The medical device industry, according to Chris Miles, is undergoing a fundamental transformation. Because of changes in the healthcare ecosystem, it is transitioning away from a hardware-centric to a software-centric focus as manufacturers shift to more data-centric business models. Miles, vice president of consulting services at Foliage (Burlington, MA), will share his thoughts on this shift at the MD&M West conference in Anaheim, CA, on Monday, February 10, at 1:00 p.m. In the following conversation, he provides a sneak preview of the themes he will develop in his presentation.
MPMN: Why is it important to talk about the shift from a hardware- to a software-centric perspective?
Miles: Over the last several years there has been considerable pressure placed on the healthcare ecosystem that has directly impacted the medical device industry landscape. These pressures have included entrance into the marketplace of numerous low-cost manufacturers that provide good enough products at reduced price points as well as increased financial constraints such as cost containment, and the Affordable Care Act's medical device tax provision. In addition, payer pressures are forcing the healthcare industry to provide compliance and patient outcomes data to support the reimbursement framework. When you look at that landscape and the pressures involved, you are really seeing the commoditization of medical device hardware and the demand on medical device manufacturers to shift their value proposition to be more data centric. The value they add is shifting from hardware to how they provide and manage data across the spectrum of what has become a complex healthcare ecosystem.
When some of us began our careers in the industry, medical devices were fairly straightforward. A medical device in a hospital, for example, simply provided diagnostic results. As the healthcare industry grew, so did the demand for devices to support higher levels of interoperability and interconnectivity. This trend really began in the laboratory area when doctors started to demand faster access to diagnostic data. This need drove the industry to provide the means to link laboratory instruments with the laboratory information system and ultimately with electronic medical record (EMR) and hospital information system (HIS) technologies. At the same time, device manufactures also began to provide the ability to remotely access their devices to support more effective service and maintenance capabilities, enabling hospitals to maintain device uptime and decrease support costs.
Fast forward to today. We are now seeing a growing trend in which the data generated by these devices has become increasingly important to a wider set of consumers, which now not only includes device manufactures and healthcare providers but also patients and payers. Not only must device data be accessible to the established EMR/HIS networks, but patients and healthcare providers want to be able to access this data remotely and on a wide variety of mobile devices. Additionally as payers, due to cost-containment pressures, pay more attention to issues such as compliance and outcomes, they want to monitor when healthcare providers are prescribing the use of a medical device, how and when they are being used, and what the outcomes are. As a result, data management and accessibility is becoming a significant differentiator for device manufactures.
A recent example of this can be seen in the glucose meter market. Manufacturers of glucose meters have faced a series of significant challenges. Reimbursements for test strips have been cut substantially--in some cases, more than 50%. On top of that, such players as Walmart have entered the market and begun to produce their own low-cost glucose meters.
Adding to the challenges of this market sector, payers are now saying, "Before we start to reimburse for use of the glucose meter and the test strips, we're interested in looking at such things as compliance. Are patients actually using these devices? Are they using them in the prescribed manner? And what are the outcomes? Are the patients getting value out of using these medical devices?"
Facing such challenges, the industry is asking, "What's our value proposition? How do we differentiate ourselves in the marketplace?" The answer to these questions has been to provide, at a cost, new services that are data centric and that help patients to more effectively access and manage their data as well as use this data to satisfy payer demands stemming from some of the new reimbursement models.
In summary, these fundamental shifts in the market are forcing device manufacturers to realign their organizations to be more data and software centric.
MPMN: In the medical device sphere, what steps are necessary to achieve interoperability and connectivity?
Miles: Going back again to the early years, it was initially very challenging to get systems connected to hospital EMR and HIS networks. And it was even more difficult to get information out from behind the hospital firewall to the internet environment. However in the last few years, we've seen a significant shift in this landscape. Now, hospitals are supporting a higher level of connectivity by providing stronger infrastructures, including virtualized servers, on which they host companies' connectivity products. In addition, there are now such tools as MirthConnect, Microsoft's Biztalk, and Orion Health's Rhapsody, which are bridging the gap between the data provided by medical devices to the formats and necessary data streams that are required for EMR/HIS servers.
Hospitals have also become more comfortable with devices tunneling out through their firewalls to provide diagnostics data for backend services by medical device manufacturers themselves. Many hospitals are now routinely providing manufacturers with access to their internal proxy authenticator services, thus allowing easy external access to device data. Thus, what used to require complex, high-investment connectivity software is now becoming very straightforward and commoditized.
MPMN: What is the state of data security in the medical device sphere, and what types of data security issues do you expect to see in the future?
Miles: In recent years, there have been several hacker symposiums in which presenters have demonstrated their ability to hack into such devices as blood glucose meters and implantable pacemakers. Concern about data security has therefore bubbled to the forefront not only for the medical device industry but also for FDA. Although FDA has not published definitive requirements pertaining to data security, it has published some guidance specifically addressing data security in wireless communications. Fundamentally, the agency is asking industry to look at data communications security using a risk-based approach and to provide evidence that they have effectively accounted for this level of misuse.
In the area of implantable medical devices, the challenges associated with ensuring communications security center around how medical device manufacturers balance such factors as processing and computing power, battery life, and functionality against potential intrusions and security concerns. Because no standards currently exist to cover this space, manufacturers must rely on risk-based approaches to ensure that the integrity of their devices is maintained.
Conversely, within the enterprise and application landscape, the need to comply with the Health Insurance Portability and Accountability Act (HIPAA) has been an issue for quite a while and as such, manufacturers readily provide compliant solutions. Now, as we move into the Cloud, HIPAA compliance has again become a focus and an issue. This focus is leading to such concepts as the private Cloud and the use of such technologies as virtual private networks for data access. Although Internet-based security has, in general, been addressed in the consumer space with such technologies as SSL and VPN, we are really just at the tip of the iceberg in terms of vetting all the potential implications of Cloud-based medical-data security.
MPMN: What will your message be for those attending your presentation at MD&M West?
Miles: What medical device manufacturers are confronting today is a fundamental shift in their business models and their approaches to the marketplace. Whereas hardware used to be the great differentiator, its commoditization will compel manufacturers to differentiate themselves by the way that their products manage, distribute, and utilize data. The question I will try to answer is, "How do you transition your organization from one that has focused primarily on hardware to an organization that is software and data centric and must embrace systems and system-of-systems thinking and approaches?"
Fundamentally, all of us in the medical device industry are finding ourselves in the software business with the need to evolve our organizations to provide not only embedded-based solutions but also enterprise, Cloud, and mobile-computing ones.
Bob Michaels is senior technical editor at UBM Canon.