Medtech and the Internet of Medical Things How

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Medtech and the Internet of Medical Things How connected medical devices are transforming health

Medtech and the Internet of Medical Things How connected medical devices are transforming health care Mark Steedman 21 st November 2018

Deloitte UK Centre for Health Solutions About us Established in 2011, the Centre is

Deloitte UK Centre for Health Solutions About us Established in 2011, the Centre is the independent research arm of Deloitte LLP’s healthcare and life sciences practices. Its role is to inform stakeholders across health care and life sciences about emerging trends, challenges, opportunities and examples of good practice. Using primary and secondary research and rigorous analysis to drive unique perspectives, the Centre seeks to be a trusted source for relevant, timely and reliable insights. www. deloitte. co. uk/centreforhealthsolutions blogs. deloitte. co. uk/health/ Publications 2

Providing health care is becoming more challenging Global health care spending expected to grow

Providing health care is becoming more challenging Global health care spending expected to grow from $7. 1 trillion in 2015 to $8. 7 trillion by 2020 The percentage of people aged 65 and over is expected to double by 2050 To reduce spending and improve outcomes, health care organisations are looking for medtech to demonstrate the value of their products Deaths from noncommunicable diseases are anticipated to increase from 38 million in 2017 to 44 million in 2030 People’s interactions with the health care system often involve interactions with a wide range of products that diagnose, monitor, and/or treat patients. These devices and equipment are instrumental in helping health care providers to achieve better patient outcomes, lower health care costs, improve efficiency and enable new ways of engaging and empowering patients. 3

Report introduction The medical technology (medtech) industry designs and manufactures a wide range of

Report introduction The medical technology (medtech) industry designs and manufactures a wide range of products to diagnose, monitor, and treat patients from syringes and bandages, blood pressure monitors and pregnancy testing kits, to surgical instruments, pacemakers, artificial joints, and MRI and CT scanners. Major advances in wireless technology, miniaturisation and computing power are driving innovation in medtech, leading to the development of an increasing number of connected medical devices that are able to generate, collect, analyse and transmit data. The data, along with the devices themselves, are creating the Internet of Medical Things (Io. MT) – a connected infrastructure of medical devices, software applications and health systems and services. Our report focuses on how the Io. MT is transforming medtech’s role in health care and the impact of the increased use of connected medical devices on medtech companies’ business and operating models. 4

Methodology Detailed literature review Insights provided by Markets&Markets An online survey conducted by Research

Methodology Detailed literature review Insights provided by Markets&Markets An online survey conducted by Research 2 Guidance Structured interviews with senior executives from a number of large medtech companies Insights provided by Deloitte colleagues working across the medtech and health care industries 5

The Io. MT market What is the current and future market size? Forecast by

The Io. MT market What is the current and future market size? Forecast by geography and component 6

The Io. MT market How is the market segmented? Connected medical devices 7

The Io. MT market How is the market segmented? Connected medical devices 7

Medtech are investing in connected medical devices Our survey of 237 respondents revealed that:

Medtech are investing in connected medical devices Our survey of 237 respondents revealed that: “One of our priorities is to create fully connected care. ” Cx. O, Medtech company 81% Note. The figures from our research survey relate to medtech companies with connected medical devices and are not entirely representative of the medtech industry as a whole. Source: Deloitte commissioned research from Research 2 Guidance, 2018 8

The 8 key systemic challenges and opportunities facing the medtech industry improving the adoption

The 8 key systemic challenges and opportunities facing the medtech industry improving the adoption of medical technology at scale developing an in-depth understanding of end users maintaining trust in a digital age Challenges and opportunities for medtech attracting digital talent and building digital capability developing new funding, business and operating models understanding interoperability requirements successfully navigating regulatory change maintaining cybersecurity 9

Developing an in-depth understanding of end users As more providers adopt VBC models, the

Developing an in-depth understanding of end users As more providers adopt VBC models, the speed of adoption and integration of connected medical devices will increase Data and insights on patients and processes is key to VBC Challenges include the extent to which an organisation’s IT infrastructure is able to handle or process the connections and data, and whether clinicians and patients can be convinced of the safety and effectiveness of the devices Deloitte’s View Medtech companies need to develop a deeper understanding of the end-user to improve patient outcomes but also create value for key health care stakeholders. “The industry must have more close relationships with the ‘real’ health care system and health care providers, namely doctors and nurses. Without the partnership of the medical world all smart devices will stay only ‘nice-to-have devices’ instead of really connected devices. ” Cx. O, Medtech company 10

Developing new funding, business and operating models Our survey indicated that medtech companies are

Developing new funding, business and operating models Our survey indicated that medtech companies are working on… Deloitte’s View Different types of innovation will require different business models, and progress will depend on both the innovators themselves working in new ways to take on risks and rewards, and the evolution of existing payment systems by both public and private payers. 11

Addressing the challenge of interoperability Interoperability can provide numerous benefits to health care stakeholders

