become. Apple has always known how to drum up excitement for its latest releases, and CVS capitalized on its national reach to become one of the main locations for vaccination roll-out in the U.S. These companies approach sales with a successful omnichannel strategy — streamlining customer experience every step of the way.

But people seeking healthcare do not always behave the same way as those shopping for makeup and toilet paper. As noted above, many potential users of retail-attached clinics or tech-based care are concerned about privacy. A 2018 survey by Rock Health showed only 11 percent of consumers were willing to share health data with tech companies. Meanwhile, nearly half were willing to share the same information with their pharmacies and health insurance companies.

Even after winning consumer trust, these companies face an uphill battle to retain a robust customer base. Amazon and Apple may have begun by offering services to their own employees, but the overabundance of healthcare providers, from boutiques to major hospital groups, mean the general population is overwhelmed by choice. 

Potential Fixes for Patient Retention

The adoption of telehealth since March 2020 highlighted its convenience and accessibility for patients and providers alike. For tech and retail giants to succeed in the healthcare sector, their best bet is to rely on these two factors. In this vein, Amazon Care plans to leverage their experience with delivery services to one day offer mobile clinics that visit a patient’s home whenever an in-person visit is necessary. Additionally, Walgreens has invested $5.5 billion in primary care providers VillageMD and CareCentrix to improve the quality and quantity of its patient care division. 

Another way these companies can prove themselves to consumers is by drastically decreasing the costs of life-saving medicine. Walmart did this recently by launching its first private brand of insulin. Walmart’s products could save customers up to 75 percent off the cost of traditional insulin options on the market. 

Translating Tech and Retail Experience into Healthcare Outcomes

Despite issues of interoperability and patient retention, healthcare solutions built by tech and retail behemoths have the opportunity to make real changes to health and wellness.

Wearables like the Apple Watch have reportedly saved lives after detecting situations like a hard fall or dangerously low heart rate. Amazon’s acquisition of PillPack has streamlined prescription fulfillment through the mail. And Walmart’s massive footprint means it can reach people in rural areas that lack robust medical centers. 

The impact of tech and retail on healthcare is being felt outside the United States as well. Toronto-based Shoppers Drug Mart has built several Health Clinic by Shoppers™, described as primary-care and family practice clinics, into its existing Canadian stores. The pandemic made clear just how central a grocery store is to contemporary life, and Shoppers Drug Mart president Jeff Leger recognized the “need for more accessible healthcare options for patients” like extended hours and convenient locations.  

The Future of Industry Convergence

Tech and retail companies have the opportunity to transform the healthcare sector for the better. But they must recognize the fragmented nature of healthcare in America and be willing to revise their profit expectations accordingly. Healthcare has very small profit margins, hovering around 4 percent. For companies used to ten, twenty, or thirty percent margins, the sector may not seem so appealing in a few years’ time. 

Healthcare expert Sachin H. Jain suggests such a company might be better off buying an entire hospital system and modernizing it – rather than building a new system from scratch. That’s essentially what Amazon did when it bought Whole Foods after years of dabbling in unsuccessful grocery offshoots. Still, 2022 is shaping up to be an interesting year in healthcare as competition between tech and retail newcomers accelerates. Time will tell if privacy concerns and consumer trust will be an early hurdle for these companies or the final blow to their healthcare ambitions.

Lawrence Leisure is Co-Founder and Managing Partner of Chicago Pacific Founders.