Disruption - Striking at the Heart of Medical Devices
Digital disruption un-bundles and rewires every sector it touches. Previously protected areas such as healthcare are not immune, though pharma and medical devices - with high barriers to entry - have until now felt less of the heat.
In Upstart’s five years in digital health, we’ve seen the impact of AI, data science and personalised experiences drive change at previously unthinkable speed. So what’s going on in the protected world of medical devices, and what can that teach us about disruption?
The medical devices market is one of fastest-growing markets in the world, despite being a relatively small part of the $10Trillion healthcare market: By 2023, it is estimated that the market will reach $409.5 billion, with increasing healthcare expenditure and developments in tech fueling this growth.
Until this decade, it’s also been relatively immune from disruptive tech and business models. Barriers have been kept high by R&D spend, escalating regulatory compliance and the need for a highly-educated and connected salesforce to sell to demanding healthcare clients. While technological advances have been impressive, with robotics and digital printing on the verge of adoption, M&A and consolidation in the sector has led to declining choice for health providers.
An industry such as this is ripe for disruption. One which has relatively low engagement with digital and slow to implement is likely to be hit even harder when it happens - and it’s happening now.
We’ll focus on just three key trends which are disrupting health provision globally; consumerisation and patient experience, cloud, and business model innovation which is enabled when closed systems are opened and unbundled.
Consumerisation. The last decade has seen the mass availability of affordable mobile technology. The ambitions of players such as Apple, Google and Samsung to own health as a category mean the patient-consumer can be an active partner in health. Technologies such as AliveCor have moved diagnosis and monitoring of cardiac conditions from the hospital or the consulting room to the patients’ sofa or workplace. Home testing services such as Thriva and Livesmart are enabling testing to help populations stay well, while Entia’s home testing can give cancer patients the certainty they need before they start the journey to hospital for cancer.
The patient/consumer is also bringing their expectations to the medical devices business. Patient experience, once seen as a “nice to have” in the serious business of medicine, is now seen as part of effective care. Koning Corp’s Koning Breast CT 1000, quickly and painlessly delivers a mammogram without the painful compression that often occurs through conventional methods.
Cloud Technologies. More than anything, cloud thinking and technologies are doing the most to disrupt the traditional 20th Century model of central provision. Previously, information was previously stored in hospital IT, close to the people and equipment who could treat and diagnose. WIth the efforts of providers such as Google. Amazon, IBM, Salesforce and services such as Philips Health Suite, data can now flow freely, be shared with patients and crucially, be exposed to machine learning algorithms for machine-assisted diagnosis. Accessible data is paving the way for preventative health models, puttingpatient care directly in their hands, promoting education and reducing strain on healthcare services. Medical devices leader Abbott is championing patient-centered care. Remote heart monitoring, for instance, allows critical information about a patient’s heart to be transmitted wirelessly to a doctor’s office or clinic, allowing carers to assess and make changes to their treatment before the symptoms occur.
Value-based Models. The ability to gather and understand data in health is driving business model innovation. Where payment was once triggered for a consultation or procedure - the so-called “fee for service” model - there is a move towards value-based care and fees. Under this model, providers share not only information, but risk. One such example is Medtronic’s MiniMed 670G insulin pump that monitors levels in diabetic patients in real time. Beyond the technology, there is a business model innovation here where the device maker offers performance guarantees and penalties if it fails to keep patients out of hospital and prevent costly emergency admissions for health providers.
So Now What?
Whether you’re in the medical devices business or looking in from outside, there are some key learnings from this creative destruction of health, ones which apply to all industries
Involve Users - End users - whether health professionals or patient-consumers - now have a voice. They are empowered to communicate - either through feedback or by sharing their data with professionals to drive their own care. Learn from the broadcasting industry which ignored YouTube’s user-generated model to its loss.
Recognise Reality - Cloud tech and shared data streams will be the norm - there is no going back. In diabetes care and management there are now ecosystems building where patients, device makers, pharma, insurers and health providers are sharing data. In a business where M&A is the prevailing motor of growth (see ResMed’s $225m acquisition of connected inhaler startup Propeller Health) maybe smart money invests in interacting with, rather than owning the disruptive services.
Step Away From The Tech. Innovation is not the same as technology - it is enabled by tech. Ask what data, understanding and interoperability can do for your attractiveness as a seller, and find ways to keep your buyers happier by solving their business problems.