I have been blogging recently about the rationale for the recent Google purchase of Fitbit (see: Google to acquire Fitbit, valuing the smartwatch maker at about $2.1 billion). At first glance, it's somewhat unusual because Google is primarily known for software and not hardware. On the other hand, the huge wellness and fitness market is an attractive target. A recent article speculated on the "real reason" for the purchase (see: The Real Reason Google Is Buying Fitbit) and below is an excerpt from the article:
Google already has plenty of hardware and software chops. What else does it get out of the Fitbit deal? The most obvious potential lure is the health data of millions of Fitbit customers. Fitbit devices have been tracking wearers’ health metrics for over a decade, cataloging behaviors like steps taken, calories burned and exercises performed. That’s just the kind of thing Google, fundamentally an advertising company, needs to further build out its profile of, well, you. Advertisers already take educated guesses at your health status, with apps like period trackers sharing your info with Facebook and others....
What else, then, does Fitbit have that’s attractive to Google?....Through its health-focused Verily subsidy, Google has been working on cardiovascular health, diabetes and more, but it hasn’t been publicly pushing healthcare as a business proposition. Fitbit, however, has been doing exactly that....Gartner senior analyst Alan Antin says Google could benefit from Fitbit’s expertise in working alongside corporate partners and other stakeholders in the healthcare world. “There’s the lesser known side business-to-business side of Fitbit, which is their partnerships with health insurance companies and direct corporate wellness programming,”....“Those are things that are a little bit harder for a company like Google to do.”
This point about gaining access to Fitbit's B-to-B relationships is important for Google. I have previously commented on Fitbit's relationship with companies such as Humana, UnitedHealthcare and Blue Cross Blue Shield (see: Fitbit Shifts Its Business Model Toward Services with Attention to Chronic Diseases). Let's get specific about why health insurance companies want to exercise control over wearable health ecosystems (WHEs) for which the Fitbit products will play an important point (see: The Evolution of "Wearable Health Ecosystems" and Associated Partnerships).
In a recent note, I speculated about how WHEs will shortly be able to generate referrals for acute care or hospital admission based on solid diagnostic information and predictive algorithms (see: Status Reports and Hospital Referrals from Wearable Health Ecosystems). I further speculated that such medical decisions would be triaged by PCPs. It is not unreasonable that some of these PCPs would be employed by health insurance companies, particularly if such companies were to provide a WHE gratis to policy holders. In so doing, these companies would gain control of some percentage of hospital admissions and thus be empowered to exercise greater control over hospital costs without putting their own bottom lines at risk.
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