Christopher Delporte, Editorial Director02.14.14
“One of the complaints I’ve heard over and over is, ‘Why doesn’t my glucometer look like my smartphone?’” says Andrew Atwell, senior manager at the Samsung Open Innovation Center. “The reason people aren’t checking their blood sugar levels is because they have to carry around an extra thing that only does blood sugars, looks clearly like a medical device, and reminds them that they’re sick. Patients want consumer devices that do double-duty because they always have them with them and there’s no stigma associated with them.”
Samsung’s Innovation Center in Silicon Valley, Calif. opened in January 2013 with the goal of pursuing strategic investments, acquisitions and partnerships, and to act as a technology accelerator, looking for new technology sectors and opportunities—moving way beyond the company’s traditional product lineup of flat-screen televisions and smartphones and into cutting-edge, next-generation growth markets. One such market is the convergence of consumer electronic and software technology with healthcare and medical devices.
Granted, the intersection of medical and consumer technology is not a completely new phenomenon, but it’s certainly one that has picked up pace in recent years. And if medical device makers thought they innovated rapidly, they haven’t seen the likes of what’s to come—if industry analysts’ predictions are to be believed.
According to a study released last fall by the PricewaterhouseCoopers (PwC) Healthcare Research Institute on the topic of healthcare innovation, medtech companies have never had a better opportunity to be the “connective tissue that binds the healthcare delivery system to the patient.”
According to the study’s authors, as hospitals and clinicians seek to deliver more health services in the home instead of the hospital, medtech companies can be “key to bridging distance, time, and boundaries between clinicians and patients.” Going forward, the value of devices is no longer only in the actual product itself, but in how companies integrate information and services to solve larger problems such as increasing operating room efficiency, reducing length of hospital stays, avoiding unnecessary re-admissions, improving patient adherence and satisfaction—all of which help to reduce healthcare costs.
Doug Hiemstra sees the cost question as a growing part of the equation, particularly as medical technology evolves into new areas of interconnectivity with multiple user groups. Hiemstra is based in the San Francisco, Calif., office of Lunar, a firm that provides creative and technical product strategy, innovation, design and development services to clients in a number of different industries. He characterizes the convergence of consumer electronics and medtech as “an amazing opportunity,” but cautions that the devil is in the details.
“It’s more than just having a cool app. Safe and effective devices, of course, are always mission critical for medical device companies, but medtech firms and the marketplace are going to be looking for technology that saves the system money,” he told Medical Product Outsourcing. “It’s really about looking for opportunities to drive down costs. Innovation is under pressure and it has been for a few years. Most of the innovation in the market is about saving costs.”
The folks at PwC predict that future innovation—and system-wide cost savings—will come from a mix of traditional consumer product companies, medical device firms, and start-ups with the next big idea that bridges the gap between the first two.
For example, in addition to Samsung, widely recognized brands such as Verizon, Motorola, Sony, Qualcomm, and even athletic shoe company Reebok (which has partnered with a Cambridge, Mass.-based start-up MC10 Inc. to develop a wearable sensor that detects the severity of head trauma in contact sports) already are in or have plans to enter the healthcare/medical technology space.
“One of the reasons there has been so much more awareness about the convergence [of consumer technology and medtech] is because you have non-traditional companies getting into the mix, and consumers notice that,” Donna Fedor told MPO. Fedor, who has more than 20 years of experience in the technology and connected health space, is founder of The Arden Group, a Santa Cruz, Calif.-based healthcare consulting firm focused on wireless technologies, design and manufacturing services, medical devices, mobile networks, healthcare IT infrastructure, healthcare providers and patient-specific solutions. “The consumer interest helps to build critical mass.”
Until very recently, medtech companies have held onto more traditional mechanical and electrical technologies, and have been slower to apply social, mobile, analytic and cloud-based technologies that other industries have used successfully to create new business models. That, as Fedor and others have pointed out, is changing swiftly.
For example, in August, Minneapolis, Minn.-based Medical device giant Medtronic Inc. acquired telehealth company Cardiocom based in Chanhassen, Minn., for $200 million in cash. Cardiocom develops remote patient monitoring technology.
