Users and clinicians want more than just a product from device companies. Here's what medtech companies need to know to get ahead as the industry partners with providers and moves toward offerings that support customers.
Medtronic is undergoing a transformation. So are GE Healthcare and Stryker.
But if you thought that the conversion from device maker to integrated care partner was simply a trend meant for the largest medtech companies--think again. The entire industry is shifting toward offering more services and training to help customers optimize medical care.
A recent report from PwC Health Research Institute, "Beyond the device: From producer to problem solver," states that device and diagnostic companies are "reaching across the ecosystem to offer services that engage patients in real-time, improve physician performance and demonstrate value beyond any one device, diagnostic or technology." The report authors point out that half of the 10 largest medical device companies sell tailored solutions outside of their devices, 7 have moved toward "services-based offerings," and all offer customers training and education.
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Medtronic has been one visible proponent of this strategy. In the last few years the company has picked up a number of new roles through acquisitions like Cardiocom, a patient management services company, and Diabeter, a Dutch diabetes clinic and research center. Medtronic has also taken on risk sharing around its Tyrx absorbable antibacterial envelope for infection control.
The authors of the PwC report had a number of recommendations for medical device and diagnostic companies exploring what they call the "New Health Economy." These include determining whether they can best offer service solutions or patient-focused products; partnering or collaborating with a variety of stakeholders; gearing up to participate in value-based contracts or risk sharing; and creating devices that offer data to clinicians.
But all of this is easier said than done. Brian Williams, global healthcare strategy director at PwC, told MD+DI that device makers will need to consider both operational and financial risk.
"Currently, manufacturers likely have the knowledge needed to drive operational efficiencies for their customers, but the knowledge may be distributed across the organization and not integrated into a market ready solution," Williams said. He added, "Several medical device manufacturers have announced new business units and offerings that support operational efficiency. Fewer manufacturers have announced partnerships with providers that share readmission risks."
Stryker's Performance Solutions (SPS) is one of those sharing risk with some of its hospital customers. As MD+DI reported recently, SPS offers its JointCOACH platform to help educate and engage patients undergoing joint replacement procedures, as well as it Episode Performance Manager to give hospitals actionable data and a plan for improving care while cutting costs.
SPS may benefit from being an early pioneer. Williams explained that risk-sharing partnerships "are more difficult to design and manage, however, first movers will have a long term advantage because critical [factors] to long term success lie in this area of risk management experience."
What will it take for medical device manufacturers to make this transition? Partnering and acquisitions may be needed. Williams said that traditional manufacturers can become "'problem solver[s],' but few, if any, will have the necessary capabilities internally."
Zimmer Biomet appears to be looking to external collaborators for its recently announced Signature Solutions offering. This will combine Zimmer Biomet's consulting services with services and technologies, some of which are expected to be added through acquisitions and partnership.
"Medical device manufacturers will need to complement their clinical insights with third parties such as hardware, software, telecommunications, and data management and analytics firms to provide solutions that integrate into the clinical and consumer environments," Williams said.
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