(Bloomberg) — Google and Apple Inc. have some bright ideas about the future of health care. Not so long ago, AT&T Inc. and Verizon Communications Inc. had similar ideas: a networked world of devices and services that would revolutionize how medicine is practiced in the U.S. and, in the process, tap into a huge new vein of business. So far, it hasn’t worked out that way for the telecom companies.
Now comes the tech push. Google parent company Alphabet Inc. is developing wearable devices embedded with sensors, such as contact lens that monitors glucose levels. Apple supports developers of apps that track consumers’ health data, sharing the information directly with doctors. And dozens of startups such as Omada Health Inc., Doctor on Demand Inc. and Amwell are helping people lose weight and connect with other patients, coaches or doctors. Can these businesses succeed where the likes of Verizon and AT&T fell flat just a few years ago?
Maybe. But the earlier telecom parry into U.S. telemedicine that flopped several years ago is worth remembering. Starting around 2009, telecommunications giants AT&T and Verizon, among others, made bold predictions about the future of telemedicine. By 2012, Verizon Chief Executive Officer Lowell McAdam said his company was “focused on enabling the transformation” of the health-care industry, backed up by the $10 billion the company spent over the past decade on fiber-optic networks, data centers and network security. But the health-care bet has yet to pan out.
“The carriers haven’t done a good job of moving into the hospital setting and investing the time and money to live in the footsteps of the providers,” said Lee Schwamm, medical director of telehealth at Massachusetts General Hospital. “It’s always been a side business to them.”
Both AT&T and Verizon have succeeded in building businesses handling data connections and electronic records for hospitals, but for the most part U.S. wireless carriers remain on the health-care sidelines. This has left medical and tech companies to pick up the bulk of growth in telehealth services and devices. And there’s a lot to pick up. A recent Harvard Medical School study of claims data found that Medicare patients’ use of teleconferences or virtual visits increased by 28 percent a year from 2004 to 2013, with 107,000 visits in 2013.
The U.S. is the largest market for telemedicine, a $14.4 billion global business in 2015 which is projected to grow to $34 billion by 2020, according to Mordor Intelligence. Broadly defined, telemedicine is any exchange of medical information via electronic communications, including two-way video and remote monitoring of patient health. AT&T and Verizon pull in only “tens of millions” or “a rounding error” of telemedicine, according to Roger Entner, an analyst at Recon Analytics LLC. Two smaller U.S. carriers — Sprint Corp. and T-Mobile US Inc. — play even more limited roles in telehealth.
Verizon and AT&T targeted health care as a growth market as early as 2009. It made perfect sense: with growth of their cellular businesses slowing down, big telcos seemed well poised to find new revenue providing secure networks for the medical community to exchange information and provide health-care data storage and other services. Verizon, especially, with its continent-spanning wireless network and fiber-optic infrastructure, seemed the perfect go-to telco to handle the burgeoning markets for electronic health records, clinical collaboration and hospitals’ ever-growing data use.
The telcos, though, never figured out the killer apps that the health-care industry was looking for — how to smoothly connect patients with the doctors and labs seeking to retrieve and view data in real time from patient devices. Hospitals and doctors didn’t just need networks; they were looking for innovative services and devices that could make their lives easier, said Mass General’s Schwamm.