Home Is Where the Heart Monitor Is

The world’s population is graying. This year, the oldest baby boomers will turn 65. This demographic trend is creating a new market opportunity for medical device manufacturers. Unlike previous generations, boomers are more interested in managing their own care. They also are more affluent, better educated, and more engaged with their own wellness.

With two-thirds of Americans overweight and 125,000 deaths caused annually due to poor prescription drug regimens, new healthcare models focused on managing wellness and chronic illness will increasingly focus on the use of devices. The U.S. market constitutes 41% of the global medical devices market and is one of the fastest growing in the world.

When we combine these factors with the fact that more than 75% of U.S. healthcare expenditures are due to chronic conditions, it becomes clear there is an obvious need to drive down healthcare costs by turning to self-care. The use of home diagnostics for blood glucose monitoring alone is a $4 billion market. These are devices that test for a single indicator for a single type of patient, and similar markets exist for other chronic illnesses.

Recent research reveals that users of home medical devices in the United States and the United Kingdom are very satisfied with their choices and positive about using them in the future. As exciting as these new opportunities are, however, they present challenges because next-generation devices will require the right functions and price points to satisfy demanding consumers.

Consumers Are the Future

Consumer-based healthcare is growing rapidly. Every day, civilians use electronic devices to improve their health and to keep fit. For example, patients with heart problems carry iPhones and use a mobile health application like a heart rate monitoring program, while others with diabetes use a blood glucose monitor that can transmit data to their doctors. The question that may keep device company executives up at night is whether consumer electronics manufacturers could dominate the home medical device market because of their expertise in selling commodity products such as Nintendos, Kindles, and Garmin nuvis.

IBM’s Institute for Business Value examined this question to determine how a shift in decision-making power and more patient control over personal wellness might shake out for the device industry. In 2009, medical devices were 82% of the global medical equipment market, with $228 billion in sales, according to a February 2010 report by Medical eTrack Global Data. This research reveals that medical device manufacturers might want to focus on the real end-users—persons living with chronic diseases, their caregivers, and other healthcare professionals.

The market forecast for remote patient monitoring is $260 million in 2010, according to Frost & Sullivan. Meanwhile, revenues from remote patient monitoring using mobile networks will rise to almost $1.9 billion globally by 2014, according to Juniper Research. This opportunity has brought 35–40 new entrants to this market recently, all bringing with them new technologies.

Preventive Care Reduces Costs

As the debate about lowering healthcare costs continues, one thing is clear: preventive care has to play a role, and technology can help. Clinical devices traditionally sold for use in hospitals and doctor’s offices are now being redesigned for home use, and consumer electronics with more health-oriented features are appearing on the market. Electronics companies are taking a closer look at the consumer market, offering new products and services and exploring innovative business models to take advantage of this growth.

Meanwhile, traditional players in the life sciences industry will shift their focus to devices. In the future, Big Pharma will focus not only on powders and pills; the drug companies will also sell a variety of therapeutic healthcare packages that include diagnostic tests, drugs and monitoring devices and mechanisms, as well as a wide range of patient services. Companies that learn how to make “targeted treatment solutions” will deliver bigger shareholder returns than they have ever delivered before (see Table I).

Not surprisingly, the $100 price point is similar to that of consumer electronics, requiring manufacturers to ensure that new devices they bring to market are still affordable. This result confirms information from a recent Data Monitor study that the medical device market is characterized by price-sensitive buyers who are often willing to change suppliers.

While the vast majority of devices currently in use do not have a monthly service charge, 32% of respondents anticipate having to pay for such services in the next two years. The consensus is that consumers are open to this concept because they recognize that new connected services—for example, blood pressure monitoring services—will make wellness devices more useful.

No Brand Loyalty

More than half of the respondents couldn’t recall the brand of the device in their home, so it’s likely their buying decision isn’t brand driven. However, they did express a preference for products made by medical device companies such as Medtronics over those made by consumer electronics manufacturers such as Sony, for example. The consumers surveyed perceive medical device companies to have more expertise in understanding their healthcare needs. However, medical device manufacturers should be aware that consumer electronics companies still have opportunities to capture mindshare.

When asked about the importance of third-party endorsement for medical devices, consumers value the recommendations of healthcare professionals and watchdog organizations but do not see employers, or even their health insurance provider, to be knowledgeable or useful sources of information. This response implies that device manufacturers would do well to work with healthcare professionals to design, promote, and distribute their devices.

When asked what they want from their devices, consumers said they want immediate and intuitive feedback, but they still care about what healthcare professionals have to say. They seem to understand that information from devices does not replace the need to have meaningful discussions with a healthcare professional. Instead, they believe that information provided by their devices helps them become more knowledgeable and enables them to ask more meaningful questions about their health.

On the topic of security and privacy, consumers are interested in how they can securely share their health data, even if they aren’t doing so today. Seventy-seven percent said they are concerned about privacy and security in order to safeguard personal health data. Meanwhile 63% felt it is important or very important that data can be shared with multiple healthcare providers. Only 34% believed it is important that this data be accessible from mobile devices.

Quality, Affordability Are Key

As consumers embrace smarter products in the home, patient care will transition from healthcare facilities and toward patients and families in their homes. An additional driver for the industry is the key role medical devices will play in new drug discovery and development processes. As promising new drugs are discovered, they will be launched in the market and subjected to additional “in-life testing” using a variety of remote monitoring devices that exploit advances in bandwidth, networking, mobile telecommunication, RF technologies, and miniaturization. In turn, devices will play a role in reducing the time and cost of making new drugs.

Manufacturers that can deliver the quality home device consumers need at a price point they can afford will do well in this growing market. Those device companies that can reliably aggregate helpful patient information and then verify, secure, analyze, and present that data will do even better.

It is important to note that simply creating these devices isn’t enough. The industry must address more than just how data gets transferred from a device to an electronic health record. Healthcare companies must also work together to create an interoperable personal healthcare ecosystem.

An agreed-upon infrastructure is required so that patients and caregivers can access this growing body of information. This common foundation will bring together a diverse set of players—consumers, device manufacturers, software companies, health plan companies, and providers—to address the complexity of connected healthcare and provide a seamless experience for the growing number of device users.

Katherine Holland is IBM’s general manager, global life sciences (Reno, NV). She may be reached at [email protected] or 415-545-2003. Heather Fraser is the life sciences leader for the IBM Institute for Business Value (Portsmouth, Hampshire, England). She may be reached at [email protected] or 44-7734-325459.