“It’s great that Medtronic is trying to expand beyond just the world of implants,” Jeff Windau, an analyst with Edward Jones, told the Wall Street Journal at the time of the acquisition, calling it a “sound strategy” for Medtronic. “It gets them more involved with patient care. It gets [the company] more involved with the end consumer. This gets them to be a part of the equation to help reduce costs.”
Fedor said it was only a matter of time before mobile consumer technology and medical device technology collided given how much a part of our everyday lives that smartphone and tablet technology such as the iPad have become.
“Most people don’t just use their devices to make a phone call or send a text anymore. Our music, our schedules, our photos, our books, our contacts—you name it—are on these devices. Why shouldn’t we manage our healthcare on them, too? Medical device companies are realizing what a great tool they can be and are finding ways to integrate their technology,” she said. “Think about all the new clinical tools and apps for doctors that are driving physicians to use [smartphones] in more of a decision-making way. And consumer companies are realizing that supporting healthcare means they can keep their technology and find a new life for it—for longer periods of time and at better margins—if you make the right decisions about how you design them and what rigor you put them through.”
Christopher Wasden, PwC’s global healthcare innovation leader, says the companies that can figure out how to appeal to the consumer will be the ones that find success.
“The people that will win in healthcare … are those that understand the customer the best and understand how to change consumer behavior most effectively,” Wasden told emerging technology blog Gigacom. “If you continue to focus on the doctor or hospital, you’re not going to be a winner in the future.”
And it’s no wonder that companies are betting on this new model. The world market for consumer medical devices is expected show steady growth, buoyed by demographics we know well—an aging population (that’s also increasingly tech savvy) and increased prevalence of chronic disease. A report from market research firm IHS Inc. indicated that global revenue for consumer medical devices reached $8.2 billion by the end of 2013, up 4 percent from $7.9 billion in 2012. Revenue expansion for the next few years will range from 5 to 9 percent, IHS analysts predicted, with sales by 2017 amounting to $10.6 billion. Right now, the majority of revenue stems from hearing aids because of their higher average selling prices, but diagnostic devices such as blood glucose meters and blood pressure monitors will increase, according to the report. Health monitoring also will spike in incidence and frequency.
“Lifestyle diseases are at their highest prevalence given the current state of people diagnosed with high blood pressure, diabetes and obesity,” according to the report. Government initiatives for preventive care will drive the market forward, too.
“Such efforts have had the effect of increasing awareness among consumers of the benefits to be obtained from health monitoring, and prohibitive healthcare costs have only added to the urgency of the matter,” study authors wrote. “Personal care devices such as activity monitors, body composition analyzers and heart-rate monitors are among the fastest-growing consumer medical devices today, especially in light of the rising number of fitness-conscious consumers.”
An important contributor to the market are blood pressure monitoring devices, with revenue in 2013 of around $838 million—or one-tenth of the overall total projected in 2013 for consumer medical devices.
In fact, at this year’s annual Consumer Electronics Show held in early January in Las Vegas, Nev., wearable technology for fitness or health monitoring had a significant uptick. The Consumer Electronics Association reported that approximately 300 exhibitors showcased products and applications for fitness, wellness, medical treatment and monitoring, a 30-40 percent increase compared with 2013.
Design, Function & ‘Retooling’
But what does all this mean for medical device firms that are trying to tackle promise of this new commercial reality? A cardiovascular firm, for example, may know its implant technology really well, but it is only beginning to understand the promise of wireless and patient monitoring, how to incorporate it, and how its product can “connect” with this emerging marketplace. Very often it means engaging an outside design firm or maybe a technology consultant (very often both) to help put all of the pieces together.
In order to be commercially successful, consumer products need to understand what consumers are doing, why and how they are doing it, and the context of use, says Eugene Canavan, design director at Ireland-based Design Partners, which counts consumer product and medical device companies—established international brands and start-ups alike—among its clients. Canavan leads the firm’s medical device team.
