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In 2017, IoT Is Still the Next Big Thing in Healthcare

The healthcare industry often hesitates before embracing new technology. The promise of connected sensors, however, may be too great to ignore.

“Nothing has changed, and yet everything is different.” —Jean-Paul Sartre

Which major industry will be next in line for disruption? The taxi and hospitality industries, the print media business, and brick-and-mortar retail have been forced to grapple with Uber, Airbnb, and online publishing, respectively. But the healthcare sector has been more resistant to disruptive change than many other industries. If you want to get a ride to the airport, you can whip out your phone (or give a voice command to a virtual assistant like Alexa) and hail an Uber. But if you get sick, you probably still take off work and go to the doctor. You probably don’t consult with your physician via video chat or even email—even though these technologies have been mainstream for years. And medical care, especially in the United States, is still jaw-droppingly expensive. In 2016, the United States spent some 18% of its GDP on healthcare, amounting to some $25,000 per family. Yet we are not getting what we pay for. Roughly one-third of U.S. healthcare spending can be chalked up to waste, fraud, or abuse, according to studies from the Institute of Medicine, Rand Corp., and CMS. Meanwhile, the U.S. healthcare system is ranked 37 in the world according to the World Health Organization.

Dermot O’Shea, Joint CEO for Taoglas, says healthcare stands on the cusp of considerable change in 2017. Acknowledging that the market has been slower to adopt Internet of Things technologies than other sectors, O’Shea says that awareness of the benefits of such technologies is apparent to all parties involved in healthcare. “There is a huge amount of awareness everywhere in the decision-making process, including government, insurance providers, medical device and pharmaceutical companies, medical professionals, and patients themselves,” he says. While we might never see a healthcare equivalent to Uber, change is coming nonetheless.

While there is an air of uncertainty in the United States following the election of Obamacare foe Donald Trump, there is a clear demand for sweeping healthcare reform. A recent PwC survey supports the latter point. 76% of consumers want President-elect Trump to make healthcare a priority after he takes office, according to PwC.

Boosting Healthcare Efficiency Still a Priority

No matter what happens with the Affordable Care Act—Obamacare—there will likely be continued pressure to rein in costs. Repealing and replacing Obamacare could cost almost $550 billion over ten years, according to the Committee for a Responsible Federal Budget, which could provide further incentives to turn to technology to boost the efficiency of healthcare.

While the concept of value-based care was an important part of Obamacare, the notion has already become entrenched in the healthcare landscape. Businesses ranging from hospital owners to medical device companies have been quickly consolidating to leverage economies of scale. While the consolidation is likely to continue, healthcare business owners could look to connected sensor technology to spur further savings. As McKinsey has observed, connected medical devices can be integrated into a medical ecosystem enabling clinicians to offer continuous care and remote management of patients. A number of pharmaceutical companies are also investing in digital health technologies. Eli Lilly, for instance, is working on smart injectables.

This trend could build in 2017. The costs of connected sensors are continuing to drop and, as a result, it is easier to make a business case for them, O’Shea says.

Overcoming Hurdles

O’Shea also points out that there are still a large number of decision-makers in healthcare, which could slow adoption. One barrier is how the government and private insurance companies have reimbursed for care.

Security, of course, is another hot-button topic. In the past few years, several hospitals have been besieged by ransomware attacks. The FBI and other government agencies have also released warnings relating to the cybersecurity of medical devices.

Stepping Out of the Comfort Zone

In any case, it is apparent that wireless technology is not a part of device makers’ core competency. Makers of connected medical devices, already dealing with a thicket of regulations and requirements, must now worry about cybersecurity and even more types of testing when connecting their devices. Companies making devices that use cellular signals must satisfy FCC requirements but also obtain carrier certification. “North American network operators insist that you test your medical device can pass the same types of tests designed for smartphones,” O’Shea says. A medical device company might think their product is ready to launch but then fail the carrier test and have to redesign their whole product, he says.

Another challenge for medical device companies is antenna design, which can be a struggle for even big-name tech companies. “Apple has dozens of antenna engineers, and they still had problems with the iPhone 4,” O’Shea says. In addition, the equipment to test whether a device is 4G compliant can be costly.

Despite these challenges, O’Shea expects to see more examples of the Internet of Things making its way into the healthcare field. For many medical device companies battling with falling margins from selling legacy technology, this transition is a necessity. Many device firms are expanding the scope of their product and service offerings to bolster their business. “It seems nobody wants to be just a medical device manufacturer anymore,” O’Shea explains. “They want to make the device, the app while making use of the cloud and finding new ways to use data.”

The healthcare industry ultimately must embrace digital technology to meet the healthcare needs of the future, which are less about selling expensive widgets and more about improving the quality and efficiency of healthcare while improving the ROI of healthcare-related spending. Achieving these objectives takes a systems approach, which requires collaboration among the various players across the healthcare landscape. For medical device makers, this requires forging partnerships. “The medical device companies that are successful excel at partnering,” O’Shea says. “They talk to the antenna companies, test labs, see what works well, what doesn’t.”

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