Why does Apple Keep Making Medical Devices?

Apple is diving deeper into the medical device biz. At their annual launch event this week, the company touted Apple Watch’s new sleep apnea detection feature, and AirPods Pro 2 clinical-grade hearing aid feature.

It’s clear why Apple is making moves in health. The total addressable market (TAM) for hearing loss and sleep apnea is huge. Apple has big competitive advantages: A large installed customer base and credibility with millions of people over 65. Some experts believe Apple Watch could one day be the central portal for personal health.

Apple’s approach represents a paradigm shift in medical technology. Traditional medical device companies target doctors as the primary user.

Apple is targeting consumers, not doctors. By creating new user interfaces for medical devices that are consumer-centric, they’re aiming to create medical-grade functions on devices people already have.

Healthcare can differentiate Apple’s products and keep people in its ecosystem. Apple can use healthcare to distribute its products into demographic groups that are more likely to be sick, like the low-income and elderly populations.

Let’s examine three Apple Health products: Hearing loss, sleep apnea, and heart health. Where does Apple have the greatest opportunities to impact health, and what are its biggest challenges?

1. Hearing loss

Market size: Large

Maturity of Technology: Low

Apple’s newest AirPods Pro 2 will include a scientifically validated hearing test, and a clinical-grade hearing aid feature. After the initial set up, the hearing aid feature will enable “personalized dynamic adjustments” that boost sounds around them in real-time.

The hearing aid feature will be classified under the U.S. Food and Drug Administration’s over-the-counter category — which was first established in 2022 and allows certain hearing aids to be bought without a prescription.

Nearly 30 million American adults can benefit from hearing aid use, according to the FDA. The new AirPods are now available online for $249, with the hearing aid feature expected to launch this fall.

Opportunities

The potential market is enormous. About 1.5 billion people around the world are living with hearing loss. An estimated 75 percent of people diagnosed with hearing loss go untreated. Untreated hearing loss can increase the risks of social isolation and depression and contribute to falls.

Self-perceived mild to moderate hearing loss, the condition that these devices are designed to address, affects about one-quarter of people in their 60s, half of those in their 70s and three-quarters of those over 80.

The feature could be a game-changer for people who have hearing loss and don’t have medical insurance. Conventional hearing aids cost upwards of $1000. AirPods Pro 2 cost $249.

The FDA voted 2 years ago to make quality hearing aids an over-the-counter product. ”Ninety-plus percent of adults with hearing loss have needs that can be served by over-the-counter hearing aids” said Dr. Frank Lin, the director of the Johns Hopkins Cochlear Center for Hearing and Public Health.

Apple could reduce the stigma around wearing hearing aids. Millions already wear AirPods. This could ease some of the stigma.

Challenges

Apple is new to the hearing loss market and may face unexpected challenges.

Experts caution that programming hearing aids properly is just as important as the technology in the device. If hearing aids aren't programmed correctly, they are of limited value. As people’s hearing changes over time, they may require changes in the programming of the hearing aids.

Battery life could be an issue. People with hearing aids want all-day battery life, which may not be practical with AirPods.

Apple’s current solution won’t be able to help those who need help the most: people with significant hearing loss.

2. Sleep apnea

Market size: Large

Maturity of Technology: Low

The new Apple Watch will be able to diagnose sleep apnea. This feature uses the Apple Watch accelerometer to detect breathing interruptions at night and notify users if they are showing signs of moderate to severe sleep apnea via a new algorithm that analyzes breathing disturbance data. The technology is pending FDA approval.

Sleep apnea is a common sleep disorder that causes people to stop breathing or breathe shallowly while they sleep. Over time, the condition can cause serious complications. However, this condition is often very manageable, especially with adherence to prescribed treatments.

Opportunities

Doctors I’ve spoken to appreciate that the Apple Watch can raise awareness of possible sleep apnea by tracking breathing disturbance data. Apple’s detection feature looks like a way to prod someone who might not have thought about apnea to go see a sleep doctor.

An estimated 80% of sleep apnea patients remain undiagnosed. Apple could spread sleep testing to the masses and help millions of undiagnosed individuals get their first alert and seek testing and treatment.

