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Digital health and MedTech

New signals for transformation

Globally, healthcare is experiencing unprecedented pressure and disruption. Today’s challenges range from affordability issues to shifting patient expectations. Costs continue to rise. Pressure is mounting to find innovative solutions. The healthcare ecosystem must help alleviate these concerns. MedTech and pharma are under pressure to improve R&D, service models, and treatment. The goal is to reshape the industry with a modern approach that involves digital technology, and one that delivers significantly more ambulatory and at-home care.

There are clear benefits to digital innovation. However, it is important to know the forces behind its adoption. And it is essential to understand what challenges stand in the way. Accenture interviewed over 30 digital health senior executives and C-suite leaders from across the MedTech and pharma sectors. Interviews were primarily conducted with members of AdvaMed’s Digital Health Center of Excellence. In addition, they surveyed 150 MedTech senior executives globally, and analyzed over 100 M&A deals and over 600 product launches from a subset of MedTech companies that took place between January 2019 and May 2022. In doing so, they found that five key trends are driving the future growth of MedTech.

The consumer patient
The consumer patient has better health literacy. They are in more control of their health than previous generations. This can be an asset to MedTech companies. However, it requires many companies to re-orient their long-term strategies. They must shift from a product first to an outcomes first mindset.

It also shifts a bulk of the responsibility for risk from institutions to the patient. According to Accenture’s 2021 Global Digital Health Survey of cross-industry C-Suite executives, a majority of the 350 respondents agreed that digital health accelerates the shifting of risk from employers and governments to individuals.

Healthcare consumers are becoming more demanding. They are also taking more control of their health. And together with their physicians, they are becoming more involved in decision-making. This is leading to increased importance in the consumer/physician experience. Not to be overlooked in this transition is the increasing pressure on physicians to adopt digital tools.

Many physicians are already experiencing heightened workloads. They are now being asked to log into different portals for different products. And they are expected to learn the software and how the tools operate and fold all of this information into their services. Some form of standardization of health care professional (HCP) digital tools is needed. Without it, this experience will remain unmanageable. It has led many MedTech experts we spoke with to validate the shift to an outcomes-first mindset.

For the majority of companies, the focus used to be on developing next-generation products with an engineering mindset. Now, they are looking at entire care pathways, identifying challenges for physicians and patients. A big part of this is designing better experiences and products that fit into both physician workflows and consumer lifestyles. In doing so, they are looking to create increased value. And they are trying to drive better outcomes across the ecosystem.

The rise of the consumer patient requires MedTech companies to adopt and develop human-centric approaches. At the same time, patients are also becoming increasingly more powerful. They now have the ability to self-educate. And they have expectations toward effective treatments and the immediacy of care. Leaders in our interviews pointed to the need for specialized skills and expertise in this area. These will be core to meeting patients’ expectations.

Challenges to overcome. Digital health products need human-centric design. They must be built for integration with other products, services, and platforms. They must be implementable. And they should always be convenient and easy to operate. This will help MedTech companies make sure their desired outcomes are always successful. However, it should be noted that human-centric design requires a significant level of effort to achieve. Amazon, for example, has 10,000 employees alone working on its Alexa products and services.

Some successful MedTech companies are approaching the challenge by prioritizing the hiring of high-quality digital talent with consumer product experience. They then teach their talent how to operate within the MedTech space. This approach is an attempt to account for digital and human-centric expertise. Both of these are needed to drive success in this space. When done well, this approach can support product and engineering teams. It enables them to focus on innovation. And it gives space for a surge of ideas. Many of these ideas often end up on the floor. This is typically due to time constraints or limited capacity. Developing the right connected programs for customers remains a hurdle. This is true in terms of programs for both patients and providers. There are many challenges across MedTech categories. 46 percent of executives agreed that implementation complexity and not having the right partners are their primary challenges.

This is important. 51 percent of all respondents reported they believed that the customer’s voice needs to be strengthened. They know it is the key to improving the consumer-patient relationship. Customer service capabilities followed closely behind with 49 percent.

Key takeaways:

  • Patients are taking more control of their healthcare experiences. They are demanding continuous engagement. And they are gaining a better understanding of their health.
  • MedTech leaders believe that the consumer patient is very relevant. They expect it to significantly re-orient their firms’ long-term strategies.
  • The goal is to effectively serve the consumer patient. To do this, MedTech companies need to design new tools and solutions. And they must fit both physician workflows and consumer lifestyles.

