When David Feinberg, head of Google Health, announced this past week that he was departing to take up the CEO role at the EHR company Cerner, media reports took it as an admission of defeat by Google in the campaign to win in the healthcare space.

A leaked internal memo, scooped by Business Insider, revealed that the Google Health division was disbanding. The parts are scattered among different business units where they may simply limp along or quietly shut down.

Google wasn't alone in making news. Another article in the same week in Business Insider revealed that Apple acknowledged it is "scaling back" a key project, an app called Health Habit.

The app allows Apple employees to log fitness goals, manage hypertension, and talk to clinicians and coaches at AC Wellness, the doctors' group that Apple works with.

There was no shortage of commentary on social media. Aaron Martin, chief digital officer of Providence, quipped on LinkedIn: "If you're a big tech and want to exit healthcare, this is the week to do it." For good measure, he added the hashtag #healthcareishard.

My friend and digital health entrepreneur Sherri Douville, whose post on LinkedIn went viral, summed it up like this: "If companies misunderstand evidence-based medicine, they have no business bringing technology into medicine at all (as opposed to consumer or administrative use)."

Glenn Tullman, digital health entrepreneur and founder of Livongo – which merged with Teladoc in 2020 – had this to say: "Big Tech was struggling in healthcare because patients' problems are more about the overall experience than technology, per se."

Dr. Nick Patel, chief digital officer at Prisma Health, is not surprised that Google and Apple were scaling back.

"The multi-trillion-dollar healthcare industry is a hard nut to crack," he said. "There are too many complex variables to solve, and the healthcare tech space is already too crowded. Each is trying to solve for a tiny part of the overall tangled mess."

How did Big Tech get here, and what's next?

Google (Google Health) and Microsoft (Health Vault) tried to aggregate patient medical information directly from consumers and gave up after several years. Google Health shuttered in 2011, and Health Vault closed its doors in 2019.

Apple has made steady progress over the years, successfully integrating its Health app with the EHR systems of dozens of providers across the nation. It's not clear what the failure of the Health Habit project means for Apple's overall commitment to the healthcare sector.

So that leaves us with the obvious question: What will happen with Amazon's healthcare efforts? Amazon's recently launched Amazon Care has run into scaling issues almost from the get-go, with the unit's head acknowledging they will need "thousands of employees" to scale. It is a nontrivial problem in a market where there is widespread shortage of healthcare workers.

The commonalities between Apple's Health Habit product and the Amazon Care product are important. Both started as a limited primary care service offering targeting internal employees, presumably as a precursor to opening the offering to the public at some point. Both incubated the service using partnerships: AC Wellness in the case of Apple and Care Medical in the case of Amazon.

Tech firms are used to big-ticket failures (remember the Haven Healthcare debacle?) and often use the learnings to come back in a different shape and form. This is what has happened with Google and Amazon. Apple will undoubtedly brush aside the current setback and find a different approach to the healthcare market.

The repeated setbacks of big tech firms in the healthcare space merit the question: Is healthcare too hard for technology firms? Finding the answer requires understanding the structural issues within tech firms in their approach to the healthcare market:

Healthcare is a part-time job. The core mission of all the big tech firms is to sell software and hardware in as many different sectors and to as many customers as possible. Healthcare is seen as a huge opportunity, and by all accounts, the big tech firms are doing well selling their core products in the sector. However, unlike healthcare-focused tech firms – notably EHR firms - the healthcare sector gets only a part of the CEO's attention in big tech firms and only a part of the overall company resources.

Further, healthcare efforts are often scattered across the organization, with no cohesive enterprise-level strategy – ostensibly by design. When these tech firms try to cross the Rubicon into core healthcare services business – to compete, in short, with their customers and displace them in a $4 trillion industry – it's no surprise that they find themselves in over their heads.

Big tech firms want to solve the healthcare problem by themselves. Healthcare is a notoriously fragmented industry. Paradoxically, most tech companies add cost to an unsustainable, inflated healthcare bottom line by adding redundant layers to an already burdensome workflow for clinicians.

Nick Patel offers a counterintuitive suggestion. "If major technology companies came to the table together at the national level to solve this problem instead of trying to get a piece of the trillion-dollar pie, then maybe we will have a shot at fundamentally reducing costs and improving outcomes."

It's not just that technology firms are trying to go it alone. It's the structural barriers to the free movement of data, the data privacy considerations, the lack of desire among healthcare providers to consider patient-generated or other data that is not considered clinical evidence, and a host of other issues that hamper big tech firms.

Selling technology is not the same as selling healthcare services. Tech firms that work within the current construct of healthcare and focus on providing technology solutions have plenty of success to look forward to. Indeed, many are. It is a different story when it comes to getting into the healthcare services space. Incubating a primary care service offering for a few hundred employees and scaling it to 50 states are efforts that are entirely different orders of magnitude.

Healthcare consumers value their relationships with their physicians. The decades and generations of trust-building that define a hospital's relationship with its community are missing for big tech firms getting into the healthcare services space. Throw in the current employer-based insurance and reimbursement model for healthcare services, and it is clear why healthcare is not your conventional B2C business. (And not to forget, the provider community has little interest in being disintermediated.)

In the longer term, though, things are bound to change. We already see it in the success of digital-first and virtual-first providers of healthcare emerging as challengers. One or more of them will eventually have a breakthrough.

It just may not be one of the big tech firms we know today. Here is a thought to ponder, though: Maybe Google, Apple and Amazon go out and buy a big, established health system someday soon? After all, Amazon went out and bought Whole Foods to enter the grocery business, so why not repeat it in healthcare?

Paddy Padmanabhan is the author of Healthcare Digital Transformation – How Consumerism, Technology and Pandemic Are Accelerating the Future. He is the founder and CEO of Damo Consulting.