The model answer: How the medical device market is being disrupted

Darren Cooper, Stibo Systems, explains how the product-as-a-service model is disrupting the medical device market.

Healthcare service providers across the globe are facing universal pressures; costs are rising due to a growing range of services and at the same time, they are seeing greater demand due to an increase in life expectancy while ongoing austerity is leading to budgets becoming ever tighter.

While the solution to full wards might once have been to build more hospitals to accommodate more patients, healthcare providers must now examine the efficiencies of their established processes. Consideration must now be given to more nimble and creative solutions, how less invasive surgical procedures can cut down the length of hospital stays for instance, or how funding lifelong health and nutrition education can help reduce the risks of falling ill in the first place.

The advent of product-as-a-service

One recent, technology-driven innovation – product-as-a-service – can not only help healthcare providers cut costs but also improve the services they offer patients.

Rather than buying an object or product, the model involves paying for an end result or service. Take for example, a car club in which customers pay a monthly fee for a vehicle that suits their needs; a van for moving furniture or a car for a weekend break, as and when required. Customers don’t pay for tax or insurance and they don’t need to worry about breakdowns, MOTs or servicing; all they pay is an agreed fee on an ongoing monthly basis for the product-as-a-service.

Elsewhere, Daimler and BMW not only sell cars as products but also provide them as part of a car sharing service. Since BMW started its DriveNow joint venture with Sixt in 2011, it now has 580,000 registered customers and operates across with 4,000 vehicles across nine European cities.  And GE, the aircraft engine manufacturer, offers flight efficiency and analytics services to help optimise flight procedures. In using these services, Alitalia, the Italian carrier, has saved £34m in fuel costs since the programme began in 2011.

In the context of healthcare, a product-as-a-service agreement would see healthcare providers contracting with their medical equipment manufacturing suppliers to fulfil a service, such as 24-hour heart monitoring. The manufacturer would then provide the physical device and its lifetime maintenance, along with the cloud-based service to which it connects, and the capture and analysis of the data the device generates.

If the patient or hospital had bought this device, they would have needed to pay for repair or replacement had it become worn out or obsolete. However, as with the car club example, the fact that they’ve bought the service means this needn’t be a concern. For as long as their agreement continues, they’ll receive the most up-to-date monitoring and analysis services from the best technology available.

Combination of technologies

This model is made possible due to the emergence of the Internet of Things (IoT) and the work of companies such as Philips Healthcare in developing devices that use IoT technology; embedding standardised, mass-produced microchips in every device to allow them to communicate with other devices across various internal and external networks.

While still some years from becoming fully mainstream, the IoT will radically streamline and simplify the healthcare industry’s supply chain. Smart warehouses will directly monitor their stock levels, hospitals will check the status and location of their inventory in real time and monitoring devices, such as those previously mentioned, will supply a constant stream of data for analysis without the need for patients to take up valuable bed space and the most valuable of resources, time. The subsequent reduction in outpatient numbers, and the easing of resource levels brought about by continuous, pro-active monitoring, will both represent significant cost savings to the healthcare provider.

For now, as a result of embeddable technology, connected to cloud-based systems by a universally available high-speed network, and supported by Big Data analytics solutions interpreting the constant flow of information, the healthcare industry is already starting to see the benefits of a fledgling product-as-a-service model.  In time, this combination of technologies is set to relieve pressure on healthcare providers by increasing efficiencies in their daily routines, providing patients with the information they need on their own situations, enabling them to make decisions about and manage their care options, reducing the length of stays in hospitals.

Effective data management

While the benefits of smart, wearable medical devices to healthcare services are clear, the risks associated with their increasing use are only likely to become more acute, as illustrated by stories of external agents being able to hack into and control networked medical devices, such as infusion pumps delivering dosed medication directly into patients,

It’s crucial that the vast amount of data generated by the embedded technology and communicated via the IoT concept is properly processed if the product-as-a-service model is to work effectively.

Monitored data, for example, must be transferred quickly and accurately otherwise it could lose its value and even put a patient at risk. By not storing this data correctly and securely, healthcare providers may find themselves unable to analyse it effectively and run the risk of breaching regulations around patient confidentiality.

And, as the product-as-a-service market grows, with more patients monitoring their own health, so the need for greater traceability and governance of the devices on which they rely grows too. Uniquely identifying each device from its point of manufacture through to its disposal is essential for healthcare service providers and manufacturers alike, supporting them in clinical trials and in complying with unique device identifier (UDI) regulations.

Effective data management underpins all of this.

Knowing which components have gone into which device, for example, will allow manufacturers to isolate production batches should an issue arise, avoiding costly recalls. 

Over the next few years, various necessary technical components will become more established and more patients will purchase their own devices, requiring the provision of monitoring services by manufacturers or third parties, Product-as-a-service is set to become a viable and cost-effective means of delivering healthcare, easing the pressure on an already over-stretched medical infrastructure.

However, for it to fully succeed, it’s crucial for service providers to put robust and effective data management measures in place. Only by doing so can they hope to improve patient safety, and comply with existing and upcoming regulations, ensuring the security of their data while tracking and analysing it now and in the future, in the age of the IoT.