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Qualcomm (QCOM), the mobile-phone chipmaker, and AT&T (T), the largest U.S. phone company, are angling for a piece of the emerging market for wireless devices used in providing health-related services to consumers on the go and at home.
U.S. sales of related wireless gadgets, applications, and services for consumers are projected to double to $600 million this year and may more than double again, to $1.3 billion, in 2011, according to consulting firm Parks Associates in Dallas. Growth potential for the so-called m-health market is attracting growing interest from other tech industry giants, including Intel (), IBM () and Sprint Nextel (). "We meet with one medical device company a day," says Don Jones, a vice-president at Qualcomm, which is pushing the adoption of products such as electronic band-aids—gadgets that attach to the body and gather a patient's vital signs and other information. "This business will be very large," Jones says. Qualcomm makes chips designed to power the devices.
Best Buy (BBY), the leading U.S. consumer electronics retailer, is also jumping in. Following months of testing, the company will soon begin selling wireless-enabled health and fitness devices in more than half of its 1,089 U.S. stores, Kurt Hulander, a Best Buy senior director, says in an interview. "It's a potential growth area for us," Hulander says. The retailer already offers treadmills and regular blood-pressure monitors online. While its product lineup hasn't been finalized, Best Buy may carry blood-pressure monitors, pedometers, and fitness watches that wirelessly transmit readings taken at home to a website such as Microsoft's (MSFT) HealthVault, which stores electronic health records that can be shared with a physician, Hulander says. "A lot of things traditionally done in the doctor's office might soon be done at home," he says.
At-home care is surging as the U.S. population ages and governments and businesses seek ways to control rising costs. Health care's share of gross domestic product climbed to 16.2 percent in 2007, from 7.2 percent in 1970, according to a March 2009 report from the Henry J. Kaiser Family Foundation. The costs will continue to rise as the number of people 65 and over climbs to 71 million in 2030, from 40 million last year, according to the Administration on Aging, a part of the U.S. Health and Human Services Dept.
One way to slash expenses is to deploy improved monitoring to reduce emergency room and hospital visits, particularly by people with chronic illnesses such as heart disease and diabetes. To that end, Intel and General Electric (GE), the world's biggest maker of health-care imaging systems, formed a joint venture this month. The project will offer Intel's Health Guide, a combination of patient devices and doctors' technology that lets clinicians monitor patients and conduct video calls with them at home. The combined company will develop and introduce at-home health products more quickly than Intel and GE could do on their own, said Louis Burns, a vice-president at Intel, during an Aug. 2 Webcast on the merger. "We might as well go a lot faster," he says.
In fact, the technology has long been talked about, but slow to develop. Only a handful of providers such as CardioNet (BEAT) offer at-home wireless services to seriously ill patients. Part of the holdup reflects unanswered questions regarding who will pay for the equipment and how the Food and Drug Administration will regulate mobile devices and software. "Big players are making investments but no one is making money," says Sailesh Chutani, Chief Executive Officer of Mobisante, which has developed a portable ultrasound device that works with a smartphone. Chutani previously managed $100 million in exploratory research at Microsoft.
Progress may be at hand. In July, the FDA and the Federal Communications Commission, which oversees the wireless industry, vowed to work together on regulatory issues. At the same time, a greater number of insurance companies have begun testing the technology, says Julie Kling, head of the mobile business at insurer Humana (HUM). Increasing adoption of electronic health records is making it easier to incorporate digital information from wireless sensors and smartphones into doctor's visits. Low-power Bluetooth technology, which lets sensors relay health information to smartphones without draining the battery, should become available in phones late this year or early in 2011.
"The smartphone is really driving m-health," says Kenneth Seymens, a partner at venture capital firm Vesalius Ventures. This year, Seymens plans to start a fund to provide money to startups that work on m-health, as well as other areas of health-care IT.
The added investment may prove beneficial to companies that focus on software, sensors, and other accessories for smartphones, which—as they become commonplace—are making m-health cheaper to implement. A quarter of Americans already own smartphones that can run health and fitness applications. The online application store for iPhone maker Apple (AAPL) lists some 120 health-and-fitness apps. Among the wares are tools that let users keep track of their caloric intake, plan for a pregnancy, or record distances biked. Sales of U.S. mobile health and fitness apps may more than double to $88 million next year, from $40 million this year, according to Parks Associates.
In June, Humana released "GoldWalker," a 99¢ mobile game that requires its players to do actual walking in search of in-game virtual gold. Humana formed a mobile team last fall and is now exploring home use of wireless blood-sugar, blood pressure, and cholesterol monitors, Kling says. "I've gotten three e-mails today from m-health organizations," she says. "I got a handful of them last year. Now I get a handful each week."
Insurance and drug companies are starting to cover more at-home wireless health devices and services. This year, Walgreen (WAG) pharmacies began issuing prescription bottles with a wireless cap to some patients. The cap contains a chip that flashes and plays a ringtone when consumers forget to take their pills on time. It will even call their phones with a reminder.
Using AT&T's wireless network, the GlowCaps service can also send a weekly update on the patient's pill-taking practices to a family member or a doctor. Still in testing, the service is about to undergo mass deployment and should have 25,000 users by year-end, David Rose, CEO of GlowCaps maker Vitality, says in an interview. Drug companies such as Abbott Laboratories (ABT) and Merck (MRK) are subsidizing GlowCaps' $10-to-$20 monthly fee, making it free to patients, Rose says. Their objective: Fewer missed doses will translate to additional pill sales. Novartis (NOVN:VX) says it's planning a pilot program to offer GlowCaps to transplant centers to see whether they improve patient adherence to transplant-medication prescriptions.
Carriers such as AT&T, which control prices of wireless-service plans for devices, are increasingly eyeing at-home care. "Many of our applications today help make physicians' and nurses' jobs easier," Lisa Johnson, assistant vice-president for mobility product management at AT&T, says in an interview. "Applications that would be developed for patient use, that's definitely where it's going."
Consumers are showing an appetite for at-home and on-the-go mobile products, particularly those catering to the elderly and young children. "We are seeing interest from consumers to pay for some of these services," says Sue Green, a manager at IBM, which consults with medical-device makers and insurance companies on mobile-app development. "There's a tremendous amount of activity."