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Vital Signs: How Medtech Companies Can Heal the Aches and Pains of Modern Healthcare Systems

Posted by Will Randall on November 15, 2018



2636_VitalSigns_Blog_postHospital spending has grown 15% and patient admissions are up 20% since 2009. Despite some efficiency gains, the provider financial deficit is large and growing, and patients are waiting longer than ever before for treatment in a system stretched to capacity. Sound familiar?

These are some of the findings from the Institute for Government's recently published assessment of healthcare spending by Britain’s National Health Service (NHS), but this trend is not specific to the NHS. The same trend is seen across the developed world: Healthcare systems continue looking for ways to increase efficiency and productivity and reduce costs, all while improving patient outcomes.

This broad theme doesn’t come as a surprise. The increasing demand for health services—and the increasing range and number of services provided—are counterbalanced by rising costs and by the constrained resources (physical, human and financial) of the systems that provide care. There are implications for how medtech should respond to these trends, and while some manufacturers are already adapting their product and service offerings to meet the evolving needs of their customers, much more opportunity remains. How should medtech respond to those needs?

vital signs imageSource: Performance Tracker 2018, Institute for Government

  1. Take bigger steps to stem rising costs. Hospitals are providing more services to more people at a higher cost per episode. This trend is common in all areas of care (elective and non-elective, in/outpatient, diagnostic tests, etc.), and it’s especially acute in emergency care where there has been a 30% increase in admissions and a 22% increase in cost per episode since 2010, according to the report. Manufacturers, especially those with the broadest portfolios of medical technology, like Johnson & Johnson and Medtronic, must recognize that while key account managers offering product bundling and portfolio pricing is a step in the right direction, many more manufacturers could have the scale to deliver integrated portfolio offerings, such as Philips’ recently inked long-term equipment and consulting contracts, which are financially aligned with the needs of providers to bring their budgets fully under control.
  2. Continue efforts to improve outcomes. Quality metrics are well-known and closely monitored. Safety, measured in terms of hospital-acquired infections, “has been maintained or is improving,” and other specific outcomes metrics are positive (pressure ulcers, venous thromboembolism and patient falls), according to the report. But Care Quality Commission inspections found that the majority (52%) of hospitals still “required improvement,” and some (6%) were “inadequate.” Medtech manufacturers need to demonstrate an understanding of their customers’ specific mission-critical metrics, and how the products and services that they offer can drive measurable improvements to those outcomes at the hospital level. Perhaps Zimmer’s recently announced partnership with Apple will help differentiate its joint replacement business by demonstrating measurable impact on mission-critical metrics (such as faster recovery times, reduced readmission rates and improved patient satisfaction).
  3. Relieve the stress on clinical staff. Overworked staff are resigning, leaving those who remain with even greater workload and stress. The report shows a 12% increase in the number of vacant positions in the acute care workforce, and there are indicators that this is also a global trend. Medtech companies that quantify and demonstrate how their products or services are relevant to all stakeholders and help caregivers use their time more efficiently—or even eliminate burdensome activities—will create significant value for providers looking to bridge such a staffing gap. Manufacturers that can viably offer solutions such as staff augmentation programs or even managed services agreements, like Medtronic’s integrated health solutions, will likely be rewarded for going beyond their traditional comfort zone of device technology.
  4. Focus on preventing the next episode of care, or at least moving it out of the hospital. The biggest burdens on the hospital system are the patients with multiple morbidities and chronic conditions, who consume more than 70% of the health budget and account for 77% of inpatient bed days, according to the report. Additional strain is placed on the system by a growing rate of unnecessary emergency admissions. Technologies such as Boston Scientific’s recently launched HeartLogic Diagnostic will be very attractive for providers looking to achieve a reduction in emergency admissions. Other manufacturers will need to respond to the migration of procedures to the ambulatory setting instead of the hospital, shaping their portfolio offerings to be relevant to this new care setting.

Medtech companies have a variety of opportunities to respond to these trends. Some moves could be considered closer to a company’s core, such as developing integrated portfolio offerings and value propositions built on outcomes. Other responses will be beyond the traditional areas of medtech expertise and will require incremental innovation, such as additional service offerings to augment traditional products and procedures. Even greater value can be created through innovative programs that keep patients out of the hospital, either moving them to the outpatient or ambulatory setting or by avoiding the need for a procedure altogether. Companies that identify how to evolve the value proposition of their products and services in line with fundamental success factors will further cement their positions as strategic partners to their ailing provider customers, and help them with innovative solutions that can set them on the path not just to recovery but to sustainability and longevity.


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BLOG POST: Analyzing Medtronic's Move: Put Your Money Where Your Outcomes Are


 

Topics: medtech manufacturers, medtech, healthcare, healthcare ecosystem, customer centricity, value proposition, medtech innovation, product differentiation, patient outcomes, medtronic, zimmer biomet, philips, johnson and johnson

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AUTHORS
Brian_Chapman_thumbnail
Brian Chapman
Principal,
ZS Associates
Tobi_Laczkowski_thumbnail
Tobi Laczkowski
Principal,
ZS Associates
Will_Randall_thumbnail
Will Randall
Manager,
ZS Associates
Matt-Scheitlin-London_thumbnail
Matt Scheitlin
Associate Principal,
ZS Associates
Andy-kach_thumbnail
Andy Kach
Associate Principal,
ZS Associates
Bhargav_Mantha_thumbnail
Bhargav Mantha
Associate Principal,
ZS Associates
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