Welcome to MedTech 3.0: Digital technology in healthcare today

Excerpted from The Digital Future of MedTech: Navigating a path to improved patient outcomes and business performance. To read the full whitepaper, click here.

If the MedTech industry really has entered a new stage of development, then what does that mean for MedTech businesses? What are the opportunities and challenges of large-scale digitization? To what extent will organizations need to change their company structures, operating models, product offerings and go-to-market strategies in order to survive and thrive in this new world?

Drivers of digitization

All the leaders we spoke to for our research see digitization as a necessity, not a nice-to-have – and, while digital technology creates many different product opportunities, it also presents a number of competitive threats. For Philippe Houssiau, Chairman of Corilus and Althea Group and Board member of Mach7 Technologies, companies must include digital technology as part of their offering if they want to leapfrog their competitors in terms of patient outcomes or efficiency savings. It is only though digitization that they can continue to innovate and improve.

“Everybody will continue to refine their devices, but the marginal effect on outcomes will be dwarfed by the capacity to actually work with the datasets that are made available by even basic technology,” Houssiau said. “I think the emphasis now lies much more on making sure that the data provided by the medical devices is presented in such a way that it becomes more relevant, more in context, and more useable for optimal decision-making.”

Roy Jakobs, Executive Vice President Connected Care at Philips, agrees. For him, digital innovation should be primarily a means for optimizing patient care rather than a business goal in its own right.

“As soon as you have the ambition to truly support taking care of people, regardless of where they are or what state they are in, you very quickly come to the realization that you can only do that if you go digital and make the patient data flow seamlessly,” Jakobs said. “It is about systems productivity and patient outcome. Digitization and AI are part of the mix, but it is not about that per se. The only means that will change the delivery of healthcare is the interplay between devices, people, systems and data. How can we give people the insights and tools that make their job easier and better?”

The need for digitization is also being driven by changes in the healthcare ecosystem. By 2050, according to World Population Prospects 2019 (United Nations, 2019), 1 in 6 people in the world will be over the age of 65, up from 1 in 11 in 2019. As populations age, and systems come under pressure, hospitals will no longer provide the majority of patient care. Instead, they will focus on more complex clinical cases while increasing numbers of treatments and recoveries are done at home. The out-of-hospital sector will therefore grow significantly. In this new environment, MedTech companies need to be able to provide products and services that enable interconnectivity and allow information to flow.

Changes to charging models

Digitized medical devices mean extra costs – for manufacturers and customers. But the additional investment is justifiable if companies can demonstrate that digitization leads to improved outcomes, for example, in terms of fewer complications or infections, or in improved economics for hospitals.

Digital technology such as pre-operative software, robots and 3D models have been shown to improve procedures and patient outcomes. Artificial intelligence can be used to optimize the patient journey or to enhance back-end processes through the ongoing automation of repetitive tasks. Data also has a key role to play in enabling healthcare providers to tailor the approach to the individual and make more accurate predictions about treatments.

In this new heavily digitized world, we are likely to see major changes to how products or services are paid for. Instead of charging fees per product, MedTech companies will likely move towards more outcome-driven or service models. Going forward, most leaders agree that it will not just be about the clinical performance of the product but rather about the add-on services that are built around it. The ability to innovate and add value will become a significant part of the sales process, and a source of customer stickiness.

Data is everything

Almost everyone we spoke to put data at the heart of their organization’s digital transformation strategy. They also provided insight into the critical questions businesses need to ask themselves if they are to make their strategies a success. What data do we have? How can we extract value from it? What steps do we need to take to increase the flow of data across the healthcare system? “Fundamentally, it starts with a data strategy and understanding how to capture and store the data that technologies generate to add value beyond the technology. Looking at the power of ‘data generated insights’ and knowing how to extract value from that data will be truly transformative for MedTech.“ Euan S. Thomson, PhD, President of Carl Zeiss Meditec Ophthalmic Devices & Head of Carl Zeiss Meditec Digital Business Unit.

The key point to remember here is that data is not valuable in and of itself. What is valuable is the insights that the data can provide. Many companies are commenting that they already have a lot of data but don’t yet know how to turn it into actionable insights that are meaningful for the clinician, the nurse, the patient, or the caregiver. This is where AI can help with meaningful interpretation of data and machine learning can ensure companies get the most out of the data. This is something the tech industry is very good at: managing data and extracting value from it.

For some devices, finding ways to extract value from data will be relatively straightforward. “You shift towards a relevant data set model and charge a fee for service,” Houssiau said. “It’s as simple as that. You step away from the capital expenditure on a piece of equipment, and you put the investment into a system to serve a purpose. The purpose is not just to provide a scan. The purpose is to provide data, and that data has a value.”

Others may require a more sophisticated approach. “The phrase I use is Connect, Collect, Activate,” said Scott Huennekens, Chairman of Acutus Medical, Hyperfine, Envista Holdings Corporation Wondr Medical, Digma Medical and Kardion. “You want to drive the connection of all your devices and information, so you can collect the information, then analyze and activate it for the patient, physician, and device company so they can improve the device and activate it for reimbursement. So, you need to start thinking about it as a company. How do I make sure I connect, collect and activate to build my value proposition for my customers?”

Accelerating digital transformation

MedTech companies today are at very different stages in their digital transformation journeys. While some already have products and solutions in the marketplace, others are only just starting to think seriously about change. There are several issues that may be preventing companies from transforming as rapidly as they would like. These include:

  • Regulatory requirements and need to fit around clinical pathways
  • Pricing and access
  • Data and privacy issues
  • Lack of company capability how to do this

Another major challenge is inherent conservativeness around adoption. After all, it is no good developing innovative digital technology solutions if your customers are not willing, able or incentivized to use it. Today, the limiting factor is often not the technology itself but rather the reluctance of customers to adopt and apply it, or the way in which government and payers are organized to deliver care. For this to work, people adoption, technology adoption and the financial systems need to come together.

That said, the pressure for MedTech companies to transform is growing increasingly intense. Why? One reason is the pandemic, which forced organizations to enable remote working, hold virtual medical education events, and replace personal sales visits with digital customer engagement to name a few. Another common driver is cuts to reimbursement rates, as Bobby Ghoshal, Chief Technology Officer at ResMed explains: “When reimbursement rates were dropped, in some cases by 40-50%, that was when we started thinking radically different about how we can solve the same problems differently.”

Wherever organizations currently stand in their digital transformation journey, they need to start asking themselves serious questions about how they are going to continue keeping pace with change. How can we increase our value proposition with digital and AI? How do we stay relevant?

Download The Digital Future of MedTech to learn who should lead transformation initiatives, what new skillsets are needed and how to get everyone onboard for this change.

Digital Future of MedTech

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