Technology for home sleep testing is important given the shortage of sleep medicine trained physicians and a large unmet need for improved sleep solutions. Experts forecast a rapidly growing demand for sleep apnea testing and treatment with an expanding patient population.

More startups are addressing sleep health: Oura and Whoop (wearables for sleep tracking); Eight Sleep (smart bed to facilitate good sleep); Fount (personalized supplements); and Elemind (brainwave stimulation to help you fall asleep faster).

With the increased focus on sleep health and a shortage of good solutions, it’s easy to see why Apple would like to enter this market.

Challenges

Sleep specialists caution that the Apple Watch is not a medical-grade diagnostic tool for sleep apnea and should not be seen as a substitute for professional diagnosis and treatment.

Sleep apnea is typically diagnosed through a sleep study (polysomnography). There is a concern that relying on Apple Watch alone could cause some people to misdiagnose their sleep issues.

Apple Watch can surface potential sleep issues, but it doesn’t provide the full range of information needed to confirm sleep apnea, such as airflow or detailed brainwave patterns.

3. Heart Health

Market size: Medium to Large

Maturity of Technology: Medium-high

More patients and doctors are relying on Apple Watch and other wearables for cardiac monitoring. Apple Watch has been approved by the FDA to notify users about irregular heart rhythms connected to atrial fibrillation (A Fib) and capture electrocardiograms (EKG).

Apple Watch can suggest possible A Fib based on a technology called PPG (the use of light to detect blood volume changes). The watch uses green LED lights paired with light-sensitive photodiodes to detect the amount of blood flowing through the wrist at any given moment.

Opportunities

Cardiologists say more patients are coming to see them based on data from their Apple Watch. I spoke to one cardiologist who said:

“I can make an A Fib diagnosis based on the Apple Watch instead of using a holter monitor. The diagnostic quality for Apple Watch is excellent.”

The current gold standard for cardiac rhythm monitoring is wearable holters or patch monitors and devices known as MCOTs. These devices are expensive, bulky and intrusive. If Apple Watch can demonstrate clinical efficacy for rhythm management, it could replace some of these medical devices.

Challenges

Some physicians believe the technology isn’t good enough yet. The PPG signal captured by the Apple Watch is less precise than medical grade devices. The technology has proven its value only for A Fib, not for the dozen or so other arrhythmias cardiologists may treat.

Reimbursement is a barrier to wider adoption in the medical setting. Use of an Apple Watch for monitoring cardiac rhythm is not reimbursed by insurance.

Payers don’t consider Apple Watch data good enough to obtain preauthorization for expensive interventions related to cardiac rhythm management. Health plans likely won’t cover it until data clearly shows Apple Watch is accurate enough, and there’s an infrastructure in place to support it — i.e. some combination of people and technology who get the cardiac rhythm data, interpret it, and manage patient outreach.

Finally, for the watch to be covered widely by health plans, experts say Apple would need to become a medical company with transparent data collection (vs. its current closed approach).

The cardiologist I spoke to is optimistic that Apple can overcome these hurdles. He expects Apple Watch will soon be able to measure PulseOx, blood pressure, and EKG — three critical elements for high-risk patients. There’s hope the watch could one day measure blood glucose levels and revolutionize diabetes care.

(Note: Apple Watch previously had the ability to measure blood oxygen levels, but Apple dropped the health feature after losing a patent case brought by the medical technology company Masimo.)

Wearables like Apple Watch could assist in other areas of health, like fall detection. They may be useful for aging seniors who are prone to falls and don’t always have their phone with them.

We’re moving toward a world in which more people use wearable devices to monitor their health in real-time. Companies like Whoop, Oura, Samsung, and Withings are making devices that support multi-sensing, i.e. more than one health parameter.

In the future, we may see more health plans cover wearable devices. The devices offer several advantages over traditional health monitoring: They’re cheaper, less intrusive, and easier to use.

Next-generation wearables could enable passive, real-time monitoring, with health data fed into AI systems that interpret health data in real time, and generate an alert when they detect issues that require medical attention.

Apple excels at taking technologies that already exist, like sleep testing and heart monitoring, and turning them into beloved hardware-based products.

The promise of Apple Watch and other health wearables is that we’ll be able to catch health problems earlier and get the right treatment at the right time.

I’d love to hear your thoughts. Do you think Apple can succeed in medical devices?