New services and problem-solving capabilities will produce new buyers for medtech. Leading companies are placing bets on business model innovation and, in some cases, sharing the risk for commercial success by partnering with health system customers. Some companies are using new social, mobile, analytic, and cloud technologies to get closer to their customers.
What started in 2011 as a marketing effort to give sales representatives a single tool to use when calling on clinicians is now in its fourth iteration and proving to be a powerful decision-making tool for clinicians.
Covidien’s energy-based device business saw an opportunity to become a preferred partner of providers by using mobile and cloud technologies to improve how clinicians and hospitals make purchasing decisions based on peer-reviewed clinical data. It introduced a mobile application that creates a one-stop shop for all of Covidien’s clinical marketing materials and analysis tools to make purchasing the company’s surgical devices easier and faster. “We wanted to be proactive in making the purchasing process better,” said David Wang, vice president of strategy, insights, and business development for Covidien Surgical Solutions. “We knew our sales representatives were spending a lot of time using multiple marketing tools to explain the clinical benefits of the same device, and we wanted to find a way to get the most out of conversations with physicians.”
By making clinical evidence and analysis tools available to an increasingly mobile clinical workforce, the company is helping providers, value analysis committees, and procurement departments make faster, more informed purchasing decisions. The tool helps customers:
Get up to speed on prevailing evidence about Covidien’s surgical devices
The app combines all published research papers and more than 300 peer-reviewed publications on Covidien’s surgical devices. Covidien’s core reference library relies on cloud technology so the latest literature and product pricing is available. Clinicians can search the literature for clinical evidence on Covidien’s surgical devices and share article links with colleagues to build support for the purchase.
Simulate impact on patient care, operating room efficiency, length of stay, and cost
Covidien’s clinical affairs team created easy-to-use tools for clinicians to see the impact of the company’s devices on patient outcomes and the hospital’s bottom line using data the hospital provides. For example, clinicians can compare the effect of the use of the company’s vessel-sealing device—which evidence shows can reduce the amount of blood loss during surgery—to the use of sutures. Clinician can also estimate how long a patient will spend in the operating room and afterward in the hospital for recovery. Clinicians can customize the analysis by loading procedure and billing codes into the tool. They can also compare the pricing of similar or alternative products.
Expedite the purchasing approval process
Using the tool, clinicians can attach the customized analysis to a purchase request form and route it to the appropriate decision-makers for approval. Procurement personnel can approve the analysis and forward it to other hospital stakeholders or request a 90-day trial.
The tool has been used extensively and customer feedback about having a single place to find relevant information has been overwhelmingly positive, according to Wang. The app is also saving Covidien’s sales representatives time, reducing administrative costs, and increasing sales. Covidien has plans for continued modification and expansion of the tool and is in the midst of taking the app to its vascular salesforce, bringing ease of interaction with Covidien to a whole new line of customers.
GE’s $6 billion commitment to improve quality, access, and affordability for healthcare consumers marches to a unique drumbeat. Born in 2010, healthymagination is the incubator the company created to nurture truly innovative ideas to the point of commercialization. It directs resources to venture investing, incubation, and thought leadership.
“It isn’t that we are creating the inventions or coming up with all of the ideas, but we’re putting the engine into place to manage innovation and bring all of these ideas together and have the ability to fail, early and fast,” said Sue Siegel, GE corporate officer and chief executive officer of Healthymagination. “We are experimenting and piloting new ideas, spending less money, to produce successful outcomes.”
Healthymagination operates outside of GE’s core business unit structure, and is designed to take risks and commit to longer-term ventures. Healthymagination’s projects have a three-year or longer horizon. This allows healthymagination the ability to explore new trends, develop pilot programs, without the quarterly reporting pressures to shareholders.
Once novel ideas are proven worthy and ready for commercialization, healthymagination transfers them to the core business units to take them to market. “Healthymagination is all about bringing GE’s scale to transform healthcare around innovative disruptive solutions. Industrialization is the process of being able to repeat and then scale,” said Siegel. “Innovation hasn’t been an area that has been industrialized, but we believe it can be. If we crack this, I think we can crack this for a lot of people, not just GE.”
Partnership cannot be overemphasized in healthymagination’s approach. The incubator collaborates with GE’s Global Research Center, forms alliances with startups via GE Ventures- Healthcare, and works with the university clusters and entrepreneurial incubators that have seen ideas work in other industries and want to apply them to healthcare. “It used to be that the value of companies derived from what they themselves could invent,” said Siegel. “I think that the world has changed. It is how you partner in this new era that is going to really determine the winners over time.”
Medtronic’s European division discovered that meeting customer needs and adding value to hospitals and patients involved a greater focus on innovation and a higher tolerance for risk and failure.
“I was in a meeting, and I told people that Medtronic needs to switch from a medical device company to a healthcare company,” said Rob ten Hoedt, senior vice president and president, Europe, the Middle East, Africa & Canada. “If we want to be a part of the solution of the delivery of healthcare, then we need to risk-share, and we need to go into this market in a completely different way and with a completely different model. And I remember everybody looking at me like I was from a completely different planet.”
Medtronic realized it needed to expand its role in the care continuum by integrating information and services for diagnosis, treatment, and disease management. The company studied how it could improve the efficiency of technology delivered at the point of care, and it established a new business unit called Hospital Solutions. Soon the unit launched the catheterization laboratory (“cath lab”) management program in which Medtronic and hospital systems build in risk sharing for efficiency savings—guaranteed and underwritten—and clinical outcomes. The contract for the partnership outlines benefits and cost savings for both parties, and hospitals pay per procedure.
Medtronic sets up a new cath lab within a hospital, coupled with the latest technology and equipment, and maintains the facility. The medical device manufacturer also deploys a Medtronic team to help the hospital implement lean six sigma programs to improve efficiency. Hospitals can choose from a menu of other Medtronic offerings, including:
Medtronic took big financial and operational risks with this endeavor, but not without reward. On average, efficiency savings range between 20% to 25% at partner hospitals. Patient throughput times and waiting lists have decreased. Physician and nurse satisfaction have improved, and patients are happier with their experience.
Medtronic runs more than 40 cath labs and is scaling the program and expanding its services to include post-therapy, home care, and monitoring. “Our Hospital Solutions group is clearly a business model innovation incubator that is now growing to become a business unit delivering these services,” said ten Hoedt. “We have developed the model ourselves and we are scaling up rapidly, also outside of Western Europe.”