Apple, Google face hurdles entering health care

When Apple (AAPL) announced new features for its next iOS mobile operating system in June, it was clear that the health care industry was a big target. The tech giant is also reportedly talking with major health care organizations about how they might use the company's so-called HealthKit services.

Google (GOOG) and other large tech players are also in the race to dominate the emerging business for health and fitness software and hardware. That won't be easy. As the competition heats up, these companies are likely to face significant obstacles in a sector where privacy and regulatory concerns abound.

Apple had already announced in June that it was working with the Mayo Clinic and software vendor Epic Systems, which makes applications for hospital and practice management as well as electronic healthcare records, to make consumer health sensor readings and data from iPhones and iPads available to them. The latest talks involve three top hospitals -- Mount Sinai, the Cleveland Clinic and Johns Hopkins -- along with Allscripts, a competitor to Epic.

For its part, Google earlier this week unveiled its health care app development kit, which is aimed at helping software developers build a range of digital medical tools. The additions to Android would help companies integrate use of sensors, data recording and healthcare history to provide mobile apps that could likely also tie into the healthcare ecosystem.

In some ways, the push by Google and Apple into the health sector is a natural one. The clinical health care data analytics market is seeing huge growth. That is being driven both by the Affordable Care Act, which has significant incentives to move medicine toward interconnected electronic communications, and spiraling health care costs.

Until recently, much of the health car industry has functioned like a collection of cottage businesses run that continue to rely on outdated manual processes and that are unable to effectively exchange information. The latter is especially important given the number of health care providers patients typically have to deal with, from their initial diagnosis and testing to hospitalization, surgery or longer-term treatment

Despite the commercial opportunities to modernize the U.S. medical system, the health care data market differs greatly from other tech sector. Companies must comply with a range of complicated rules and government agencies, including the Healthcare Insurance Portability and Accountability Act, Food and Drug Administration, Medicare, and numerous other state and federal laws and bodies.

A flashpoint for tech companies eying the health care business: patient privacy. By law, providers are required to keep strict control over personal health information. The Department of Health and Human Services has shown a growing willingness to impose hefty fines on providers hit with data breaches or that otherwise fail to safeguard patient records.

Although such sums might be trivial for a Google or Apple, they represent large sums for most health care organizations. And tech companies face hits to their reputation, and perhaps legal liability, if their gear is involved in a leak of patient data.

Of course, issues of privacy and regulatory compliance are common in tech, too. Apple has a reasonably good record of securing customer information. But the company's Internet "cloud" services have had their problems, including outages that would be considered problematic in a health care setting, and criminals hacking into user accounts. In addition, the company would have to change its existing business processes that have served it well so it could easily share data with health care providers. That also could pose risks.

Google is experienced at sharing data and at running high volume cloud services. But their software, systems and devices have been targets for hackers. The company also has a reputation for making strategic use of all customer data. That alone could make many providers reluctant to partner with them for fear of running afoul privacy or security rules.