Medtech and the Internet of Medical Things - How connected medical devices are transforming health care
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Medtech and the Internet of Medical Things How connected medical devices are transforming health care July 2018
Contents Foreword 01 Executive summary 02 Part 1. Connectivity is transforming the medtech industry 08 Part 2. Challenges and opportunities for medtech 16 Part 3. Connected medical devices are transforming care 31 Part 4. The future for medtech and the IoMT 40 Appendix: Nomenclature and medical device classifications used in the report 47 Endnotes 48 Contacts 52 Deloitte Centre for Health Solutions The Deloitte Centre for Health Solutions is the research arm of Deloitte LLP’s Life Sciences and Health Care practices. Our goal is to identify emerging trends, challenges, opportunities and examples of good practice, based on primary and secondary research and rigorous analysis. The UK Centre’s team of researchers seeks to be a trusted source of relevant, timely and reliable insights that encourage collaboration across the health value chain, connecting the public and private sectors, health providers and purchasers, patients and suppliers. Our aim is to bring you unique perspectives to support you in the role you play in driving better health outcomes, sustaining a strong health economy and enhancing the reputation of our industry. In this publication, references to Deloitte are references to Deloitte LLP, the UK affiliate of Deloitte NWE LLP, a member firm of Deloitte Touche Tohmatsu Limited.
Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Foreword
Welcome to the Deloitte Centre for Health Solutions’ report Medtech and the Internet of
Medical Things: How connected medical devices are transforming health care.
Patient interactions with the health care system often involve interactions with equipment and devices – from syringes and bandages,
blood pressure monitors and pregnancy testing kits, to surgical instruments, pacemakers, artificial joints, and MRI and CT scanners. The
medical technology (medtech) industry designs and manufactures a wide range of products to diagnose, monitor, and treat patients and is
instrumental in helping health care organisations achieve better patient outcomes, lower health care costs, improved efficiency and new
ways of engaging and empowering patients.
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 (IoMT) – a connected infrastructure of medical
devices, software applications and health systems and services. The IoMT is rapidly transforming medtech’s role and relationships within
health care. More specifically, connectivity between sensors and devices is enabling health care organisations to streamline their clinical
operations and workflow management, and improve patient care, even from remote locations. Provided medtech companies can convince
clinicians and patients of the value and benefits of connected medical devices, the pace and scale of health care transformation will be
exponential.
New regulations, digitisation, data analytics, artificial intelligence, automation and the development of value-based health care represent
some of the numerous challenges as well as opportunities facing the medtech industry. Consequently, medtech companies from start-ups
to corporates are reinventing themselves to remain competitive. New strategies are needed to harness data provided by digitally-enabled
products and make their business and operating models relevant and sustainable. This will help companies develop evidence of better
health outcomes at reasonable cost to obtain price reimbursement and gain market access. For some medtech companies this means
shifting from a product-based model to a value-based system driven by software-based services and solutions.
Connected medical devices will have a profound impact on patients, clinicians and the life sciences industry. Our report focuses on how
the IoMT 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. It outlines how medtech companies can get digital transformation right – whether through
adapting their existing business models, inventing new ones or both. The industry’s future will depend on its ability to demonstrate to
providers and payers how connected medical devices contribute to the new value-based paradigm.
Hanno Ronte Karen Taylor John Haughey
Partner Director Lead partner
Monitor Deloitte Centre for Health Solutions UK and North West Europe
01Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Executive summary
A series of technological and cultural revolutions are allowing technology and
people to be better connected to one another, leading to the development of the
Internet of Things (IoT) – a network of connected, smart devices and objects that can
communicate with each other and automate key tasks.
