The medical technologies sector faces profound commercial challenges in the coming years – but it also has the opportunity to play a major role in the transformation of healthcare. In the second of two articles, Chris Morgan focuses on the trends that are shaping the future of the medtech industry and its products.
The medical technologies sector is currently one of the most dynamic sectors of the healthcare industry. Its products are of fundamental importance to society, providing innovative solutions for diagnosis, prevention and treatment. The medtech industry is also a major employer, contributing significantly to all major economies.
Now the industry is facing national, European and global challenges that will have an impact on its innovation capacity and its competitiveness, but will also bring major opportunities driven by the needs of health systems, clinicians and patients. Can medical technologies realise their full potential?
The first part of this article examined the challenges affecting the healthcare economy and the forces creating new opportunities. The second part focuses on several trends that are shaping the future of medical technologies and the industry that supplies them.
Trends and opportunities
Significant challenges to the sustainability of healthcare systems are driving recourse to new medical technologies: the need to achieve more with less, to improve the quality and efficiency of care, to provide more home healthcare and self-care outside the clinical environment. What does all this mean for the future of medical devices and medical technologies?
A number of trends and opportunities are driving the future of medtech: cost efficiency, information, connectivity, convergence with bio-pharma, safety and usability, reuse and environmental issues, and transfer of innovative technologies from other sectors.
1. Cost efficiency and value. Cost is an obvious driver in the challenge to achieve more with less – but it’s not just about direct medical device cost. The true driver is cost efficiency and the real value of a technology within the new healthcare delivery models. A few more pounds spent on an appropriate device can save thousands of pounds in a particular care pathway.
For example, with the advent of compact and portable devices, home healthcare delivery has become an affordable alternative to long-term hospital stay – with significant benefits, including cost savings. A recent FDA paper on medical device home use compares the cost of in-patient care with homecare and puts the average monthly cost saving for homecare across a range of treatments at around 40%. It estimates the saving for ventilator-dependent adults at more than $14,000 per patient per month.
Home healthcare can provide further value in improved quality of life, enabling patients to remain ambulatory and independent. The focus on patient needs and patient-centred approaches in healthcare can be highly compatible with efficiencies and cost savings.
So although medical technology cost will remain important to the procurement process, it is not the driving trend. HTA agencies are evolving to determine reimbursement based on cost-effectiveness and how the patient’s quality of life is improved by the treatment at a population level. Support for efficiency and value-based device and service innovations is particularly good news for SMEs.
2. Information: the lifeblood of the healthcare revolution. The complexity of healthcare has resulted in a relatively late adoption of information technology, but it is clear that health systems can achieve remarkable results by using information to drive more personalised care – opening up access, reducing health inequalities and driving up quality while controlling costs.
Measuring the performance and value of efficiency-based medicine, new healthcare delivery models, patient-centred disease management and new reimbursement models will all require information, and lots of it. Evidence of early accurate diagnosis, effective treatment and optimum care outcomes – the visibility of medtech’s contribution to healthcare will depend on information.
Information will be used to manage therapy, monitor patient compliance, modify treatments in response to real-time diagnosis and trigger reimbursement. Most health systems are awash with data, but lack meaningful information about performance. Measuring the right things is critical, as focusing on the wrong things can lead to a misguided belief that quality of care is improving.
We are about to witness a revolution in healthcare enabled by technology that provides individual patient information – prompted by HTAs, facilitated by newly evolving commercial models and pursued by new entrants into the healthcare area. Outcome-based payment requires compliance and outcomes monitoring and data analysis, which will be facilitated by technologies from other sectors. A lack of relevant IT expertise among pharmaceutical, diagnostic and medical device suppliers represents a significant threat to their continued dominance, and an opportunity for new market entrants that can source and integrate the IT components.
3. Connectivity and telehealth. In the wider healthcare delivery environments determined by new delivery models, the adoption of electronic technologies can enable the acquisition, communication and analysis of (nearly) real-time data. Industry standards for interoperability are already emerging to enable the communication of devices from a variety of suppliers, removing barriers to entry and reducing costs.
