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Heralded as a new frontier in medicine, wearable devices sure are getting a lot of hype these days. Let’s start with some numbers:

The recent FitBit IPO (currently valued at $6.5B) and $300MM Jawbone investment by BlackRock, only prove the point further that the hype around wearables isn’t really hype: it’s real. Wearables will undoubtedly open up a whole new arena of ways for people to interact with each other and perhaps, most interestingly, a whole new way for people to interact with themselves.

Now, for the bad news. Wearables have a long way to go – both in terms of technology and how they fit into the health and wellness ecosystem. About 33% of wearables are no longer used after six months. After a year, that number increases to about 50%. So are they really the new frontier for personalized medicine? Some might argue that most doctors don’t care about your FitBit data. Insurance companies and employers want to use the data, but can’t seem to get any utility from it. And despite the dazzling growth of the industry, wearables still are only a drop in the bucket of the $3 trillion US health system.

To illustrate the problem further, think of someone you know who owns a wearable. Let’s take a guess: they’re not sick. There have been several studies of fitness trackers used in chronically ill patients (with positive results), but the majority of users today are healthy people that desire a “quantified self.” While fitness trackers and smartwatches can generate a lot of data, it’s data about a group of people that the healthcare system is least worried about. The key? Generating data that is actionable. Wearables will only generate interest from the rest of the healthcare system when they can generate data in the context of clinical problems and outcomes.

Building in clinical context

Trying to cure a healthy person is a terribly difficult task, but that’s exactly what many wearable manufacturers have tried to do. People are ultimately interested in data that is able to change their behavior. Companies like Nike, Apple and FitBit have created beautiful dashboards about steps walked, hours slept, and changes in temperature – all to try and inspire their user to action. The problem is, the athletic 30-something hitting the gym 4 times a week probably won’t get any information from their tracker they don’t already know.

In contrast, medical device companies like Siemens, GE Healthcare, and Medtronic are the polar opposite, having created devices that are excellent at collecting useful (and contextual) clinical data, but cater their interfaces to the medical community – not the consumer. The ideal wearable does both. For sleep apnea, monitors that positively reinforce good sleep hygiene, while mapping sleep data against goals and sharing all this information with doctors and patients. For epileptic patients, monitoring transdermal electrical activity to help patients learn about seizure triggers. For diabetic patients, combining exercise tracking with contact lens blood glucose monitoring to help build personalized and data-driven care plans.

Just as pharmaceutical companies have never been able to produce a pill that cures all ailments, there isn’t a single wearable made for everyone. Ask Eric Ries or Steve Blank, this is a fundamental startup principle – building the right product for the right population.

Validating the product with partnerships

Tapping into the rest of the $3 trillion health market means convincing everyone, including providers, payers and employers, that the data being produced is useful. They’re a much tougher crowd, and it will take more than a marketing campaign to gain traction. Having the right partnerships is crucial. Many startups have caught on, with a recent trend of startups taking investment dollars from atypical sources – insurance providers like Humana, and medical centers like UCSF.

While showing some promising ROI numbers might be enough for an insurance provider or VC fund, convincing the provider community starts with one key element: the peer-reviewed journal article. Getting there means approaching an academic medical center and communicating very clear intentions. Medical research programs and institutional review boards (IRBs) have very different processes depending on whether the objective of the partnership is a clinical trial, pilot program, or just basic user feedback. The results of any of these options can make their way into formal medical literature. Of course, influence will depend on the scale of the project, but founders can take solid first steps by determining the right partnering researchers, a discrete project scope, and a resource allotment that the company can afford.

Wearables must live in an ecosystem

On average, doctors carry a few hundred patients, insurers have millions of beneficiaries and employers have thousands of employees. No one has the time to manually access multiple reporting systems, and the whole wearables industry will need players focused on creating interface platforms that connect to larger health IT systems. Apple has been leading the charge, recently announcing that its HealthKit platform will interface with EPIC, the largest provider of electronic health record software. Just as the success of the app industry began with the success of smartphone platforms, wearables will become successful when the whole ecosystem has a foundation to grow upon.

Interoperability has also been of intense federal focus, with the Office of the National Coordinator for Health IT having delayed Stage 3 of Meaningful Use until this year so that the industry could first make progress on interoperability of EHR platforms. FDA regulations around wearables are also scant, so there is both flexibility and enthusiasm for wearables to work together. Now, the issue is who will carry the platform burden – will it be a giant like Google or Apple, a new entrant, an existing EHR provider? It’s tough to predict now, but will likely depend on whether consumers, providers and/or payers end up driving the market.

The important thing for current wearables companies to remember is that their success stories have yet to be written, no matter what the WSJ or bloggers say. Healthcare has had plenty of darling hopefuls that never panned out, and it’s hard to say what the fate of wearables will be. They might be the key to personalized medicine and rekindling the relationship between patients and providers. Here, the devil is in the data – making sure wearables produce information that’s accurate, accessible, and powerful enough to change the way we live.

Arnab Sarker

1776 Health Columnist

Arnab Sarker is an independent healthcare consultant, medical student, and former Director of Operations of K Street Capital. He writes/thinks/breathes about healthcare trends and how policy, technology and medicine can…

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