Industry CEOs Say Medtech Must Look to Collaboration, Long Term Planning
“If you are in the outcomes business, you have to change behaviors.” That was the lesson from Ernst & Young’s Panel at Advamed in October in Boston, MA. Now in this context, David DeMarco, principal at E&Y, who moderated the panel, was speaking about patients. But in reality, medtech manufacturers might have to change their own behaviors to respond to the changing market.
Industry leaders were on hand to add to DeMarco’s discussion of E&Y’s report, and explain how they are adjusting to the shifting healthcare focus. Panelists included Mike Mahoney, president of Boston Scientific Corp.; Karen Licitra, worldwide chairman, Global Medical Solutions Group, Johnson & Johnson; Donald Morel, chairman, president and CEO for West Pharmaceuticals Inc.; and Michael Mussallem, chairman and CEO of Edwards Lifesciences.
For the medtech industry to respond to the new healthcare market, a fundamental change in behavior must occur. In Ernst & Young’s 2012 Pulse of the Industry report [PDF], technology is in the spotlight. Specifically, patient facing, data driven technology is aimed at changing patient behavior and disease prevention as well as disease management. As E&Y puts it this new technology must be patient-empowering and information-leveraging (PI).
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For the most part, panelists were upbeat and excited to explore how to best meet these two fundamental ideas that merge health IT and patient-focused medical devices. “We have a critical part to play changing the definition of healthcare,” explained Licitra, who said she is optimistic about industry’s relevance in the new healthcare system.
A significant challenge for industry, the panelists agreed, is in engaging stakeholders at all levels of industry. “We can’t be experts in all things,” Morel said. “We have to go outside our company for expertise—innovation takes place in a collaborative environment.”
The panelists agreed that even if the partner is (or could end up being) a competitor, the pressure to respond to the changing market is going to require collaboration. DeMarco mentioned the pharmaceutical industry’s move to form a consortium and suggested that the medtech industry might be served to consider a similar path.
And that is because the customer base is widening. “The customer base is expanding to include payers, providers, administrators, and patients,” Lictira said. “We have to focus on getting customer insights—in [product launches] in which we’ve only gotten physician feedback, [that product] failed.”
Addressing an increased stakeholder base is no easy task. Doing so will require grand experiments and being comfortable with failure. “The culture of companies has to be open to trying new things,” noted Mahoney. Mussallem agreed, saying, “At Edwards, we have to take risks and know that we’ll be more wrong than we are right.”
To accommodate such risks, Mussallem said that firms have to change their expectations of product development timelines. “Product development has to have a long-term approach, it’s not as easy to get quick wins anymore. Value doesn’t happen in a 12-month budgeting period.” In Mussallem’s mind, a critical task is to not let these long term goals get disrupted by the day-to-day.
Another challenge, in Mussallem’s mind—and this might be the most important takeaway from the entire AdvaMed conference, as well as the most difficult to meet—is to manage the expectations of its customer base, with an emphasis on indsutry’s personal responsibility. “[Industry] has to raise the bar on [its] own behavior. We can’t just do the minimum to survive. We have to have a high level of integrity and not inflate expectations,” he said.
If industry can change its behavior by encouraging development of visionary medical devices, while underpromising their performance, it really could be a path to success, with improved patient outcomes as the measure of success.