Telemedicine and mobile health consortiums are maturing. There are now IEC standards covering home healthcare medical equipment and the incorporation of medical devices into IT networks, and the rules on medical device data connectivity are being clarified. The Continua Health Alliance has brought together technology, healthcare providers, companies and academic organisations to work with governments and standards organisations to create a sustainable technical environment for telehealth services.
Telehealth uses technology to help people manage their own health. The technologies used range from highly adapted devices that are accessible to people with only the most basic IT skills to highly interactive services linking wireless medical devices to applications on smart phones. While most telehealth systems collect and transmit data from patients, there is a general trend towards more interactive services that help to inform patients and encourage adherence to self-care regimes. Some clinicians are discouraged by the demands that telehealth makes of them, but this is typically a symptom of small operations: a broader service design could achieve economies of scale and free up clinical resources.
4. Convergence of medtech and bio-pharma. The challenges of efficiency-based medicine and personalised medicine are promoting the fusion of devices with drug and bio-engineering technologies. New opportunities and business models include the development of novel drug delivery devices. Major device and pharmaceutical companies are watching the innovative biotech and medtech start-ups and growing through targeted acquisition.
Pharma companies have recognised the unsustainability of the blockbuster model, and are turning their attention towards demonstrating benefits to patients and alignment with value-based pricing. Development of drug delivery devices is also driven by the trends for increased self-administration, patient convenience and safety, targeted drug delivery and the growing market for biologics.
Regenerative medicine, which usually has a major device component, has great potential for increasing people’s lives and improving their health. Creating artificial organs can alleviate many health problems for people who need transplants. For example, a research team has unveiled a prototype model of the first implantable artificial kidney, which could eliminate the need for dialysis. The implant could be ready for clinical trials in five to seven years.
The FDA’s Office of Combination Products is experiencing its highest level of novel product RFDs and application submissions, which is a sign of things to come. Regulators are under pressure from all sides to establish innovation pathways for pioneering medical devices, and they are clearly responding.
5. Innovation in safety and usability engineering. New healthcare delivery models and environments are creating increased demands on device engineering for safety and usability. Usability is the new requirement to provide efficient healthcare provision safely in a breadth of new delivery models and environments, many with unsupervised patients and users of increasing diversity. Poor usability engineering (match to human factors) has proven to be the highest risk to patient safety, closely followed by errors in device software.
Around 30% of adverse device events are attributed to usability issues. All too often, ‘use-errors’ lead to devices being rapidly withdrawn from the market and manufacturers facing penalties and patient litigation. So it’s no wonder there is currently a high-profile drive by regulatory authorities to promote improvements in device safety and usability. The adoption of new standards such as IEC 62366 into regulatory frameworks is making usability engineering separately accountable within the medical device design and development process.
This is less a ‘red flag’ than a co-ordinated effort by regulators to drive innovation in safety and usability and pave the way for future devices. Good usability engineering also means that devices are more intuitive to use, making them more successful and profitable.
6. Reuse and environment-conscious technologies. Reducing healthcare costs and protecting the environment both require careful management of resources. Disposable devices are typically not cost-effective or environmentally friendly, so reusable devices are back on the agenda. The reuse of single-use devices is currently discouraged in most of Europe, including the UK. However, innovative design that permits some degree of reuse will be a way forward for many medical devices.
Regulatory authorities are increasingly emphasising the importance of addressing environmental issues, and medical devices will have to balance effective and safe use with environmental responsibilities. A new WEEE Directive, the EuP Directive and the IEC60601 standard for environmentally conscious design of medical electrical equipment are all paving the way. Current medical device exceptions will not last forever.
COCIR, a trade association for European radiological, electromedical and healthcare IT companies, is working hard to establish pragmatic approaches and is at the forefront of intelligent eco-design solutions. Interestingly, early adopters of medical device eco-design have achieved significant benefits in terms of reduced manufacturing costs as well as improved product size, weight and reliability.
7. Technology transfer. There is a desperate need for rapid technology transfer from other industries, such as telecommunications, military and automotive, to speed the realisation of new healthcare delivery models that can meet the challenges of providing greater value and wider access in changing demographics. The medical technologies industry, with its wealth of specialist SMEs, is well placed to achieve this. Governments and regulators are paving the way for the development, approval and uptake of pioneering medical technologies.
Chris Morgan is an expert in Healthcare Technology & Innovation at PA Consulting Group.