Care anywhere, everywhere
One MedTech executive, leading a virtual care business unit stated, “All Covid did was change the face time – it did not transform the workflow of the clinic.” Healthcare has become more digital and remote. However, the industry remains at the beginning stages of building the right platforms and capabilities to meet the needs of the consumer patient. The decentralization of healthcare will require new business models. They must include new products and solution strategies. This is vital to service the full-care continuum. The new models should also feature different marketing strategies. And they should target various types of consumers, such as hospitals, physicians, and patients. It is also advisable to make use of changing sales team incentives.

Executives confirmed that decentralization of healthcare impacts their businesses. And remote devices and monitoring technologies are having the biggest impact so far. Over 75 percent of executives surveyed expect expanding care settings and delivery models to significantly re-orient their company’s long-term strategy. They believe these changes will require them to completely rethink their business approach. In fact, approvals for patient monitoring products in the US were 60 percent higher during the 18-month period between July 2020 and Dec 2021, compared to the 18-month period prior.

The majority of MedTech experts we interviewed confirmed their traditional products are driving the bulk of their revenues. However, they also noted they see this expansion of care to new settings as part of their growth strategy. For example, smaller, connected instruments with rapid diagnostic tests are being placed in physician’s offices instead of large hospital labs. Similarly, at-home tests with virtual assistance have become very common due to the pandemic.

In orthodontics, patients are now using progressive trays instead of traditional braces. This helps them avoid the back and forth of going to the orthodontist’s office. It also enables orthodontists to double their treatment capacity. And it saves patients countless hours spent on treatment. One can also look to neuromonitoring devices. These can be remotely reprogrammed, as necessary. They save time for many patients. And they were especially common during the pandemic. At-home diagnostics, like wearables, also allow patients to capture data. They enable new opportunities to capture data that do not necessarily coincide with hospital visits. Wearables help physicians gain a deeper understanding of their patients. And they can help determine when potential required interventions will be needed, which can save further costs and time.

Challenges to overcome. It is time to move products from hospital settings to alternative settings, such as physician’s offices, ambulatory centers, or at-home care. But this move has implications on the business models of MedTech companies. And the shift requires comprehensive solutions. They are critical to solving any new challenges that may arise. Different payment and contracting models will be impacted. These impacts will also have implications for the size and incentives of sales teams. For example, consider the large diagnostic instruments that may be sold with a five to ten-year contract to large hospitals. Alternatively, small rapid test instruments could be sold to thousands of physicians’ offices. Likewise, at-home tests can be sold to millions of consumers.

Many executives report that many MedTech companies are bolting on their old structures to create digital health teams by simply identifying and re-labeling team members. This results in a lost opportunity to enrich home-grown expertise with new ideas and ways of working. It is advisable to blend and incubate external talent in addition to upskilling and reskilling existing talent. Digital health requires the addition of talent focused on design and technology. And it must be partnered with the best of MedTech’s core competencies. These are engineering, regulatory, and therapeutic area knowledge. Digital health should transition from being (in many cases) a small fringe group into part of a more comprehensive strategy for the future.

Marketing is also different when it comes to digital health. Traditionally, MedTech companies have access to disease area specialists. For example, orthopedics, cardiologists, oncologists, and more. The decentralization of healthcare, by its nature, requires access to consumers and primary care physicians. It requires MedTech companies to build new relationships. They must leverage different thinking and mindsets for marketing teams. It is clear that the broad action to be taken in care anywhere, everywhere, is in the designing and engineering of technology that supports decentralized care. It is not simply an overlay of digital health teams to existing structures. Instead, it is an integrated approach. And it is designed around patients and physicians requiring MedTech to develop new business models.

Key takeaways:

  • Healthcare is expanding from hospitals to ambulatory and at-home care.
  • Many executives agree that the industry remains at the beginning stages of having the capabilities to meet decentralized care.
  • Decentralized care requires the addition of talent, focused on design and technology. It must be partnered with the best of MedTech’s core competencies – engineering, regulatory, and therapeutic area knowledge.

The rise of digital health
In terms of the primary strategies for digital expansion, respondents reported being evenly split. Build (44%) is a traditional way to build digital health capabilities in-house. It requires companies to make investments in R&D, technology, MedTech, and new business models. Buy (47%) involves asset acquisitions. They enable companies to expand their pipeline across therapeutic areas. They also help companies to add capabilities to innovate faster or reach customers in new ways (less than 10% reported primarily pursuing a hybrid model of the two).

Of over 600 product launches between January 2019 and May 2022, just over a quarter have been digital health products. During that time, diagnostic imaging has been the biggest category. As part of the Buy model, MedTech companies have also been inorganically growing their digital health products and offerings. In the past three years, for the 25 companies analyzed, almost half of mergers and acquisitions (M&A) deals were in the digital health space. During this time, robotics, remote monitoring, and decision support tools made up the vast majority of deals. MedTech companies are sticking with their core competencies. But they are also partnering with other companies to strengthen their portfolio. The real end-to-end vision is multi-dimensional. And it includes when, where, and to whom insights are connected to during the patient journey. All of this can potentially reveal surprising and actionable next steps for care.

