"The industry is facing national, European and global challenges that impact innovation capacity and its competitiveness, but will also bring major opportunities driven by the needs of health systems, clinicians and patients."
CHRIS MORGAN, PA'S HEALTHCARE TECHNOLOGY AND INNOVATION EXPERT
The medical technologies sector faces profound commercial challenges in the coming years – but it also has the opportunity to play a major role in the transformation of healthcare. In the first of two articles, Chris Morgan looks at how the industry can realise its full potential.
The medical technologies sector is currently one of the most dynamic sectors of the healthcare industry. Its products are of fundamental importance to society, providing innovative solutions for diagnosis, prevention and treatment. The medtech industry is also a major employer, contributing significantly to all major economies.
Now the industry is facing national, European and global challenges that will have an impact on its innovation capacity and its competitiveness, but will also bring major opportunities driven by the needs of health systems, clinicians and patients. Can medical technologies realise their full potential?
This two-part article discusses the challenges affecting healthcare and the medtech sector, and the trends driving the future of medical devices. The first part examines the challenges affecting the healthcare economy and the forces providing new opportunities.
The medtech contribution
The diversity and innovation of the medical technologies sector contributes significantly to the quality and efficacy of healthcare provision.
In the UK, the medtech industry base provides a positive trade balance and is part of a vibrant life sciences industry that is recognised as a key contributor to the UK economy. Over 2,000 medical technology companies, mostly SMEs, directly employ around 50,000 people and indirectly support an additional 250,000. Medical technology companies also undertake significant amounts of manufacturing and R&D in the UK.
Medical technologies – from syringes and wheelchairs to pregnancy test kits, pacemakers and X-ray machines – play an essential role in the provision of healthcare. It has been reported that there are 10,000 different types of medical device in use today.
There is also a growing integration and convergence of therapeutic, diagnostic and device technologies. New devices for diagnosis, monitoring and drug delivery will empower this revolution, enabling a much better understanding of patients’ reactions to diseases and therapeutic drugs.
Health economy challenges
According to a recent EU report, key healthcare economy challenges include:
1. Challenges and opportunities for the healthcare payer and new medical technologies and developments
developing a shared understanding of future healthcare goals
overcoming health inequalities
societal changes (e.g. the ageing society)
emergence of new medical technologies (e.g. e-health)
2. Balancing patient needs and financial sustainability of healthcare provision
enhancing patient access to medical technologies
appropriately measuring the value of medical technologies
factors such as pricing and reimbursement policies and purchasing and payment mechanisms
3. Competitiveness and innovation within the medtech industry
global innovation and competitiveness
the green economy
The crunch factors
Pressing economic challenges facing both the healthcare payer and the industry suppliers themselves are determining new dynamics in the medtech sector and driving the future trends in its products and services. Examining these challenges enables us to identify the drivers for change. The primary factors are: societal change, clinical challenges, healthcare delivery challenges, personalised medicine, device access challenges and the green economy.
1. Societal challenges are affecting the sustainability of healthcare systems.
A number of current societal changes are likely to impact on the sustainability of healthcare systems in the future: demographic factors (e.g. the ageing population and falling birth rate), the growing shortage of healthcare professionals, the increase in care provision from outside the family and the pressure to reduce inequalities in healthcare provision. All of this requires the quality of care to be improved by implementing new clinical guidelines with the aim of reducing the wide variation of current clinical practice.
2. Clinical challenges are increasing financial pressure on healthcare provision.
Age and ‘lifestyle’ related chronic diseases represent a growing percentage of the disease burden. The increasing prevalence of chronic diseases, coupled with medical progress transforming many previously fatal diseases into chronic conditions, is increasing the financial pressure on healthcare systems and driving the need to change healthcare delivery models.
3. Healthcare delivery challenges are driving recourse to new medical technologies.
The fundamental delivery challenge is to achieve ‘more with less’. Resource constraints, coupled with the need to improve the quality of care, are driving health providers increasingly towards the use of new medical technologies. The focus is on prevention and further development of ‘efficiency-based medicine’. Key to this is:
timely uptake of innovative technologies that improve the efficiency and quality of healthcare management around patient safety and the productivity of healthcare systems
development and use of clinical, economic and societal evidence for medical devices, increasing the use of appropriate screening and early diagnosis programmes to improve patient outcomes and drive efficiency.
