Big Tech Will Disrupt Healthcare, Just Not How You Think

The claims that big tech will disrupt healthcare are often met with justifiable skepticism. We have heard repeatedly over the past several years that these companies do not fully understand the industry and how to operate effectively within it. Additionally, we have seen many organizations claim “disruption” in their pitch decks, while very few make it past a proof of concept. How can a company that makes search engines or smartphones think they have any clue how to drive change in this complex ecosystem?

Despite rampant doubt, I believe that big tech has an opportunity to revolutionize our industry, just not in the way many think. These companies only invest in projects that have an opportunity for massive returns. In healthcare, the projects that fit this mold are outside of the provider, payer, pharma ecosystem where scale happens one small market at a time. If we want to know where tech will have the biggest impact, we need to look outside of the traditional scope of the industry.

What Big Tech Won’t Do

Care Delivery

Providing care to patients directly is not a business that fits the model of the big tech firm. We often hear the mantra that healthcare is local, and it is incredibly true. Scaling a provider services business requires significant time, effort, and capital investment while returns slowly trickle in. This is also why I believe VC is a sub-optimal source of financing for these businesses. The fixed costs of running delivery organizations are far too high for them to be attractive to big tech.

Rebuild the EHR

As I mentioned in my post regarding the link between provider burnout and business models, fee for service medicine leads to the provider being the secondary customer for EHR technology. While big tech could utilize their design skills to improve user experience, it is unlikely that doing so would drive significant sales of the product. Most organizations have invested heavily in current vendors, and switching costs are out of this world. While the billing department remains the primary customer for EHRs, there is no reason for big tech to invest in better UX design. A great article on the proposed purchase of Epic by Apple, written by John Lynn, can be found here.


Many will point to the Alphabet investment in Oscar to say that big tech is already in the insurance game. But that fails to appreciate that Oscar is just like any other insurer when it comes to insurance model design. The thing that Oscar is actually good at is building technology to support the insurance industry. I believe this is the primary driver of the Alphabet investment. Insurance is such a low margin, hard-to-scale business that I just don’t see it being attractive to our tech overlords.

Big Tech’s Wheelhouse

Consumer Devices

A subset of big tech, particularly Apple, excel at developing devices for consumers (note that consumers in this case could be patients or physicians). With the release of the Apple Watch EKG, we are already getting a glimpse at the types of products we can expect Apple to develop in the future. From managing fitness levels to predicting exacerbations to monitoring seniors in their homes, consumer devices have a great future.

Interoperability / Data Aggregation

Data integration is not a hard technical problem. Big tech firms thrive on their ability to collect and integrate data from a variety of sources. In partnership with large industry players (e.g., providers, payers), these companies can build solutions on top of their platforms to aggregate data for high-impact use cases. I expect companies like Amazon and Microsoft to really pursue this path heavily given their AWS and Azure platforms. Additionally, building a data platform really enables our next major innovatio

Artificial Intelligence Tech

This is the Google sweet spot. Given the 100s of AI PHDs that they employ, Google has clearly gone all in on this technology. While the use cases for artificial intelligence in healthcare are too plentiful to list here, I would expect things like image recognition in radiology, driving patient behavior change through technology, and population health to be the first places we see growth in this space. Even beyond Google, there are many smaller data science shops in Silicon Valley already partnering with traditional healthcare companies to build and design tailored models that help them achieve their business goals.

Employer Power

These companies are significant employers (the top 5 firms have over 1M employees in aggregate), and they are not immune to the rising costs of healthcare benefits. With that said, the size of these companies doesn’t even come close to the 2.1M people employed by the US’ biggest company, Walmart. Employees represent a significant training ground for new innovations, but big tech will need to develop additional partnerships in order to grow their population for experiments. This is why the Amazon, Berkshire, JP Morgan partnership will be especially beneficial to Amazon in particular.

Supply Chain

Speaking of Amazon, does “your margin is my opportunity” ring a bell? Given the severe inefficiencies in the medical supply and pharmaceutical supply chains and the number of middlemen that are involved in the process, there is certainly an opportunity for Amazon to play a role here. They have already begun to move into this space with their acquisition of PillPack and their decision to sell medical supplies through the Amazon platform. Walmart (and their business) really missed a great opportunity by letting PillPack go to Amazon.

5 Predictions for Big Tech’s Impact

The above outlines only the immediate areas where I feel big tech can really drive change in healthcare - I can’t even begin to fathom what this looks like 10 years down the road. With that said, just this list alone represents potential for significant industry disruption. Here are my predictions. I am excited to see which come true:

(1) Consumer Devices Drive Up Short-Term Costs

With more power in the hands of consumers, paternalistic medicine will feel the pressure. As more patients head to their local Emergency Room scared by concerning readings on their devices, we will absolutely see costs rise. (More Visits = More Costs). However, this technology will also have a major impact on consumer health, as previously undiagnosed issues will be caught before they become life threatening. I would argue that the rising costs are a direct result of the poorly designed fee-for-service system that are just being highlighted through consumer use of these products.

(2) Value Based Medicine Becomes Profitable

Value-based care is a hot-button issue for payers and providers, and many have struggled to make alternative payment models work. However, coupling consumer devices with improved population health platforms powered by AI, these organizations will be able to better manage patient health thanks to big tech. As a result, we will see the move to VBC accelerate even further as more firms turn a profit through this business model. Good news for docs - this will make you the primary customer for provider technology and really improve your user experience as a side effect.

(3) Consumers Demand More

Consumers have gotten used to the high quality experiences delivered by big tech firms. However, we have historically not applied the same level of expectations to our healthcare providers. As big tech enables more facets of the industry to deliver these experiences, I expect that consumers will start incorporating them into their choice of care location. Patient experience is no longer just a nice-to-have in the healthcare industry.

(4) All Your Data Are Belong to Us

Patient ownership of healthcare information is an incredibly important topic, and we are seeing more and more people demanding their medical records from providers. However, the regulation guiding data sharing in healthcare, HIPAA, has not kept up with this changing tide. It is still really difficult for researchers to access the data they need while also ensuring privacy and access for patients. I think we are on the cusp of new GDPR-like regulation in the US, and big-tech’s hunger for data will only drive that forward.

(5) Big Tech Drives Care Delivery Disruption

While I do not believe that big tech will go into care delivery on their own, I do think that their technology will play a major role supporting the advent of new provider organizations. In particular, value-based primary care practices will be able to more quickly succeed in alternative payment models. While traditional fee for service businesses will see this technology as a competitive threat to their revenues, providers that have embraced value-based care will use it as a competitive advantage.