With increased investment in digital via R&D and M&A, a comprehensive plan is key to building capabilities. MedTech executives feel confident in their M&A abilities and they are confident in their R&D and manufacturing capabilities. However, our survey suggests most companies need to develop a better understanding of the market and customer behaviors and expectations. These are essential to keep up with the consumer patient and serve them in various care settings. In addition, according to the experts we interviewed, a good strategy of integration post-acquisition is also key. This is where acquired capabilities are scaled across the entire portfolio.

Challenges to overcome. The common vision for digital health is for it to be able to reveal insights. Insights must be surprising, individually relevant, not generically true, and valued by the health ecosystem – and increasingly the consumer patient. In most cases, companies are less interested in innovating ways to gather data. Instead, they are focusing more on what they can do with the data. One major barrier has been fragmented data or not having access to data. For example, almost every hospital has different rules and approaches to risk-taking. This is typically because there is no central guidance on what is appropriate or acceptable to share.

Experts interviewed pointed to the need for a dialogue among the MedTech players, hospitals, and governments. They must work together to form an overarching guideline on data privacy. This is how they can enable digital health products and services while protecting the individual’s data. It is key for serving the healthcare consumer across the whole care pathway. It enables all biopharma, device, and lifestyle interventions to be connected and personalized to set up the best possible outcomes. Transparency and education of consumers are also very important. We have seen this in previous years. Indeed, one reason many people did not adopt digital health technologies more broadly before was due to an attempt to safeguard personal health information.

Fortunately, respondents report they would be more likely to adopt digital technologies if they felt more confident in data security and privacy (30%), and if these technologies enabled them to receive better information about their health (30%).18 A major opportunity many executives highlighted is that digital health may help physicians unlock new insights. It can do this by adjusting their approach, including expanding beyond the clinical workflow to include at-home patient data. They also need to trust that the data collected is accurate, safe, and secure. This is essential in order for them to adopt digital health more meaningfully. Executives in the survey found that the biggest challenge they face is getting clinicians to understand how digital health benefits them. For the most part, they want hard evidence. This requires clear communication, evidenced clinical studies, white papers, and other data that they can clearly see. Once they have this information, they are more likely to adopt digital health.

Key takeaways:

  • 99 percent of respondents indicated that development and commercialization of digital health solutions has accelerated in the past two years. As part of this, companies require various new and strengthened capabilities to execute their visions.
  • Patients and health professionals need to trust that data collected is accurate, safe, and secure in order for them to feel comfortable using it.
  • Fragmented data or lack of access to data has been a barrier to development. An overarching guideline on data privacy is needed.

Converging sectors
The rise of digital in healthcare is also fueling non-traditional deals, with future success dependent upon various sectors converging to develop products and services across the entire care continuum, according to nearly nine out of 10 (86%) executives.

Challenges to overcome. As indicated in the high number of non-traditional deals, everyone has a role in the digital health ecosystem. Because of this, companies need to consider partnering within the broader ecosystem. This must be done in addition to M&A. Respondents reported that a common motivation for collaborations is a partner being able to bring products to market faster. They also highlighted the need for collaborations to develop differentiated products that they could not develop alone. They noted that the key to the most successful partnerships is balancing varying risk tolerances. These include regulatory and reputational risk, between partners and being mindful of cultural differences.

One of the biggest challenges MedTech companies face when going into partnerships is ensuring their potential partner has the required level of data privacy and protection compliance. However, evaluating companies that have historically operated outside of varying data privacy and protection guidelines (GDPR and HIPAA) can be tricky. A lot of time and resources are spent investigating and determining if a potential future partner meets the level of data security they are comfortable with. A standard global definition of levels of data privacy compliance would save industry partners time and resources, and it would enable them to make products and solutions available to patients faster.

Key takeaways:

  • Industries are coming together to develop products and services across the entire care pathway, which is leading to non-traditional deals and partnerships.
  • Approximately 30 percent of deals within the MedTech and digital health segments are non-traditional, indicating that MedTech is breaking out of its historically conservative reputation and embracing digital innovation.
  • Key to the most successful partnerships is balancing varying risk tolerances. It should include regulatory and reputational risk, between partners and being mindful of cultural differences.

    A standard global definition of levels of data privacy compliance would save industry partners time and resources. And it would enable them to make products and solutions available to patients faster.