Addressing the challenge of interoperability Interoperability can provide numerous benefits to health care stakeholders Deloitte’s View Interoperability is arguably the biggest challenge to health care’s ambition for a patient-centred, digitallyenabled, health care ecosystem. All stakeholders need to be aligned to develop open platforms and standards 12

Maintaining cybersecurity Data breaches in health care can be large and costly One data

Maintaining cybersecurity Data breaches in health care can be large and costly One data breach in health care affected 78. 8 million people The cost per capita of a data breach in health care is the highest among 17 industries analysed Our survey suggests medtech are prepared to maintain the cybersecurity of connected medical devices 81% Deloitte’s View Given the scale of potential security issues affecting connected medical devices, all stakeholders managing and utilising the data generated from connected medical devices need to take a more proactive and collaborative approach to identify and resolve security issues. 13

Navigating regulatory change There have been a wide range of security issues found in

Navigating regulatory change There have been a wide range of security issues found in connected medical devices, which has lead to the development of a number of regulations and guidelines Our survey suggest medtech are prepared to comply with regulatory changes such as MDR, IVDR and GDPR Deloitte’s View Medtech companies need to build engagement with regulators into their innovation models and involve clinicians and patients in product design. 14

Attracting digital talent and building digital capability Respondents from our survey suggest that: 79%

Attracting digital talent and building digital capability Respondents from our survey suggest that: 79% of respondents are prepared to build digital capability within their company 22% believe that recruiting digital talent within their company as a top three priority However there is a growing digital skills gap which may make recruiting more difficult in the future Deloitte’s View Medtech companies need to develop a new, digital-first skill set, including multidisciplinary talent from creative and scientific backgrounds. “The health care system is not fully ready for Io. T, [and] has a lot of catching up to do. [It] does not have the technical capabilities, nor the professional technical manpower to handle and manage the technology. Technology is moving at faster pace than the healthcare system and the regulatory system. ” Cx. O, Medtech company 15

Maintaining trust in a digital age Patients’ willingness to share data is critical to

Maintaining trust in a digital age Patients’ willingness to share data is critical to the long-term success of connected medical devices. For this to happen patients need to have trust in how their data will be used. Medtech must remain vigilant in protecting patient data as more and more of their devices become connected. Respondents from our survey suggest: 69 % agree that patients will be the owners of their data 34% 0% 20% 35% 40% 60% Strongly agree Neutral Strongly disagree Deloitte’s View Medtech companies need to earn the trust of providers and patients by developing strong privacy and security arrangements. 17% 80% 100% Agree Disagree 80 % of respondents believe that their company is prepared to gain patient trust in the willingness to share data “There is always something you don’t know around managing and using data. Exposure to more use cases will definitely help us. ” Cx. O, Medtech company 16

Improving the adoption of medical technology at scale Respondents from our survey suggest: 71%

Improving the adoption of medical technology at scale Respondents from our survey suggest: 71% agree that healthcare providers and clinicians are not ready to utilise data generated from connected medical devices 26% 0% 45% 20% Strongly agree 17% 40% Agree Neutral 60% Disagree 80% 100% Strongly disagree Deloitte’s View Medtech companies need to be able to provide robust and reliable evidence to health care organisations on how technological advancements and the data generated by connected devices improves the efficiency, cost-effectiveness of care delivery. 17

Medtech’s role in transforming health care Collaboration 87% of respondents agreed Advanced analytics 64%

Medtech’s role in transforming health care Collaboration 87% of respondents agreed Advanced analytics 64% of respondents believe developing a stronger analytical capability is a top three priority for their company Joining the dots between connected medical devices and health care IT Devices that benefit both patients and hospital providers 88% of respondents agreed Business model transformation 90% of medtech companies are implementing new business models 18

The future for Medtech and the Io. MT Cost-effective and purposefully-designed, technology-enabled health care

The future for Medtech and the Io. MT Cost-effective and purposefully-designed, technology-enabled health care solutions can improve the wellbeing of millions of people and radically change the way services are delivered to patients 19

Contacts Authors Karen Taylor Director, UK Centre for Health Solutions Mark Steedman Manager, UK

Contacts Authors Karen Taylor Director, UK Centre for Health Solutions Mark Steedman Manager, UK Centre for Health Solutions Matthew Thaxter Analyst, UK Centre for Health Solutions Amen Sanghera Analyst, UK Centre for Health Solutions Contacts John Haughey Partner, UK and NWE Life Sciences and Health Care Leader Hanno Ronte Partner, Monitor Deloitte Emma Bairstow UK Medical Technology Leader 20

This publication has been written in general terms and we recommend that you obtain

This publication has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Deloitte LLP accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication. Deloitte LLP is a limited liability partnership registered in England Wales with registered number OC 303675 and its registered office at 1 New Street Square, London, EC 4 A 3 HQ, United Kingdom. Deloitte LLP is the United Kingdom affiliate of Deloitte NWE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NWE LLP do not provide services to clients. Please see www. deloitte. com/about to learn more about our global network of member firms. © 2018 Deloitte LLP. All rights reserved.