View from the Marketplace
Technology: The Cure for Rising Healthcare Costs?
In a financially stretched healthcare market, medical technology is sometimes seen as an expensive luxury. But use of the RIGHT technology can actually cut the overall cost of medical treatment and improve patient outcomes. You might be wondering how…
We live longer now, and we are more sedentary, so chronic diseases such as diabetes, chronic obstructive pulmonary disease, and Alzheimer’s are on the rise. These long-term degenerative diseases place a high cost burden on our healthcare systems. The sooner doctors can detect, treat, and/or prevent these conditions in patients, the more they can reduce this burden. This presents exciting opportunities for medtech companies to demonstrate R&D ingenuity.
Of course, it isn’t going to be easy. Global healthcare markets are experiencing significant cost constraints, and for new products to be taken up by healthcare providers, they will need to actively justify their cost against the measurable improvement they can provide to patient health.
The difficulty is that new breakthrough technologies often take time to deliver benefit, with cost savings spread over the lifetime of the patient or the course of the disease. For example, imagine medical device A, a new, innovative device that allows early diagnosis of chronic degenerative disease X. Early diagnosis enables early therapeutic intervention that can reduce the serious and very costly medical complications in the patient’s later life. But there’s a problem: disease X is currently diagnosed with standard low-cost techniques, and device A is expensive.
Our example may be hypothetical, but convincing healthcare providers and payers of these types of efficiency savings is a very real challenge. Innovative medical device companies are asking, “How do we secure a higher price for high-technology solutions that create significant savings many years in the future, rather than in the short term?”
Proving efficiency savings is a challenge in all industries. In healthcare, this challenge is compounded by the possibility that the savings could be passed to another healthcare provider or payer if the patient moves to another geographic region or changes their health insurer. So how can medtech companies navigate this complicated market dynamic?
A new approach to medtech R&D
Adapting to the new market realities is critical. In many cases, this adaptation may require an internal paradigm shift in how companies manage and prioritize their R&D. This can include evaluating new business models, product/service combinations, organizational structures, and ways of thinking about innovation process and technology.
For a start, patient outcomes and health economics need to be considered at a much earlier stage, and each opportunity may need to take into account quite different variables. This, along with a structured approach to technology risk management that includes active management of parallel activities/technologies, early scrutiny for pass/fail outcomes, and close monitoring of competitive intelligence, should be key to any new R&D strategy plan.
One specific trend that is challenging the status quo is the “adoption” of entire disease areas by medtech companies, rather than focusing on one single stage of a condition. One example would be insulin delivery for diabetes patients: an innovator company could decide to offer a continuum of care, from home-based wellness and obesity-prevention measures to glucose monitoring, medication, and surgical treatments for complications such as vascular disease.
“Adopting a disease” allows medical-device developers to more clearly analyze and demonstrate the cost/benefit potential of their products, and it allows them to explore new business models to deliver a continuum of care that ensures healthcare providers and payers are able to realize cost and efficiency benefits.
Using technology to enhance healthcare delivery
Now back to the technology and some examples of areas that we think are of particular interest. Because we passionately believe that science and technology are key enablers in finding new ways to reduce costs and increase the efficiency and quality of care, we spend a lot of time keeping an eye on what is out there. Sometimes the best solutions are hidden in areas you wouldn’t expect, so we are always looking across the boundaries of the patient-care continuum, searching for innovative solutions that can be borrowed or linked from parallel delivery areas or even from totally different industries. Whether it’s reducing time in the hospital, expediting diagnosis, enabling remote patient monitoring, or advancing disease prevention, technology can play a key role.
Reducing time in the hospital through improved surgical outcomes
A new generation of battery-powered tools that use ultrasonic, radiofrequency, laser, or light energy is enabling a whole new range of minimally invasive surgical procedures.
This has become a reality due to advances in low-power electronics, electronics miniaturization, and battery energy density. These smaller, self-powered instruments not only are less invasive but also have potential to improve infection control and patient outcomes.
In some cases, this means procedures can be done in a clinic rather than a hospital. So, while the actual initial instrument cost might be higher, the lifetime costs can be lower, and these instruments reduce not only the time that patients spend in hospital but also, in some cases, the postoperative treatments that are required.
Improving and expediting diagnosis
Diagnosis and pathology are changing. In the past, to make a diagnosis, a clinician might have conducted a biopsy—an invasive and time-consuming procedure that can require multiple appointments. In contrast, new technology platforms in enhanced visualization are enabling ‘in situ’ and ‘virtual’ pathology, where diagnostic tests are done at the patient in real time, negating the need for biopsy.
Optical coherence tomography (OCT) is a three-dimensional imaging system similar to ultrasound that uses light instead of sound to see below the surface of tissue in great detail. Until now, OCT has primarily been used in ophthalmology to detect abnormalities beneath the surface of the retina.
However, with developments in laser technology, light sources, miniature actuators, and processing power, OCT is ripe for use in other applications, such as in the imaging of vascular disease or cancer detection.
Advances in processing power are also negating the need for invasive endoscopies and colonoscopies. CT- or MRI-based virtual colonoscopies provide a more comfortable, patient-friendly alternative for early detection of colon cancer.
Enabling remote patient monitoring
“Connected health” and “e-health” are grand terms describing the use of technology to manage a patient’s condition at a distance. But the important enablers, aside from smart phones and tablets, are smart sensing technologies, low-power connectivity, and developments in user interfaces, storage, data processing, and analytics. These connected health technologies could help reduce healthcare costs by improving patient compliance and reducing office visits. Here are two examples:
Senseonics is developing a continuous glucose monitoring system consisting of three major components: an implanted sensor, a wireless transmitter that communicates with the sensor, and a smart-phone mobile medical application. With this device, a diabetes patient’s glucose levels could be measured remotely every few minutes, and accurate and specific alerts would be sent to both the user and the physician about impending hyperglycemia or hypoglycemia.
Another example is “Smarthaler,” a concept system Sagentia recently developed for asthma patients. The concept uses a novel acoustic detection technology, together with a cloud-based server and mobile app, to monitor and interpret whether a patient is administering doses properly. The system could warn the patient that a dose was taken incorrectly, coach the patient to improve dosing technique, and provide the doctor with a historic record of treatment adherence to determine the context of an asthma attack and options for improved treatment going forward. Monitoring and improving patient compliance in this way brings medtech companies one step closer to providing that important cost/benefit information that will help to secure reimbursement.
Advancing disease prevention
A final example is third-generation DNA sequencing technologies. These have the potential to reduce the overall cost of treating a patient by both improving prevention and enabling more personalized and targeted therapies, reducing drug waste and associated time and cost. By sequencing a patient’s genome, a doctor can select the specific therapy that will be the most effective.
Key technology enablers are groundbreaking single-molecule detection technologies and data analytics, which have enabled the conversion of vast amounts of raw data into reliable sequences, with fewer errors.
No barrier to innovation
As these examples demonstrate, the increasing focus on cost reduction and value in healthcare does not have to be a barrier to innovation. Instead, with the right technology insight, medical device developers can provide the healthcare system with cheaper, faster, and more effective treatments. It just takes a solid approach to front-end innovation that combines structured methodologies with a multidisciplinary perspective and an eye for how to adopt new technology advances in ever-more-clever ways. But it can be done!
Dr. Robin Lee is Chief Technology Officer and Dr. Gillian Davies is Surgical & Health Technology Manager at Sagentia. Sagentia is a global innovation, technology, and product development company that provides outsourced R&D consultancy services to startups and global market leaders in the medical, industrial, and consumer sectors. www.sagentia.com