There is significant value to be captured with digital products and services in the healthcare industry. However, existing medical technology companies going digital will require major business and operational model changes. This article introduces a framework and set of levers that can help medical technology executives proactively manage these changes and their impact, therefore guiding their companies through digital transformation.
Within the healthcare sector, both existing players and new entrants can create significant value with digital products and services. However, for established “analog-native” medical technology companies, going digital will require significant business and operational model changes, which can be daunting. Nevertheless, executives can proactively manage these changes and their impact by considering a set of levers that they can control. This article introduces a framework with those levers that can be used to guide medical technology companies through their digital transformations.
Going digital – a difficult path for established medical technology companies
Recent advances in technology, along with changes in healthcare reimbursement models and care delivery pathways, have created opportunities for digital products and services to play an important role in healthcare. The benefits of digital, such as lowering costs, increasing patient engagement, and improving outcomes, have been discussed extensively. Many new entrants and start-ups are taking advantage of the opportunity and challenging established healthcare companies, hoping to get a share of an industry that makes up about 10% of the global economy. These organizations employ newer, more agile working models that are better aligned with being digital. Additionally, they have a further advantage emerging: regulators that have not been friendly to software products in the past have started to embrace new iterative development approaches to accommodate the growth of digital health.
In contrast, established medical technology companies face a different picture. Their operational and cultural DNA has been steeped in rigid company processes that were created to minimize the risk of non-compliance with regulatory requirements such as FDA guidance. For many of them, results have been elusive as going digital has strained their current ways of doing business. In fact, being successful with digital products and services requires established companies to rethink their business models and the underlying operational models. This can be seen with some recent examples of established medical technology companies that have managed to find levels of success.