“If a consumer product fails to understand user needs, wants and desires, they will be replaced in the retail space by a product that does,” he told MPO. “It’s this reality that drives consumer product experience. Consumer products have responded to this challenge. Medical producers can learn from this experience. Many medical products are no different; they are retail products with competitors. There is choice in the marketplace, be it a consumer in the retail space or procurement staff within a hospital.”
Canavan noted that while this sector of medtech has been around for a while, the rate of convergence between the device market and consumer electronics has sped up. The difference is the available technology.
“A number of things have happened in the last few years that have increased the pace of this convergence. Technology is enabling this. Security concerns are being addressed; governments are interested in return on investment; and individual expectations are higher,” he said. “This convergence can be divided into two distinct groups: one is ‘smart opportunity’ and the other is ‘patient centric.’”
The smart opportunity, as Canavan describes it, is that any new electronic-based medical product can now be smart. The opportunity is that the new product itself does not have to be smart. It just needs to connect with other smart devices, making the experience, in turn, smart for the user.
“These other smart devices are often consumer products,” he said. “This is an opportunity for medical product providers, but it also breaks down the dividing line between what is a medical or consumer in the mind of users.”
The patient-centric category takes a number of factors into account.
“Patient centric is a fact of life in national healthcare provision, with some healthcare challenges so large that the model of providing care at the institution level is no longer an option,” Canavan said. “Diabetes is a very good example. The patient is the main manager of the illness within the context of a normal day-to-day lifestyle. While the patient manages their condition, they also build a data set that informs professional medical care personal, and diagnosis decisions can be based on data rather than hypothesis alone. The interesting aspect and opportunity is that moving the management of a condition into the hands of patients means that the context of use is outside the medical or professional environment. It becomes a lifestyle product. It must fit various lifestyle needs, and it needs to be appropriate in many different scenarios and use cases. The context of use has changed. Also, on a practical level, the product’s usability needs to work in the hands of a non-professional user. This is a game-changer for the design and the engineering of these products. But it is also an opportunity. This change has been happening for some time in medical device delivery, some have adapted better than others.”
User interface is “key,” according to Lunar’s Hiemstra.
“More and more, you’re talking about different sets of users—clinicians in their setting and patients in their home. Those are two
distinct groups of people. You need to understand how they connect with technology. In design, the user experience is where most of the focus is. The aesthetic design needs to be appropriate to the user. From a design perspective, you really need to do the ethnographic research and come up with a product that’s compelling to the end-user.”
If a patient is wearing a monitoring device, for example, he or she wants it to be functional, easy to use and subtle, Hiemstra said, adding that’s where some of the experience from the consumer side comes in handy.
“Patients, just like any other consumer, have to make an intuitive connection with their device.”
Canavan agreed.
“The opportunity is to place users and their needs at the center of the solution,” he said. “There are many opportunities to leverage already existing smart technology; you don’t have to create the system you just need to connect with it. Medical products that are more empathetic and human are the future, as are smart devices that provide raw data.”
Fedor cautioned that because there’s not one group (just the medical device company or just the wireless technology provider, for example) driving the process and there’s often a convergence of talents and technologies, staying patient-focused can be more of a challenge.
“You have to know about outcomes. Don’t just keep talking about features and benefits [of a technology]. There has to be someone in your organization who understands that, who knows how your device is going to act under different environments, under different conditions, for different disease states,” she said.
Canavan said the consumer market and medical device community, in many ways, are a natural fit, given what both audiences expect from their technology providers.
“Consumer devices have set a very high benchmark in terms of design quality, user experience and quality of engineering. This excellence is driven by competition and the need to be a step ahead,” he said. “Consumers have high expectations and a very low tolerance for things that don’t deliver. Patients and healthcare workers are also consumers; they know what excellent feels like. They know that if excellent is not available here, it’s probably available somewhere else. With increasing competition in medical sectors, this can also be the case with medical product solutions. Change is being driven by the availability of choice through market competition, technology and how healthcare is delivered. When you enable and empower the patient, the context of use also changes. It is, therefore, appropriate that the product itself changes. Consumer products have travelled this road, so there is a lot to learn here.”
