Can Amazon, Google, Apple + others successfully disrupt healthcare?: 5 takeaways

Amazon, Google, Apple and Uber are just a few prominent tech companies that have announced plans in recent weeks to move into the healthcare space. But can these companies succeed in disrupting an industry in need of change?

Vox's Dylan Scott analyzed several Silicon Valley companies' decisions to move into the healthcare space and what it may mean for the industry if those companies succeed in changing the way the healthcare system operates in the U.S.

Here are five takeaways from Mr. Scott's analysis.

1. Mr. Scott examined recent announcements made by Amazon, JPMorgan Chase and Berkshire Hathaway, Apple, Uber, and Google's sister company Verily to disrupt the space. He notes none of the companies' proposed innovations directly compete with each other. Instead, they aim to increase efficiency in particular aspects of the healthcare market, whether it be improving their own employees' access to care or making it easier for patients to reach their medical appointments on time.

2. Each of the organizations also maintains a history of disrupting existing business models, according to the report. For example, Amazon has completely altered the retail space through various initiatives like its Amazon Prime shipping service; Uber changed the landscape for transportation and hired driving.

3. However, Mr. Scott questions whether an industry such as healthcare is capable of disruption. According to him, the healthcare industry does not operate like other parts of the economy, and is governed by "a hopelessly tangled mix of payers, administrators, providers and manufacturers. Not to mention the patients … who have never proven very good at treating healthcare like any other commodity.

"The complexity, the opacity, the sheer scale — not to mention the existing $3 trillion industry and its many vested players, who aren't going to stand idly by while the tech wunderkinds supplant them — are standing in Silicon Valley's way," Mr. Scott writes.

4. Craig Garthwaite, PhD, an associate professor of strategy at the Evanston, Ill.-based Northwestern University Kellogg School of Management, told Mr. Scott just because the industry is in need of disruption, doesn't mean the organizations that set out to do so will succeed.

"[Amazon, Apple and others] made a ton of money and [did so] in industries where it's hard to make money. Now they want to go to the place where everybody seems to be struggling. That rarely works for firms, trying to pick up wholesale and move to a new industry," Dr. Garthwaite said.

5. However, hospitals, health systems and other industry organizations should still be wary of tech companies' potential moves into the space. A representative for Moody's Investors Service told Mr. Scott ventures like those proposed by Apple, Google and Amazon, JPMorgan and Berkshire Hathaway, in particular, are attempting to circumvent traditional hospital care in favor of cheaper, more efficient alternatives, like outpatient clinics, thereby affecting hospitals' bottom lines, the report states.

To access the Vox article, click here.

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