Fitbit Care: Making Health a Platform
When a consumer electronics company needed to pivot, it turned into a platform healthcare company.
Deloitte Consulting estimates that between 2017-2022, global healthcare spend will grow 5.4% annually to be a $10 trillion industry [1]. While healthcare accessories only make up small subset of that industry, the wearable industry is expected to grow to $48 billion by 2023 thanks to innovative companies who have embraced platform business models [2]. One company in particular that I believe has been innovative, despite a near complete financial collapse, is Fitbit.
Smart Wearables + Enterprise Platform = New Opportunities
Seemingly everything in our daily lives has become 鈥渟mart.鈥� From telephones and cars to doorbells and refrigerators, there鈥檚 hardly a device in our lives that isn鈥檛 connected to the internet and analyzing data in some way. Fitbit, founded in 2007, started as a consumer electronics company that tried to take advantage of that trend. Their smart fitness trackers were best sellers, until the more functional Apple Watch was released in 2015 and Fitbit lost 50% of market value over the next year. Realizing that Fitbit couldn鈥檛 survive solely as a consumer electronics company, CEO James Park announced a transformation to a 鈥渄igital healthcare company鈥� [3]. Then, in September 2018, Fitbit announced the launch of Fitbit Care, an enterprise healthcare platform for wellness, prevention, and disease management [4]. According to the company, Fitbit Care is 鈥渁 connected health platform for health plans, employers, and health systems that combines health coaching and virtual care through the new Fitbit Plus app, Fitbit鈥檚 innovative wearable devices and self-tracking and personalized digital interventions to help improve wellness, disease management and prevention.鈥�
Instead of selling Fitbit devices directly to consumers, Fitbit is using their new platform to sell through partnering companies and healthcare providers. Through this enterprise-only strategy, Fitbit released two new smart wearables, the Fitbit Inspire and Fitbit Inspire HR, that will only be available through the Fitbit Care platform [5]. Through the platform, users will get access to 鈥減ersonalized digital interventions鈥� 鈥� which include social support tools, challenges, private social groups, and guided workouts. Users will also gain access to health coaches to create personalized care plans and virtual communication with healthcare providers. To gain users and jumpstart network effects, Fitbit partnered with Humana, Blue Cross Blue Shield, and United Healthcare.
I think that Fitbit鈥檚 shift toward an enterprise-only platform model is innovative because it shows how a platform can create more value when combined with a physical device than a physical device alone can create on its own. Without the platform, Fitbit (and just about every other fitness wearable) wasn鈥檛 able to compete with all of the features that come with the Apple ecosystem. By partnering with health insurance companies and employers, Fitbit is taking advantage of the growing trend of employers trying to find ways to cut healthcare costs and shift toward virtual health. By going through enterprise partners, they don鈥檛 have to rely on consumers to make the choice. Additionally, working with large employers allows them to sell a large volume of devices at once and set up a new stream of recurring revenue. By gaining large volumes of users through those enterprise partners, they鈥檙e able to create network effects and scale much faster than selling to individual consumers.
Fitbit Care is in its infancy and the jury is still out about whether or not it will be successful, but I believe the enterprise-only platform model was a smart pivot for a company that almost failed as a consumer electronics maker.
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Sources:
[1] Burrill, Steve, and Steve. 鈥�2019 US and Global Health Care Industry Outlook.鈥澛�Deloitte United States, 25 Jan. 2019, www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/us-and-global-health-care-industry-trends-outlook.html.
[2] Research, P&S Market. 鈥淲earable Fitness Trackers Market to Reach $48.2 Billion by 2023: P&S Market Research.鈥澛�GlobeNewswire News Room, “GlobeNewswire”, 28 Mar. 2018, globenewswire.com/news-release/2018/03/28/1454453/0/en/Wearable-Fitness-Trackers-Market-to-Reach-48-2-Billion-by-2023-P-S-Market-Research.html.
[3] Stevenson, Abigail. 鈥淔itbit CEO Reveals He’s Transforming the Mission and Purpose of the Company.鈥澛�CNBC, CNBC, 6 Oct. 2016, www.cnbc.com/2016/10/06/fitbit-ceo-reveals-hes-transforming-the-mission-and-purpose-of-the-company.html.
[4] 鈥淔itbit Launches Fitbit Care, A Powerful New Enterprise Health Platform for Wellness and Prevention and Disease Management.鈥澛�Fitbit, Inc., investor.fitbit.com/press/press-releases/press-release-details/2018/Fitbit-Launches-Fitbit-Care-A-Powerful-New-Enterprise-Health-Platform-for-Wellness-and-Prevention-and-Disease-Management/default.aspx.
[5] Truong, Kevin. 鈥淔itbit Launches New Enterprise-Only Products as Part of New Strategy.鈥澛�MedCity News, MedCity News, 27 Jan. 2019, medcitynews.com/2019/01/fitbit-launches-new-enterprise-only-products-as-part-of-new-strategy/.
Great post! To your initial point, I am really curious to see where the healthcare industry will go – especially given the connected world that is developing. There are a ton of players in the fitness world that are gathering data, and I could definitely see them heading in a similar direction as Fitbit Care, except for maybe an enterprise-only platform. I agree with you that a device without a platform and ecosystem to back it is not as powerful as a device on its own, but I worry about potential pricing implications for health insurance providers who experiment with price individualization based upon data being gathered via the device and potentially used to either help (or hurt) that individual’s insurance premium. It is great to see a company such as Fitbit leading the way and learning the best way to promote healthy lifestyles and choices – ultimately decreasing health care expenses.