Editor’s note: Medical Product Outsourcing will continue to chart the convergence of the consumer and medtech markets, examining the technology opportunities and challenges, regulatory pathways, and user experiences.
Samsung’s Innovation Center in Silicon Valley, Calif. opened in January 2013 with the goal of pursuing strategic investments, acquisitions and partnerships, and to act as a technology accelerator, looking for new technology sectors and opportunities—moving way beyond the company’s traditional product lineup of flat-screen televisions and smartphones and into cutting-edge, next-generation growth markets. One such market is the convergence of consumer electronic and software technology with healthcare and medical devices.
Granted, the intersection of medical and consumer technology is not a completely new phenomenon, but it’s certainly one that has picked up pace in recent years. And if medical device makers thought they innovated rapidly, they haven’t seen the likes of what’s to come—if industry analysts’ predictions are to be believed.
According to a study released last fall by the PricewaterhouseCoopers (PwC) Healthcare Research Institute on the topic of healthcare innovation, medtech companies have never had a better opportunity to be the “connective tissue that binds the healthcare delivery system to the patient.”
According to the study’s authors, as hospitals and clinicians seek to deliver more health services in the home instead of the hospital, medtech companies can be “key to bridging distance, time, and boundaries between clinicians and patients.” Going forward, the value of devices is no longer only in the actual product itself, but in how companies integrate information and services to solve larger problems such as increasing operating room efficiency, reducing length of hospital stays, avoiding unnecessary re-admissions, improving patient adherence and satisfaction—all of which help to reduce healthcare costs.
Doug Hiemstra sees the cost question as a growing part of the equation, particularly as medical technology evolves into new areas of interconnectivity with multiple user groups. Hiemstra is based in the San Francisco, Calif., office of Lunar, a firm that provides creative and technical product strategy, innovation, design and development services to clients in a number of different industries. He characterizes the convergence of consumer electronics and medtech as “an amazing opportunity,” but cautions that the devil is in the details.
“It’s more than just having a cool app. Safe and effective devices, of course, are always mission critical for medical device companies, but medtech firms and the marketplace are going to be looking for technology that saves the system money,” he told Medical Product Outsourcing. “It’s really about looking for opportunities to drive down costs. Innovation is under pressure and it has been for a few years. Most of the innovation in the market is about saving costs.”
The folks at PwC predict that future innovation—and system-wide cost savings—will come from a mix of traditional consumer product companies, medical device firms, and start-ups with the next big idea that bridges the gap between the first two.
For example, in addition to Samsung, widely recognized brands such as Verizon, Motorola, Sony, Qualcomm, and even athletic shoe company Reebok (which has partnered with a Cambridge, Mass.-based start-up MC10 Inc. to develop a wearable sensor that detects the severity of head trauma in contact sports) already are in or have plans to enter the healthcare/medical technology space.
“One of the reasons there has been so much more awareness about the convergence [of consumer technology and medtech] is because you have non-traditional companies getting into the mix, and consumers notice that,” Donna Fedor told MPO. Fedor, who has more than 20 years of experience in the technology and connected health space, is founder of The Arden Group, a Santa Cruz, Calif.-based healthcare consulting firm focused on wireless technologies, design and manufacturing services, medical devices, mobile networks, healthcare IT infrastructure, healthcare providers and patient-specific solutions. “The consumer interest helps to build critical mass.”
Until very recently, medtech companies have held onto more traditional mechanical and electrical technologies, and have been slower to apply social, mobile, analytic and cloud-based technologies that other industries have used successfully to create new business models. That, as Fedor and others have pointed out, is changing swiftly.
For example, in August, Minneapolis, Minn.-based Medical device giant Medtronic Inc. acquired telehealth company Cardiocom based in Chanhassen, Minn., for $200 million in cash. Cardiocom develops remote patient monitoring technology.
