Last month, the medtech community descended on the city of Philadelphia for AdvaMed’s annual MedTech Conference. Spending most of my time working in the commercial arena, I get to hit the pause button at this event to ponder bigger trends in the industry and to get exposure to some of the other forces shaping our environment in the form of regulatory, legal, trade and lobbying. Now that I’ve had my annual dose of relatively uninterrupted contemplation, I wanted to share three takeaways.
1. The FDA is driving innovation. While the industry apparently is experiencing some degree of a slowdown in venture capital investment and innovation, regulators are working to shake their reputation of impeding progress to instead accelerate medtech companies’ innovation. The FDA is doing what it can to drive innovation by easing the barriers to approvals where possible. The approach to quality—focusing on practices and design instead of policing—is coming into its own.
Even if our industry is receiving some criticism in the popular press and carefully considering how some of this criticism impacts approvals, there is innovation going on in other areas of the regulatory process. For example, the FDA is clearly articulating a desire to rely more on real-world evidence post-approval to ensure the device or therapy’s efficacy and impact on patient outcomes. The pre-certification process also is an area where the FDA is laying out a streamlined approach and attempting to articulate requirements more clearly. The FDA’s collaboration with CMS and AdvaMed to assist in bridging reimbursement for breakthrough devices is another proof point. Even the approach to digital health, the Apple Watch EKG app notwithstanding, continues to be an area where the FDA is constantly refining its approach to support innovation while ensuring safety. In short, the FDA continues to look for ways to satisfy its mandate while also supporting innovation in the industry.
2. The industry is finding real value in data. Another big realization, perhaps not new but definitely on full display at the conference, was the value of data to medtech organizations. In the panel that I moderated on vertical integration in healthcare, this was a major theme. Ivan Tornos, worldwide president of Becton Dickinson Interventional-UCC, described how access to a direct relationship with thousands of customers motivated an acquisition of a DME for his company. Anthony Spero, president and CEO of Ascend Hospice and Home Health, and COO of Partners Pharmacy, described how the new solutions that his company is commercializing may well bring data that can be monetized in the murky world of skilled nursing facilities. David Harding, senior vice president of business development at Exact Sciences, described the centrality of data in his company’s business model.
After similar talk in subsequent sessions, I was left with the feeling that there is some risk that we in medtech may be left behind. Tech companies are the real pros in monetizing data and moving quickly. Instead of charging for a core service—say, internet search—tech companies know that the data provided to these companies is far more valuable than simply charging a fee for the base service provided. Is there a model somewhere in medtech that’s lurking to disrupt a market? At the same time, those tech companies often also play fast and loose with the data that they collect in a manner that would be both intolerable legally (for example, HIPAA) and unacceptable politically. So we find medtech coming to the realization that data is power and value, but the industry still lacks clear approaches to create, manage and monetize this asset. Personally, I see this as a key battleground for the coming years.
3. Hospital centricity is a thing of the past. Now for the most obvious observation of them all: The hospital is no longer the center of healthcare delivery. Shocking! Volumes have been written about this for years, but we finally are starting to see some consequences of this trend and it is expected to continue. In fact, CMS recently proposed a change to the definition of “device-intensive procedures,” which would almost double the number of procedures that ASCs can afford to provide to Medicare beneficiaries (from 154 to 285). Much of the healthcare provider integration of recent years, both vertical and horizontal concentration, is a consequence of the shift away from hospital-centric healthcare delivery. The need for hospital capacity is shrinking as procedures shift to outpatient or ambulatory, medical technology and digital health solutions keep patients from ever presenting at the hospital, and home monitoring keeps patients safely cared for in their homes. As Anthony Spero explained during our panel, this is one of those unique instances when nearly all forces in healthcare align to accomplish a common goal of reducing the time of patients in the acute care setting. Even hospitals recognize this, as they form formal and informal networks to care for patients across the continuum instead of just in the hospital.
The direct implication is that less money will be spent in the hospital. Fewer of the total healthcare resources are available for those who concentrate their efforts in the acute care space. Much more innovation will go into the things around the hospital. Again, this is a warning to keep the old-guard medtech companies on their toes and keep reinventing what they do. As Ted Langan, senior vice president of specialty pharmacy sales at UnitedHealth Group–Optum, reminded us: “Don’t sell parts and pieces. Sell solutions. If you can put together outcomes, programs that impact the larger ecosystem that we are operating in, now you have our attention.”
Thanks to my panelists David Harding, Ted Langan, Anthony Spero and Ivan Tornos for a stimulating conversation about the reshaping of the healthcare landscape via vertical integration. This group provided all in attendance with some keen insights on how their organizations and industries are adapting today—and what they’re preparing for tomorrow.
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