by Paddy Padmanabhan

Why healthcare needs to care about Google’s acquisition of Apigee

Sep 15, 2016
APIsHealthcare IndustrySoftware Development

The API economy is powering digital health transformation.

data integration
Credit: Thinkstock

Integration software is sexy, and it’s back.

Last week, Google dropped $625 million to buy Apigee, a company that specializes in integration software known as application programming interfaces (API). The deal validates the API economy, estimated by research firm Forrester to be a $3 billion business by 2020.

Interestingly, one of the real-life examples cited in Google’s announcement was how drug retailer Walgreens uses Apigee’s API management platform to enable consumers to order prescription refills and print photos. The e-prescription use case is an excellent example of the API economy — a term that broadly refers to how APIs create value by allowing proprietary software applications to communicate with each other — at work in healthcare.  Integration software enables a doctor’s office to electronically approve prescriptions to Walgreens, and it allows the consumer to order refills (with gentle prompting from Walgreens) by way of text messages, all in a closed loop that significantly eliminates delays, increases patient adherence to medication regimens and improves population health. 

Why the API economy matters for healthcare

APIs are like wonder glue. “Open” APIs allow software applications to “talk” to one another using a defined set of data exchange standards and protocols. This unleashes innovation by enabling developers to build applications using APIs to reach into underlying data on platforms such as Google, Facebook and Amazon.

Healthcare has been relatively slow to adopt open API standards. Unlike social media and e-commerce, healthcare is mostly a closed ecosystem of proprietary software, notably electronic health record (EHR) systems that do not permit the free exchange of data. This has been the subject of much discussion and debate and has drawn the attention of the Office of the National Coordinator of Healthcare IT (ONC). The ONC has been pushing for more open standards to unlock the value of digitized medical records sitting in proprietary systems that can unleash innovation in healthcare and positively impact costs, quality and experience (the triple aim) in healthcare.

An important step in the drive toward open APIs has been the launch of the Fast Healthcare Interoperability Resources (FHIR) standards for data exchange in healthcare. Developed by industry standards organization HL7, FHIR is a possible alternative to proprietary standards for the exchange of healthcare data between systems. Most importantly, FHIR is future-proof, and the HL7 organization has committed to making FHIR backward-compatible with earlier versions of HL7-compliant interfaces as markets transition to the newer standards.

Apigee has been one of the early movers in building FHIR-based APIs, and this puts it in a small group of leaders, along with stand-alone integration software companies such as Mulesoft, that are helping accelerate innovation in healthcare. Google, which has struggled to gain traction in healthcare (and is arguably a late entrant to the API economy and B2B tech in general), may now find a new lease of life with a suite of tried and tested solutions for healthcare with the Apigee acquisition.

However, it is also relevant to note that open APIs by themselves don’t solve the interoperability problem. True interoperability in healthcare requires the ability to not only exchange data but also know what data to exchange under what conditions. It’s also important to understand the privacy and security aspects (HIPAA regulations) of the exchange of protected health information (PHI).

How the API economy is powering digital health

In the blog post announcing the deal, Google senior vice president Diane Greene said “the transition toward the cloud, mobile and digital interaction with customers and partners via APIs is happening, and fast.” This is perhaps the strongest case for the importance of the API economy. Technology-led innovation is mostly about unlocking the value of data. As data becomes the “new oil,” integration software may be the new oil pipeline. 

With the explosion of data sources in healthcare, from electronic medical records to the Internet of Things (IoT), images, unstructured data from text and more, innovation is going to be determined by how well applications can harness the data. This will require a robust API environment that permits data to be exchanged quickly, efficiently, and accurately. Digital health startups are creating entirely new experiences based on access to the EHR backbone in health systems. They are building applications that combine data from these systems in innovative ways with other data sources such as claims data and other non-healthcare data to create mobile experiences that are transforming healthcare. The API economy is set to play a vital role in this transformation.