New regulatory pathways
Digital health sits at the convergence of medicine and technology. It is precisely due to this positioning that it is governed by a number of different regulatory and legal frameworks and working groups within governing bodies. However, the focus throughout remains on helping ensure that human health and consumer interests are well protected. This largely happens through regulation and enforcement. As such, companies need to be able to navigate the new regulatory pathways.

In nearly every part of the world, there has been a surge in the adoption of software in healthcare settings. The surge was driven by the emergence of COVID-19. Most, but not all software in healthcare settings is classified as Software as a Medical Device (SaMD). Experts voiced that in many cases, when it comes to regulatory bodies and advancing digital health, agencies are under-resourced to handle the volume of cases. Governing bodies are strained to move at speed. This lack of urgency is resulting in high opportunity and resource costs for digital health innovators.

Digital health may fall outside the bounds of established regulatory pathways for untested technologies, requiring new approaches from the sector. Most executives (87%) identified government regulations as a threat and disruptor to their business. This may be due to the shifting nature of regulatory guidelines, as regulatory bodies work to keep up with the rate of new and emerging technologies and ensure they are safe and effective.

Challenges to overcome. In the survey, MedTech executives ranked regulatory uncertainty as a medium-high barrier. They agreed that this has a moderate impact on their digital health agenda. Regulatory bodies have established guidelines. But they remain at a very high level and fail to address the intricacies of digital health solutions that are rapidly being developed. A harmonized set of guidance and regulatory frameworks is essential to support innovation and help ensure the safety and effectiveness of solutions. However, across the board from interviews and surveys, a common theme has been heard that MedTech is navigating barriers within regulatory.

Surprisingly, only 26 percent of respondents indicated that regulatory uncertainty had a high or great impact on their digital health agenda. Given the current state of regulatory guidance, experts in research pointed to the importance of the mindset shift when it comes to thinking about regulations and receiving approvals for their digital health products. In the past, they thought more about the minimum evidence required to receive approval for their devices. Now, there is a better approach; they should ask, “How can I ensure this product is safe and effective for healthcare consumers?” This parallels the shifting mindset of product-first to outcomes-first. And it underlines the importance of putting the consumer at the heart of product design. It also shows the need to provide evidence that proves outcomes and safety. When one starts regulatory conversations with this mindset, experts agree that they have better regulatory success. MedTech is uniquely positioned to navigate and turn perceived regulatory barriers into a competitive advantage. But to win in digital health, companies need to become more comfortable working within the current environments. They must feel confident even where there may not be an established regulatory pathway. Furthermore, they must also collaborate with regulatory bodies to develop new guidance in parallel.

Key takeaways:

  • Digital health sits at the convergence of medicine and technology. It is governed by a number of different regulatory and legal frameworks and working groups within governing bodies.
  • MedTech executives ranked regulatory uncertainty as a medium to high barrier. They agreed that it has an impact on their digital health agenda.
  • Digital health stakeholders must work in regulatory spaces they are less comfortable in – or in some cases, work with the regulatory body to develop new guidance.

Digital health, MedTech, and the future of healthcare
MedTech will lead the transformation of digital health. This is thanks to its unique understanding of therapeutics and patients. Growth is being driven by the increasing popularity of digital devices, many of which are already in the hands of consumers. However, the right digital foundation is needed to support these companies internally. Without it, digital insights will be difficult to leverage. These insights are critical to create a comprehensive digital health solution.

One C-Suite executive summarized by saying, “MedTechs have to be leaders. Tech disrupters will eventually figure it out. If we do not lead in digital health, we are choosing to have our future market share shrink. MedTech needs to build ecosystems to reach consumers everywhere, anywhere.”

MedTech executives strongly believe the future winning strategy is to develop products and solutions to tackle the entire care pathway, with the consumer patient as a first priority. But at this stage, no single company alone has amassed all the capabilities required to serve the entire care pathway and drive the digital health ecosystem.

Therefore, traditional competitors must work together on pre-competitive initiatives. They must also collaborate with external partners, for example, with MedTech and other technology companies. This collaboration requires open standards and interoperability between various partners. Critically, it needs internal regulatory, legal, and privacy guidance with the appropriate internal teams to support them.

Healthcare is facing huge pressures around the world. Challenges range from affordability and the growing percentage of GDP spent on healthcare to shifting consumer patient expectations. MedTech offers value through accessibility. It provides critical insights for both patients and physicians and it improves costs. Companies are becoming more outcome-oriented through digital adoption. Therefore, reimbursement models also need to shift to incentivize HCPs to pursue more digital health solutions.

The key is understanding the barriers currently facing healthcare. This will enable companies to be better able to build strategies, and create a more effective, affordable and innovative paradigm. The level of care will not only be sustainable but will continue to improve across the entire ecosystem. The future of health is in the hands of MedTech. Accenture

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