Adding connected health applications to a smart home platform opens up additional, complementary revenue opportunities, yet some of these paths will not result in a straight-forward replication of conventional revenue models. This is especially true for applications that touch a patient’s health and require collaboration with healthcare professionals. For others, the smart home industry needs to think outside the box to build channels and experiment with new revenue models.

Parks Associates identifies several business models that can benefit smart home players interested in capitalizing on what connected health platforms provide:

• Freemium with a service upgrade option – Health apps in the fitness tracking, diet management, care coordination and support categories are well-suited to this revenue model. This model type is especially appealing to light users who may find it difficult to justify paying a monthly recurring fee for services that they use only occasionally.
• Complementary product/supplies sales – Consumers may find it convenient to buy products and supplies directly on a care platform if product brands are trustworthy and the shopping process is pain-free. This revenue model is appropriate for many connected health solutions and services, but needs to be carefully planned and designed. For example, a medication tracking app can remind people of prescription refills and connect users to their pharmacy for scheduled pick-up or mail-order delivery.
• Data for health and medical research – Data collected from a connected health platform and cleared by end users for medical research purposes can be a goldmine for medical researchers and drug companies. These data would not replace carefully planned clinical trials, but instead can complement structured clinical trial data or medical research.
• Cost savings share – A connected health platform can so catalyze changes in a patient’s behaviors that it generates both near term and long-term cost savings for healthcare providers or health insurers. Besides a conventional technology license or platform-as-a-service fee for revenues, a platform provider can seek shared savings as new revenue sources. Long-term cost savings shared as revenues can result from an agreement with health insurers to maintain a patient’s health status through measurable outcomes.

All of these new revenue models require careful planning and coordination with cooperating partners. They may not be mainstream today and may not appear sufficient to offset the near-term development costs of a connected health platform. They are, however, complementary to mainstream revenue models, and over time, promise significant revenue contributors for players in for the long-term growth of the connected health industry.

For more research on crossover opportunities between the smart home and connected health markets, see Parks Associates’ 3Q 2015 industry report Smart Home Platforms for Health. For more information, click here.

Further Reading:

• Global sales of connected digital fitness trackers will exceed 82 million in 2019
• Connected Health Tracker Research Service
• Health & Wellness Devices within Wearables Market Represent a Huge Opportunity for OEMs