“It’s great that Medtronic is trying to expand beyond just the world of implants,” Jeff Windau, an analyst with Edward Jones, told the Wall Street Journal at the time of the acquisition, calling it a “sound strategy” for Medtronic. “It gets them more involved with patient care. It gets [the company] more involved with the end consumer. This gets them to be a part of the equation to help reduce costs.”
Fedor said it was only a matter of time before mobile consumer technology and medical device technology collided given how much a part of our everyday lives that smartphone and tablet technology such as the iPad have become.
“Most people don’t just use their devices to make a phone call or send a text anymore. Our music, our schedules, our photos, our books, our contacts—you name it—are on these devices. Why shouldn’t we manage our healthcare on them, too? Medical device companies are realizing what a great tool they can be and are finding ways to integrate their technology,” she said. “Think about all the new clinical tools and apps for doctors that are driving physicians to use [smartphones] in more of a decision-making way. And consumer companies are realizing that supporting healthcare means they can keep their technology and find a new life for it—for longer periods of time and at better margins—if you make the right decisions about how you design them and what rigor you put them through.”
Christopher Wasden, PwC’s global healthcare innovation leader, says the companies that can figure out how to appeal to the consumer will be the ones that find success.
“The people that will win in healthcare … are those that understand the customer the best and understand how to change consumer behavior most effectively,” Wasden told emerging technology blog Gigacom. “If you continue to focus on the doctor or hospital, you’re not going to be a winner in the future.”
And it’s no wonder that companies are betting on this new model. The world market for consumer medical devices is expected show steady growth, buoyed by demographics we know well—an aging population (that’s also increasingly tech savvy) and increased prevalence of chronic disease. A report from market research firm IHS Inc. indicated that global revenue for consumer medical devices reached $8.2 billion by the end of 2013, up 4 percent from $7.9 billion in 2012. Revenue expansion for the next few years will range from 5 to 9 percent, IHS analysts predicted, with sales by 2017 amounting to $10.6 billion. Right now, the majority of revenue stems from hearing aids because of their higher average selling prices, but diagnostic devices such as blood glucose meters and blood pressure monitors will increase, according to the report. Health monitoring also will spike in incidence and frequency.
“Lifestyle diseases are at their highest prevalence given the current state of people diagnosed with high blood pressure, diabetes and obesity,” according to the report. Government initiatives for preventive care will drive the market forward, too.
“Such efforts have had the effect of increasing awareness among consumers of the benefits to be obtained from health monitoring, and prohibitive healthcare costs have only added to the urgency of the matter,” study authors wrote. “Personal care devices such as activity monitors, body composition analyzers and heart-rate monitors are among the fastest-growing consumer medical devices today, especially in light of the rising number of fitness-conscious consumers.”
An important contributor to the market are blood pressure monitoring devices, with revenue in 2013 of around $838 million—or one-tenth of the overall total projected in 2013 for consumer medical devices.
In fact, at this year’s annual Consumer Electronics Show held in early January in Las Vegas, Nev., wearable technology for fitness or health monitoring had a significant uptick. The Consumer Electronics Association reported that approximately 300 exhibitors showcased products and applications for fitness, wellness, medical treatment and monitoring, a 30-40 percent increase compared with 2013.
Design, Function & ‘Retooling’
But what does all this mean for medical device firms that are trying to tackle promise of this new commercial reality? A cardiovascular firm, for example, may know its implant technology really well, but it is only beginning to understand the promise of wireless and patient monitoring, how to incorporate it, and how its product can “connect” with this emerging marketplace. Very often it means engaging an outside design firm or maybe a technology consultant (very often both) to help put all of the pieces together.
In order to be commercially successful, consumer products need to understand what consumers are doing, why and how they are doing it, and the context of use, says Eugene Canavan, design director at Ireland-based Design Partners, which counts consumer product and medical device companies—established international brands and start-ups alike—among its clients. Canavan leads the firm’s medical device team.
“If a consumer product fails to understand user needs, wants and desires, they will be replaced in the retail space by a product that does,” he told MPO. “It’s this reality that drives consumer product experience. Consumer products have responded to this challenge. Medical producers can learn from this experience. Many medical products are no different; they are retail products with competitors. There is choice in the marketplace, be it a consumer in the retail space or procurement staff within a hospital.”
