With the advent of Internet of Things (IoT) and Industrial Internet, all relevant parts of any machine or equipment will be able to collect all kinds of data, all the time. Cisco sees IoT as a $14.4 Trillion market over the next decade and GE talks about Industrial Internet driving an incremental $15 Trillion to global GDP over the next decade. From the data explosion already happening and 50 billion devices connecting over the next decade, the colossal sets of data which will be churned out from the physical and digital world will need strong analytics to drive real insights and therefore, actionable results. With pervasive connectivity, strong analytics and huge processing power in the cloud, big data will constantly be analyzed to help in making real-time decisions. And, when the decisions are about life, the value of big data seems more important than ever.
While all industries leverage big data to drive higher efficiencies, make better decisions, introduce new and relevant products, serve their customers better, etc., no other industry needs to adopt big data more than healthcare. Globally, the US spends the most in healthcare across all parameters per person, in absolute terms and % (17.6% of its GDP). According to a recent McKinsey report, the US spends $600 Billion more on healthcare than what it should ideally be spending. That is similar to squandering the entire GDP of countries such as Switzerland or Sweden! It is a colossal waste, and among other overhauls needed, big data must be leveraged to weed out inefficiencies and significantly reduce the spend on healthcare.
Big data is probably one of the most frequently discussed and debated topics in the medical devices industry today. The Health Information Technology for Economic Clinical Health (HITECH) Act of 2009 in part mandates the collection, storage and analysis of health-related data to reduce the overall cost of patient care. With HITECH, big data was no longer optional for the industry but became an integral part of the overall approach to reduce cost and improve care.
It is a great opportunity for medical devices and healthcare companies to transform proactively. At a recent JP Morgan Healthcare Conference, Boston Scientific pointed out ‘convergence of devices and informatics’ as a tailwind for their business.
The pressure on large industry players in medical devices to keep cost down is intense as the perfect storm hits from all sides – regulators, payers-providers and the onslaught from m-health businesses. Dr. Eric Topol, the prominent cardiologist and intense supporter of m-health initiatives showed in an interview, a mobile app which could deliver the results of a standard echocardiogram for patients, resulting in savings of approx. $800 per test. Imagine the savings from millions of such tests worldwide.
Big data is no longer a matter of choice for the medical devices industry. Due to increased regulations, more and more hospitals ask for it. Insurance companies try to reduce hospital visits for patients by asking for better predictability of health through advanced analytics of medical records. Medicare and Medicaid programs face reductions of $400B over the next decade and globally, healthcare funding is being reduced. In addition, m-health is empowering patients and in some cases, replacing the need for expensive tests through the use of simple mobile apps. There are almost 97,000 different apps today and this market is expected to grow to $26B by 2017.
By effectively using big data and driving strategic decision-making by in-depth analysis, medical devices companies could enable product improvements quicker, faster and better. At the same time, it could also track and effectively guide practitioners to extract more efficiency from the underlying device and therefore, enable improved ROI, lower cost and predictive treatment often. Personalized care and individualized treatment now become a step closer in reality with big data monitoring of patients’ health.
Big data could also enable medical devices manufacturers to contain damage from a faulty or defective device by detecting problems earlier and therefore, potentially avoid huge product recall costs and liability lawsuits. Big data also open up new revenue streams for companies by offering data-as-a-service to hospitals to manage their data or provide post-discharge monitoring.
Big data has the potential to transform the medical devices industry by drastically changing the business and business models of existing companies towards the common goal of reducing the cost of treatment and making it predictable. The question is no longer if it will happen but rather, when and who will make it happen. The opportunities to transform often arise during a crisis and perfect storm. Big data may be the catalyst this industry is looking for to transform…