Digital Disruption in Medical Devices

Rajit Kamal

"AI is one of the most important things humanity is working on. It is more profound than, I dunno, electricity or fire" said Sundar Pichai, CEO of Google.

Fire and electricity profoundly changed the way we live as humans. It has made us more efficient, productive and unleashed the era of industrialization. If AI is more profound than electricity, the future is going to be very exciting and we have just scratched the surface, especially when it comes to Medical Devices.

There are three foundational trends driving digitization of Medical Devices.

Data: It is estimated that every day we create 2.5 quintillion bytes of data. 90% of the data we have today was created in the last 2 years. For devices, the ability to collect data in an easy and cost-effective way is transformational. 10 years back, once a patient had a device implanted, the only time the surgeon got to assess their progress was when they came for a follow up visit. Sometimes, that might be too late. The lag in assessing the data around patient progress made us more reactive than proactive and at times compromising patient outcomes. Today, with sensors and wearables, one can get real time data and monitor patient progress remotely and in real-time. This provides the ability to pro-actively intervene and improve patient outcomes.

Computing Power/Machine Learning/Deep Learning: Just collecting data is not enough. We need to make sense of the data and derive insights. The Moore’s law has played out for computing power. The iPhone X is significantly more powerful than the computer that put the man on moon. 10 years back, when a surgeon examined a patient post-surgery and measured key metrics, they had to rely on their education and experience to make sense of that information. The advances in computing power and Machine Learning have enabled analyzing that data against hundreds and thousands of patients around the world, incorporating the latest medical literature in analyzing the information and providing the best insights on what it means for an individual patient.This enables scalability of collective experience and not just one person’s experience. It has the potential to minimize variability in outcomes.

Miniaturization: The devices are becoming smaller, flexible, smart, potable and cost-effective. This opens significant potential. Smart devices can be incorporated in implantable devices, used as wearables, used at point of care, used in patient homes etc., enabling collection of data we want and where we want without barriers of size, convenience, cost etc. Gone are the days when only way to get some important information like A1C level, patient range of motion etc. was to go to a physician’s office which had inherent issues with convenience (take time off work), cost (pay for office visit) etc. Today technology enables that in a convenient and cost-effective way. 

So, how critical is it to adopt these technologies. As they say, there will be two types of radiologists in the future, those who adopt AI and those who don’t and those who adopt AI will be better and more competitive. Same applies to medical devices companies. 

For Medical Device companies, adopting technology will become critical for competitiveness.  In some ways, this will be the cost of entry. One McKinsey study found that companies with advanced digital capabilities grow revenues and share faster than their peers.

So, how should companies adopt digital technologies:

Unmet Needs: It is very easy to get swayed by the hype around digital technologies. It is a similar hype that was there around e-commerce in early 2000s. But it is very important to make sure technology is used to address “unmet needs” that cannot get addressed by traditional products or are better addressed by technology. The basic driver of “why invest” still must be “better patient outcomes”.

Like reducing variability in outcomes or remote patient monitoring etc. Without recent advances in data and technology, these unmet needs cannot be addressed through traditional products.

Also, it is not just about outcomes. The solution should be cost effective. It should either reduce or at least offset the overall cost of care.

Also, device companies must start looking at unmet needs across the care continuum. So, far companies have addressed the unmet needs for the surgical episode. The companies in future will not only sell the “implants”, they will send a “solution” with products and services across the care continuum.

Business Model: The model of monetization will be fundamentally different than traditional products. Medical Device companies must evolve the way they monetize their solution. Companies can learn a lot from technology companies. Selling a solution for care episode, enables “risk sharing” type monetization models. Models like “Freemium” where some features are free while others (e.g. advanced analytics and insights) are for a charge to models like subscription, fee per click etc.

Organizational Structure: Since these are new technologies, it is very easy to follow the model of having a separate team than the core business. That model has been very successful for disruptive businesses, businesses that will cannibalize or replace existing core business. E.g. Online book store, Movies on demand vs. Blockbuster model. Digital technologies are not going to replace the core products, they will enable better performance for the core products. For example, digital products will never replace core implants, these will always be required, but it will enable them to achieve better patient outcomes. So, it is very important that these are managed within the core businesses to align incentives and enable right strategic focus. Take example of Kindle business at Amazon. The goal is to sell more books not make money from Kindle. If Kindle is a separate business unit, it might conflict with the bigger picture of selling more books. To make this transition successful, it will require a technology savvy leader and a team that has the right combination of people with expertise in traditional and digital businesses.

Incorporating technology and data will improve care for patients. And for those of us in healthcare industry, this is very exciting.