But there is a silver lining. The digital world is poised to converge with the healthcare world. The outcome of that convergence will result in better tools in the hands of patients and practitioners at a lower cost.

So what’s the secret to tapping into this market? Device firms need to get away from creating a device as a standalone item and look at how to expand it to become a functional part of a patient’s life, explained Derek Newell, managing director of HT3, at California Healthcare Institute’s recent “Take This Pill and Tweet Me in the Morning” social and mobile media event. In other words, “Don’t create devices. Create services.” 

Some companies are heeding that advice. For instance, one of the biggest venture capital deals of 2011 involved NovaSom, which closed $35 million in equity financing in June. Its primary technologies are a sleep apnea diagnostic device and cloud-based MediTrack patient management portals. The home service delivery model uses cloud technology to connect patients to physicians, therapy providers, and payers.

Such development means partnering with software firms to create disease management applications, as well as using social media to engage with communities centered around diseases. “Being engaged with all end users, not just the doctor or nurse, will become vital,” explains Bill Betten, a senior technical advisor, medical devices, for UBM TechInsights.

One challenge to building such medical services continues to be regulatory uncertainty, although FDA is making some progress. The agency just released fairly straightforward guidelines on mobile medical apps. FDA has said that mobile medical apps that meet its traditional definition of devices (e.g., MIM imaging, BP monitors) will be regulated as such. All apps that do not fill a traditional medical device role (e.g., calorie journals, pedometers) will not require regulatory oversight. There is a gray area, Bakul Patel admitted at the CHI meeting. Patel is policy advisor for the Office of the Center Director at CDRH. He said that FDA would be looking to industry to help define that area. Industry is still awaiting social media guidelines. However, FDA action against pharmaceutical firms on social media sites are helping industry define what not to do.

Additional challenges include data management, storage, and security. Betten asks whether patients should have access to their health records and to what degree. “X-rays can be misread, for example.” The problem is that information has to be assessed in the context of meaningful and substantial data. Patients could take unwise actions based on limited data. On the other side, Betten says that self-management of healthcare is empowering and allows for informed decisions. “But a balance is required and no one is really sure how to do that yet.”

Robert Knorr, CEO of Alere Home Monitoring, warns industry not to focus on getting patients to pay for their own healthcare. He explains that healthcare has entitlement tied to it and that patients are unwilling to pay out of pocket. “Consumers want control once they have been diagnosed, but they don’t want to pay for it.” He said patients respond to building communities around disease management, which is a place to organically introduce patients to products.

Heather Thompson