Breaking the Barriers: How MedTech Companies Can Drive a Smarter Healthcare System

A broad range of macro trends have been shaping the MedTech industry (see figure).

With demographic changes, geopolitical instability and technological advancements, there is increasing pressure on MedTech companies to adopt new business models, which we define as how an organization creates, delivers, and captures value2, with a view on long-term value generation while also addressing specific capability gaps. But why has change been so slow to happen? Through our work with clients in this space we have identified some of the key roadblocks that have so far prevented widespread adoption of radical transformation in MedTech:

• The value proposition of new business models is unclear. Opportunities often lie in the development of new solutions that address identified pain points of healthcare providers, payers and/or patients. Often there is too much of a focus on the product itself rather than getting a better understanding of the end-users. Unclear perceived benefit leads to poor user adoption and subsequently, low revenue targets.  
• Difficult ROI assessment: for a radical change to happen, organizations need to be steered and fully supported to carry on a digital transformation, which is yet too often not perceived as a CEO priority. It currently sits with IT, with no commercial inputs, making it all about technology, while it is about people. Moreover, most of the digital health solutions are offered for free or bundled with existing products with no clear ROI model in place for further scale up. Back in 2020, revenues from digital health solutions used to represent approximately 10% of a company’s revenue, but this figure is expected to increase to 50% by 2025.3 A noticeable increase in investor funding in digital health was also observed during the pandemic, highlighting the importance of readdressing priorities and the potential of digital technologies.

• A shift in the culture and mindset of MedTech companies is needed to bring transformation to the next level. At EY, we believe that to maximize the success of a transformation, organizations need to place humans at the center to generate exponential value. This can be achieved by building more customer-centric businesses together with creating more engaging experiences for employees.4
• The regulatory environment has yet to adapt to the development of digital MedTech solutions and therefore needs to be modernized to support compliance and to better promote such innovation in the industry.

To illustrate the application of an ecosystem, we assess the evolution of a traditional hospital to a smart hospital in which people, the environment and systems are connected in real time (see figure below). The data is generated in intelligent ways to improve the quality of core processes of personalized and safe patient care. For example, by using smart devices and wearable sensors, patients could recover from a heart procedure in their home instead of a hospital bed with the help of a digital care tam, patients could view their results and connect with their clinicians in a seamless and accessible manner. Process optimization and automation of routine tasks greatly improves the efficiency of hospital processes. For example, Roche and GE Healthcare collaborated on the launch of a platform used in oncology that pools medical imaging and other patient data providing medical teams with complete patient diagnostic information. This in turn helped to reduce preparation time of tumor board review meetings by 53%, and therefore enabled better-informed and quicker treatment decisions.⁶

With these attributes in mind, platforms which enable the unification of data across an ecosystem will be in the position to power a smart health system which could lead to:

• an improvement in the access, efficiency, equity, personalization and quality of care.
• the creation of apps, analytics and emerging technologies layered on top.
• a seamless integration of physical products with virtual ones.
• Reduction in the administrative workload of medical professionals by streamlining administration and facilitating more meaningful patient contact time.

MedTech companies have made strides towards patient centricity, but further advances are to be made. This can be achieved by moving towards the transformation of smart health with the enhancement and adoptions of digital platforms. Supporting companies accelerate a transformation that encompasses trends and challenges, we believe that the adoption of key characteristics of ecosystem models from other industries is a winning strategy.

Partnerships between MedTech companies and digital solution providers are becoming increasingly common as both industries seek to develop innovative solutions to improve healthcare outcomes. These collaborations often involve the use of AI, machine learning, and other cutting-edge technologies to develop new medical devices, diagnostic tools, and treatment solutions. For example, Medtronic and NVIDIA are collaborating to accelerate the development of AI in the healthcare system and bring new AI-based solutions into patient care⁷. This could allow Medtronic to scale the development of algorithms to enhance real-time procedures and improve patient care.

Server management providers such as Amazon Web Services (AWS) or the Google Cloud Platform have been able to take advantage of network effects by delivering core functionalities needed for internet-based development, resulting in most of the web being built on their systems. This has enabled these providers to improve the quality, connectivity and interoperability of the services provided through the accompanying marketplaces, where third-party providers can offer solutions in related categories.⁸ A successful ecosystem platform balances two priorities: economic scalability by attracting participants through lower entry barriers and ensuring data security and compliancy with regulations. The infrastructure layer is foundational, composed of effective data capture, curation, management, storage, and interoperability to create a common data set upon which the ecosystem can operate.

Reflecting on this example, five key characteristics have been identified as a common denominator to leading digital ecosystem players’ success: they offer convenience, a seamless trading exchange, a predictive and personalized experience, high consumer choice and transparency.

For MedTech companies seeking to make the shift to a more digitally enhanced smart health system, following these guiding principles will be key in accelerating the transformation. The future of care should be patient-centric as well as integrated and should break down the existing silos between healthcare settings. This can be achieved by applying the above-mentioned principles to the MedTech industry as follows:

• Convenience: smooth integration of physical and virtual, omnichannel experience
• Data liquidity: seamless trading exchange
• Predictive and personalized: preventative and predictive care
• Transparency: end-to-end visibility of supply chain
• High consumer choice: tech- and design-driven improvements in access, efficiency, equity, personalization and care quality
• Monetization: ability to charge adequate fees for the value it brings to the ecosystem

While mastering transformation towards a patient ecosystem is challenging, MedTech companies have an imperative to rethink their value creation mechanism and operating model. Building an ecosystem is a multi-step approach where additional products and services from partners can be integrated to capture new value sources on the one hand and where companies can build end-to-end solutions to improve their technology and achieve economies of scale on the other hand.

MedTech companies face challenges in managing the complexity of their offering portfolio, especially as the industry becomes more advanced and diversified. To address this challenge, companies need to adopt a strategic pricing approach that considers factors such as customer needs, market dynamics, and value proposition. This approach should be based on a thorough understanding of the competitive landscape and customer segmentation, as well as an analysis of the costs associated with the development and delivery of the products and services. MedTech companies should also invest in advanced analytics and data-driven tools to improve their pricing decisions and increase their margin.

Another challenge faced by MedTech companies is implementing more efficient and effective go-to-market models. This is particularly relevant for companies operating in highly competitive and rapidly evolving markets, such as wound care and surgical navigation for example. To overcome this challenge, companies should focus on building strong relationships with key opinion leaders, healthcare providers, and payers, leveraging technology and digital platforms to reach a wider audience, and developing innovative sales and marketing strategies that address the changing needs of their customers. This could include investing in customer analytics and insights, leveraging social media and digital marketing channels as well as building collaborative partnerships with other players in the healthcare ecosystem. Ultimately, the success of MedTech companies in implementing more efficient and effective go-to-market models will depend on their ability to leverage technology, to embrace innovation and to stay ahead of the competition.

To drive the transformation towards smart health, EY teams bring together the entire healthcare ecosystem by exploring collaboration opportunities, leveraging innovation, sustainability, technology, strategic planning, organizational design and process transformation – putting the Humans@Center to drive better outcomes for all.