Of the 2013 Fortune 50 companies, roughly 38 have a major stake in health care and 24 of those are new entrants into the industry, according to a new report from PwC's Health Research Institute.
"These new entrants are poised to shake up the industry, drawing billions of dollars in revenue from traditional healthcare organizations while building lucrative new markets," says Vaughn Kauffman, principal of PwC Health Industries.
The report lists the following examples.
• Earlier this year, Samsung unveiled its new Galaxy S5 smartphone, complete with a built-in heart rate monitor. In 2013, Apple also was issued a US patent for a "seamlessly embedded heart rate monitor" for devices such as its iPhone.
• CVS Caremark announced it would stop selling tobacco products in its 7,600 stores as part of a strategy to expand its role as a healthcare company.
• AT&T opened its mHealth platform to developers in 2012, aiming to become the essential ingredient in healthcare's future game-changing apps.
• Time Warner Cable Business Class announced a "virtual visit" experiment with Cleveland Clinic in 2013. Cleveland Clinic caregivers will be able to interact with patients through televisions using secure video technology.
• In 2013, Google announced Calico, a company focused on aging and associated illnesses. Its chief has experience in both health care and consumer-oriented technology.
HRI found that consumers are ready to embrace new options being developed, from smartphone otoscopes to online evaluations of digital photos of rashes. Predicting that within a decade the health and wellness business will look and feel like other consumer-oriented, technology-enabled businesses, the report asks, "Who will be the industry's next Amazon?"
Today, the report says, health care revenue flows from government and employers through third-party payers, insulating consumers from true costs. In the future, purchasers – government, employers and individuals – will direct payment to the entities providing the best value, whether it is a clinical team or a sporting goods company, a nutrition counselor or a website.
"To meet looming revenue threats, traditional health care companies will have to partner, innovate or can face fading away," said Kelly Barnes, PwC's U.S. health industries leader. "Meanwhile, the nimble and innovative New Entrants can benefit from partnerships with existing health care organizations, which understand the complex regulatory and reimbursement landscape."
The report deemed three areas especially ripe for new entrant growth:
• Retail-based clinics
An HRI consumer survey, conducted in December 2013, showed 35 percent of respondents had visited a retail clinic in the last 12 months (up from 9.7 percent in 2007). The report highlights a partnership between the nation's leading nonprofit integrated health plan, Kaiser Permanente, and Wal-Mart to open in-store micro-clinics – 300-square-foot operations that offer Kaiser members and Wal-Mart associates and their dependents basic diagnostic services and telemedicine connections to Permanente clinicians.
• Price and quality transparency
Industry estimates conclude that in three years venture capital firms have invested $400 million in startups targeting price transparency. Some new and traditional players in this space include Castlight Health, Truven Health Analytics, Healthcare Bluebook, HealthSparq, Aetna, Cigna, UnitedHealth Group and WellPoint.
• Fitness and wellness
New entrants such as wearable makers Nike, Fitbit and Jawbone are carving paths into a fitness and wellness market worth $267 billion in the U.S. annually. Such strategies represent an easy entry point to the wider and more complex healthcare market, as in the case of startup Jiff, which developed a digital exchange for employee wellness programs and has its sights set on building a digital health assistant to help consumers evaluate symptoms.