The development of "efficiency-based medicine" implies a steady evolution of the healthcare delivery model through early diagnosis and accurate treatment, ambulatory care, telemedicine or e-health, minimally invasive surgery and health management. All of this will mean broadening the range of professionals involved in using technologies in healthcare settings. Patient empowerment will also become a critical factor for improving both the economics and the quality of care – requiring patient compliance, decision-making, self-care and self-management of chronic diseases. This puts the focus on patient needs and patient-centred approaches in healthcare systems.
Harnessing technologies to manage medication, monitor compliance and trigger reimbursement will be another essential part of the new healthcare delivery models. Diagnostic and monitoring devices will help to arm healthcare providers with much better knowledge of how an individual tolerates a particular drug and how amenable their condition is to a particular therapeutic regimen.
4. Personalised medicine will be supported by medical devices and new medical technologies.
A pharmaceutical revolution is taking place, with many market opportunities for drugs being rooted in technological advances that change the way in which drugs are prescribed and taken and their effectiveness is measured. We see three tiers of healthcare emerging, driven by economic constraints, pressure to improve the quality of care, deeper regulation and technological innovation:
proprietary personalised medicine – driven by co-operation between drug and medical device companies
generic personalised regimens – using low-cost generics targeted to provide optimum care with close monitoring of outcomes
individual responsibility for wellness – driven by health education and stimuli for healthy living.
The future will see a paradigm shift in healthcare policies and delivery, supported by a medical technology revolution that is likely to result in:
a shift from acute treatment to new models for healthcare delivery and health maintenance – prevention, accurate early diagnosis and effective treatment
a comprehensive, patient-centred disease management approach that leads ultimately to health management throughout the individual’s life.
The overall visibility of medical technology’s contribution to healthcare will be strengthened, with increased awareness of its value for better health and improved quality of life.
5. New delivery models present challenges for medical technologies in terms of access and effectiveness.
Providing access to medical technologies is a complex challenge, dealt with in different ways according to the type of condition and treatment, but the primary challenge for access is to make safe, innovative, useful and affordable products available on the market. Time to market is an important aspect, including the time to obtain regulatory approval. Regulatory frameworks can particularly affect the introduction of innovative medical technologies.
Measurement of the value of medical technologies requires a shared vision – especially in the use of a health technology assessment system (HTA), which should serve patients by researching best value and best practice. If used appropriately, HTA can be a useful tool to help decision makers ensure fair access to medical interventions and make the best use of scarce resources. HTA can improve the balanced perception of clinical and societal value, providing an independent analysis of the effectiveness and cost-effectiveness of new medical technologies.
However, the innovative element of a product is not always appropriately captured in HTA methodologies. Decisions about reimbursement are too often made on the basis of short-term considerations and do not reflect the need for new models for healthcare delivery. In support of device and service innovation, it will be important for reimbursement decisions to be based on proven value in terms of the expected long-term outcomes for patients. Value-based decision making must adapt to the rapid innovation cycle of medical technologies, with the benefits for disease prevention being recognised.
Tendering processes that recognise the value of new medical products across the patient pathway will be a crucial, but challenging, factor in determining access to innovative technologies and treatments. In the current economic climate procurement procedures with an increased focus on product price and little consideration of added value do little to stimulate innovation. This is a particular challenge for SMEs.
6. Environmental challenges continue to drive the uptake of green technology.
The current global economic crisis may have pushed climate change out of our immediate consciousness, but there remain clear environmental challenges driving the development and uptake of green technology. In a time of healthcare delivery and value challenges, green technology is also incentivised by straightforward economic considerations. Medical product and device waste poses a significant risk to the environment, and the costs of waste and its management are increasingly under scrutiny.
Medical devices represent a growing percentage of healthcare and consumer products, the majority of them currently being single-use disposables. Addressing the full life cycle of medical technologies so that their environmental impact is minimised represents an important innovation challenge facing the developers and manufacturers of these technologies.
These are the key challenges and opportunities the medtech industry faces.
Part 2 of this article will focus on the trends that are shaping the sector’s future.
Chris Morgan is an expert in Healthcare Technology & Innovation at PA Consulting Group.