What do we mean when we say innovation? Let’s be real. Innovation is a magic word that’s become a stand-in for everything. In medtech, there are usually three big ideas that get slapped with an innovation banner: Introducing new technology or products, introducing process improvements, and introducing supply chain improvements. Each of these is a source of anxiety and each could (and do) have entire books dedicated to exploring them.
New technologies cost money, time, R&D dollars, and they are pretty much the main reason companies exist. When the media, analysts, and stakeholders say innovation, they usually mean the new technology and products. If the technology is from a small company it can become a significant voice in the industry. One such company is Proteus Digital Health, which has been extremely successful in gaining recognition for its revolutionary technology. But there are many small companies or start-ups that have trouble getting beyond a good idea. Ernst and Young’s Pulse: medical technology report 2015 notes a “persistent vacuum in early-stage venture capital funding that continues to threaten the future of medtech’s innovation ecosystem.” The report says that what investment does come through has “has shrunk for the second year in a row; it comes from a dwindling number of sources; and it is increasingly concentrated among a smaller group of successful fundraisers.”
Technology commercialization expert Sean MacLeod says the big challenge for start-ups is finding the value proposition in their product. MacLeod says there are many good products that solve a problem, but that companies need to think beyond solving a problem and think bigger about how the technology fits in the healthcare system. Then, he says, you have to go after a lot of little dollars.
The second type of innovation is process improvement. It also costs time and money, but eventually should help alleviate the money and time spent on everything else, including manufacturing, regulatory processes, quality control, and administration. If you hear terms like LEAN, Agile, and Kanban, you are talking about innovations that help a company run better, and be more profitable. When a CEO says “innovation” and he/she means process improvements, it is likely that your question is, “How will it affect me and my ability to do my job?”
The third type of innovation is related to the others. Supply chain management often refers to the down supply; that is, managing you supply chain and ensuring that your suppliers are functioning efficiently, safely, within regulatory standards, and making continuous improvements to serve you better. But lately, it also means to look up the supply chain and see if and how medtechs can serve their clients better. This supportive innovation might be the key to market success. It is certainly equally important as product innovation in today’s healthcare environment.
All of these types of innovation are a source of anxiety for established medical technology companies. Ernst and Young’s report highlighted innovation spending, saying “to accelerate growth beyond the single-digit revenue gains achieved in 2013 and 2014, medtechs will need to invest even more in innovation and do so across the industry’s value chain.”
The EY report essentially came to the same conclusion: “While clinical efficacy is a must, the true value in medtech today is a company’s ability to provide information, services, and other assistance to customers to solve additional problems such as improving diagnostics, increasing operating room efficiency, reducing length of hospital stays, monitoring patients remotely, and keeping people out of the hospital.”
I’ll be exploring these ideas and how they play into the design and development of medtech innovation in more depth in the coming months.
