Slack is preparing for a major play in Healthcare
San Francisco-based workplace communication platform Slack filed for its IPO on Friday and underscored the healthcare privacy regulation it will need to clear as it boosts its health play.
Slack noted the importance of holding onto its Health Insurance Portability and Accountability Act (HIPAA) compliance — which, if breached, could land the company in hot water with steep fines and criminal penalties.
Slack announced that its file upload feature was compliant in February, but its direct messaging and channel communication features between health providers isn't yet cleared. It's likely that HIPAA compliance will extend to communication features within months.
Here's what it means: Healthcare represents a large market opportunity for Slack if it sorts out HIPAA compliance.
There's likely appetite among healthcare players for more convenient communication tools. For example, news surfaced in May 2018 that 500,000 healthcare staff in the UK National Health Service (NHS) were using instant apps like WhatsApp and Facebook Messenger to communicate, due in part to frustration with NHS-approved communication tools. If Slack's security is on par with current communication platforms used by health organizations, it could compete on convenience.
The industry is reeling from cybersecurity attacks, creating a large market opportunity for vendors of secure communication platforms. The US healthcare industry suffered a record 365 data breaches in 2018 — up about 2% year-over-year (YoY) from the previous high of 358 breaches in 2017. This should lead health firms to invest in secure tech that mitigates high costs that data breaches impose.
The bigger picture: Slack's healthcare-specific risks are reflective of the challenges that await non traditional digital entrants in healthcare.
Lyft and Uber both shed light on potential regulatory risks as they expand their health plays. In their respective IPO filings, Uberand Lyft highlighted they may become subject to additional federal and state healthcare regulations. Both ride-hailing giants partner with health systems and insurers to offer transportation for patients. Lyft indicated that breaching healthcare privacy laws would expose the company to up to $1.5 million in penalties.
And tech behemoths like Amazon and Google have to navigate low consumer trust. For example, only 11% of US consumers are willing to share health data with tech companies. A low level of trust could drag on consumer use of big tech's healthcare services, limiting the impact they have on the industry.