Canavan noted that while this sector of medtech has been around for a while, the rate of convergence between the device market and consumer electronics has sped up. The difference is the available technology.
“A number of things have happened in the last few years that have increased the pace of this convergence. Technology is enabling this. Security concerns are being addressed; governments are interested in return on investment; and individual expectations are higher,” he said. “This convergence can be divided into two distinct groups: one is ‘smart opportunity’ and the other is ‘patient centric.’”
The smart opportunity, as Canavan describes it, is that any new electronic-based medical product can now be smart. The opportunity is that the new product itself does not have to be smart. It just needs to connect with other smart devices, making the experience, in turn, smart for the user.
“These other smart devices are often consumer products,” he said. “This is an opportunity for medical product providers, but it also breaks down the dividing line between what is a medical or consumer in the mind of users.”
The patient-centric category takes a number of factors into account.
“Patient centric is a fact of life in national healthcare provision, with some healthcare challenges so large that the model of providing care at the institution level is no longer an option,” Canavan said. “Diabetes is a very good example. The patient is the main manager of the illness within the context of a normal day-to-day lifestyle. While the patient manages their condition, they also build a data set that informs professional medical care personal, and diagnosis decisions can be based on data rather than hypothesis alone. The interesting aspect and opportunity is that moving the management of a condition into the hands of patients means that the context of use is outside the medical or professional environment. It becomes a lifestyle product. It must fit various lifestyle needs, and it needs to be appropriate in many different scenarios and use cases. The context of use has changed. Also, on a practical level, the product’s usability needs to work in the hands of a non-professional user. This is a game-changer for the design and the engineering of these products. But it is also an opportunity. This change has been happening for some time in medical device delivery, some have adapted better than others.”
User interface is “key,” according to Lunar’s Hiemstra.
“More and more, you’re talking about different sets of users—clinicians in their setting and patients in their home. Those are two
distinct groups of people. You need to understand how they connect with technology. In design, the user experience is where most of the focus is. The aesthetic design needs to be appropriate to the user. From a design perspective, you really need to do the ethnographic research and come up with a product that’s compelling to the end-user.”
If a patient is wearing a monitoring device, for example, he or she wants it to be functional, easy to use and subtle, Hiemstra said, adding that’s where some of the experience from the consumer side comes in handy.
“Patients, just like any other consumer, have to make an intuitive connection with their device.”
Canavan agreed.
“The opportunity is to place users and their needs at the center of the solution,” he said. “There are many opportunities to leverage already existing smart technology; you don’t have to create the system you just need to connect with it. Medical products that are more empathetic and human are the future, as are smart devices that provide raw data.”
Fedor cautioned that because there’s not one group (just the medical device company or just the wireless technology provider, for example) driving the process and there’s often a convergence of talents and technologies, staying patient-focused can be more of a challenge.
“You have to know about outcomes. Don’t just keep talking about features and benefits [of a technology]. There has to be someone in your organization who understands that, who knows how your device is going to act under different environments, under different conditions, for different disease states,” she said.
Canavan said the consumer market and medical device community, in many ways, are a natural fit, given what both audiences expect from their technology providers.
“Consumer devices have set a very high benchmark in terms of design quality, user experience and quality of engineering. This excellence is driven by competition and the need to be a step ahead,” he said. “Consumers have high expectations and a very low tolerance for things that don’t deliver. Patients and healthcare workers are also consumers; they know what excellent feels like. They know that if excellent is not available here, it’s probably available somewhere else. With increasing competition in medical sectors, this can also be the case with medical product solutions. Change is being driven by the availability of choice through market competition, technology and how healthcare is delivered. When you enable and empower the patient, the context of use also changes. It is, therefore, appropriate that the product itself changes. Consumer products have travelled this road, so there is a lot to learn here.”
Editor’s note: Medical Product Outsourcing will continue to chart the convergence of the consumer and medtech markets, examining the technology opportunities and challenges, regulatory pathways, and user experiences.