Should Apple’s medical clinics make hospitals quiver in their boots?

Experts differ on whether Apple’s clinics are a threat to hospitals but agree that collaboration with employer clinics is key as is a commitment to outcomes and cost transparency.

Even in the context of Big Tech disrupting healthcare, Apple’s move to open medical clinics was eye-popping.

In February, news broke that the Cupertino, California-based giant is opening medical clinics for its employees. Going by the name AC Wellness, the purpose is initially to serve Apple’s employees in Santa Clara County where Apple’s headquarters is located. AC Wellness is a separate subsidiary of Apple.

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This notable move presents a plethora of questions about how other industry players will cope. More specifically, how can hospitals — traditionally at the heart of patient care — deal with a tech behemoth giving them a run for their money? The answer depends on who you ask.

But first, let’s take a closer look AC Wellness’ raison d’être.

From Apple’s perspective, the move makes sense. After all, the concept is hardly new as employers are trying creative options as they seek ways to lower employee health costs and manage the use of resources. A 2017 employer survey conducted by business consulting firm Mercer and the National Association of Worksite Health Centers found a third of companies with more than 5,000 employees now offer general medical clinics at their work sites.

What makes Apple’s initiative unique, however,  is that the company owns and operates the clinics itself as opposed to outsourcing the operation. The latter has been the norm with big tech companies historically, said Michael Abrams, co-founder and managing partner of consulting firm Numerof & Associates, in a phone interview.

Why take on the extra work rather than outsourcing the problem? Organizations like Apple think they can do better themselves than relying on a third party, he said. It’s not just a competitive edge that’s compelling Apple to open clinics; there are some vested interests underlying the move as well.

As tech companies develop healthcare-related products, clinics are an ideal way to understand how such tools fit into the larger market.

“They see it as an opportunity to test new ideas for products and services,” Abrams said. “They can learn what works, what doesn’t and work out the wrinkles.”

But another expert worries about possible negative consequences of such a fertile testing ground, particularly when it comes to patients. In a recent phone interview, Martin Zand, senior associate dean for clinical research at University of Rochester Medical Center, posed the question: “To use this, would Apple require you to sign over the ability for Apple to use your data for tech developments and research?” Zand, who is also co-director of the University of Rochester Clinical and Translational Science Institute and the Center for Leading Innovation and Collaboration, said the answer should be transparent.

While that is something that employees of Apple need to keep in mind as they access care internally, the larger question is how hospitals are viewing AC Wellness as it flips the script on traditional care paradigms. 

Jay Bhatt, senior vice president and chief medical officer of the American Hospital Association, suggested looking at opportunities to partner with these clinics, particularly when it comes to patients who need longer-term care. While AC Wellness’ focus seems to be on primary care, “there are going to be those employees that will need longitudinal support,” he said in a phone interview. Bhatt further noted that employer clinics and health systems can partner to improve the health of vulnerable patient populations.

Zand from University of Rochester Medical Center echoed Bhatt on the need to collaborate while recommending hospitals learn the ins and outs of excellent customer service from organizations like Apple.

“Staying competitive in healthcare means improving the services that we deliver and how they are perceived,” he said. “Apple and Amazon and a number of other Silicon Valley companies know how to do that well.”

Though the emergence of corporate healthcare clinics for employees has touched the West Coast, Zand noted that they haven’t made as big a mark in his neck of the woods: Rochester, New York.

For one health system a little closer to the action, AC Wellness’s emergence is actually good.

“‘How can we help?’ is kind of the way we think about it,” said Tip Kim, chief market development officer for Stanford Health Care, in a phone interview.

Instead of seeing Apple’s clinics as a competing primary care access point, Stanford seeks to be part of the overall continuum of care for patients. In fact, Kim feels this way despite the fact that Apple has hired away some Stanford employees to AC Wellness. 

A CNBC article from this summer noted Sumbul Desai, a doctor who was previously with the Stanford Center for Digital Health, is heading up AC Wellness. Former Stanford community physician Darren Phalen also joined the initiative.

“I think overall there is a fair amount of affinity and affection between the two organizations,” he said, pointing to collaborations that are underway.

Last year the tech giant and Stanford Medicine teamed up for the Apple Heart Study, which seeks to determine if an Apple Watch can identify irregular heart rhythms and has gleaned more than 400,000 participants. Stanford is also partaking in the Apple Health Records program.

Not everyone has such sunny optimism.

“I think they need to regard this as a threat,” said Abrams, the healthcare consultant from Numerof & Associates.

Employers opening their own healthcare operations are taking a piece of the pie away from conventional healthcare providers.

“I don’t think they can afford for that to happen on a large scale.”

To stay competitive, Abrams said hospitals should commit to transparency and accountability for cost and outcomes. He also suggested hospitals look at the situation through Apple’s eyes. Apple wouldn’t be going through the trouble of creating its own clinics if it thought it could get what it needs from traditional healthcare providers. More companies may follow suit out of frustration, he implied.

“Unless conventional healthcare providers can convince employers they can get what they want in terms of an employee health and wellness approach, there will probably be more employers who make the decision to do it themselves,” he said.

That seems to already be the case, at least with some of the larger players. Amazon reportedly intends to open its own clinics for its Seattle employees, in addition to creating a three-way joint venture with J.P. Morgan and Berkshire Hathaway to tackle healthcare problems for its employees. CNBC noted Tesla also has a health clinic for its workers, though a recent investigative report claimed the clinic has not properly cared for seriously injured employees.

As hospitals look ahead to 2019, one thing is clear: They need to have a strategy in place to handle employer health clinics because it’s a trend that’s not going away anytime soon.

Photo: Creativeye99, Getty Images