When Your Activity Tracker Becomes a Personal Medical Device

Fitbit spent its first decade selling activity trackers. With its latest moves, the company is starting to look less like a gear maker selling pricey accessories to fitness buffs and more like a medical-device company, catering to hospitals, patients, and health insurers. The company’s business-to-business arm, called Health Solutions, is now addressing four health conditions—sleep disorders including sleep apnea, diabetes, cardiovascular health and mental health—for employers, health insurers, healthcare providers, and researchers.

Fitbit has deals with insurers like UnitedHealthcare, which pays its clients up to $1,500 a year for hitting step-count goals. United has done years of research to calculate its return on these payouts, says Fitbit CEO James Park. “The business models are finally catching up to the data we have been collecting.” The next stage is to add in heart rate data, he says.

Fitbit’s newest product, the Ionic smartwatch, uses a blood-oxygen sensor to screen for sleep apnea and detect a type of heart arrhythmia. The company has completed clinical trials on the use cases and will submit them to the US Food and Drug Administration for approval. If it receives approval, Fitbits could replace expensive chest patch scanning to perform initial screenings for atrial fibrillation on some patients, Park says. The company’s data has been popular with cancer researchers.

There are plenty of reasons behind the company’s transition: For one, Fitbit will always battle high abandonment rates. (“Fitbit? More like Quitbit,” The Atlantic once quipped.) Fitbit’s sales of fitness trackers, and in turn, its stock price, have reflected that fatigue; revenue fell 22% last quarter and its stock is trading at a 77% discount to its opening price in 2014. But most important, the company needs to differentiate its offerings from the Apple Watch, which debuted in 2015 and has studies that address some of the same areas Fitbit is chasing. Fitbit beat Apple in the third quarter in terms of devices shipped, taking 13.7% of the market, according to IDC. Apple, which took 10.3% of the market, experienced a dramatic increase in sales, while Fitbit continues its decline.

Fitbit believes its position as a neutral player that works with any phone makes it desirable to insurance companies and hospitals. Apple Watches only work with iPhones; if an employer, hospital or insurer wants its clients to use them, it won’t be able to reach people who have Android phones.

Fitbit’s push into medicine is not without risks. Park agrees that over time the company’s products will become a form of medical device, but he’s reluctant to call them that outright. The company’s brand is valuable because of its association with fitness and self-improvement, and consumer psychology is a critical component in making sure something like a step tracker is successful, he says.

“There is a dramatic difference in consumer acceptance and engagement when you say, ‘Hey, here is a medical device from Medtronic, go wear it,’ versus, ‘Here’s a Fitbit, wear this instead,’ ” Park says. “One is aspirational, the other implies that you’re sick. Consumers just go in with a different mentality based on how it’s portrayed and that is actually really, really important.”

That’s why Fitbit is participating in a new FDA precertification program aimed at digital health products, announced in September. “The FDA recognizes that there is this potentially new class of devices that’s not a consumer device and not a traditional medical device, but somewhere in between, and that there needs to be a new regulatory pathway,” Park says. Fitbit’s rival, Apple, is also a participant.

CORRECTION, 12:55PM: Fitbit plans to seek approval from the US Food and Drug Administration to use data from its devices to screen for atrial fibrillation. An earlier version of this article said Fitbit was awaiting FDA approval.

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