Medical technology (medtech) companies manufacture more than While the IoMT has the potential to help alleviate some of the cost,
500,000 different types of medical devices, including wearable access and care coordination challenges facing health care, the
external medical devices (skin patches, insulin pumps and blood generation of data points through millions of connected medical
glucose monitors), implanted medical devices (pacemakers and devices will have little impact unless data can be turned into
implantable cardioverter defibrillator devices) and stationary medical actionable insight.
devices (home monitoring devices, connected imaging devices and
scanning machines). Most patient interactions with the health care More specifically, connected medical devices are a key enabler
system involve the use of medical equipment and devices. across the six predictions in our report The future awakens: Life
sciences and health care predictions 2022. The extent to which the
Like most other industries, the health care sector is increasingly predictions are realised is heavily dependent on the continued
realising the transformative nature of IoT technologies, as advances innovation and adoption of connected medical devices at scale.
in computing and processing power, wireless technology and
miniaturisation drive innovation in connected medical device MarketsandMarkets valued the IoMT market at $41.2 billion in
development. Connectivity enhancement can be applied to 2017 and expects it to rise to $158.1 billion in 2022. The connected
most categories of medical devices. The rise in the numbers of medical devices segment (helping to diagnose, monitor and treat
connected medical devices, together with advances in the systems patients) of the IoMT is expected to rise from $14.9 billion in 2017 to
and software that support the capture and transmission of medical $52.2 billion by 2022.
grade data, connectivity technologies and services, have created
the Internet of Medical Things (IoMT). The rise of the IoMT comes at a time when health care is becoming
increasingly expensive, with global health care spending expected
The IoMT brings together the digital and physical worlds to improve to grow 4.2 per cent per year, from $7.1 trillion in 2015 to $8.7
the speed and accuracy of diagnosis and treatments, and monitor trillion by 2020, largely due to a growing and ageing population,
and modify patient behaviour and health status in real time. It also with more people living longer but with multiple comorbidities.
improves health care organisations’ operational productivity and As a result, without radical transformation, health care in many
effectiveness by streamlining clinical processes, information and countries risks becoming increasingly unaffordable.
work flows.
The medtech industry has an important role to play in helping
Connectivity between sensors and devices aids real-time patient to reduce costs, improve the quality and efficiency of care and
care, even from remote locations, while improving communication support the shift to value-based care (VBC). However, the industry
within and between medical facilities. The large volume of data also faces a number of systemic challenges and opportunities that
generated creates opportunities for new models of care and need to be addressed for the full value of the IoMT to be realised.
supports the delivery of 4P medicine – medicine that is predictive, These include:
preventive, personalised and participatory.
•• Developing an in-depth understanding of end users – as
The IoMT brings together people (patients, caregivers and more providers adopt VBC models, the speed of adoption and
clinicians), data (patient or performance data), processes (care integration of connected medical devices will increase. Data and
delivery and patient support) and enablers (connected medical insights on patients and processes is key to VBC. Challenges
devices and mobile applications) to deliver improved patient include the extent to which an organisation’s IT infrastructure
outcomes efficiently. 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. Medtech companies need
02Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
to develop a deep understanding of the end-user and create •• Successfully navigating regulatory change – managing the raft
business models and scenarios that demonstrate how their new of regulatory change occurring, particularly in relation to the new
and existing devices not only improve patient outcomes but also European and US regulations is imperative for both developing
create value for key health care stakeholders. connected medical devices and the success of the IoMT.
Managing the impact of regulatory change requires medtech
•• Developing new funding, business and operating models companies to take a proactive and well-planned approach. If an
– as health care organisations focus more on improving quality innovation model is to be sustained, companies need to build
and reducing the costs of providing care, they require medtech engagement with regulators into their innovation model and
companies to demonstrate greater evidence on the added involve clinicians and patients in product design.
value of both new and enhanced products. We commissioned
a survey that found that medtech companies are having mixed •• Attracting digital talent and building digital capability – there
results in demonstrating the value of their connected medical is increasing concern among key stakeholders that a growing
devices, although some are engaged in providing services rather skills gap will delay the deployment of IoMT solutions and
than just products. Different types of innovation will require constrain market growth. If medtech companies are to remain
different business models, and progress will depend on both the competitive they need to develop a new, digital-first skill set,
innovators themselves working in new ways to take on risks and including employing data scientists and multidisciplinary talent
rewards, and the evolution of existing payment systems by both from creative and scientific backgrounds. Accessing this talent will
public and private payers. require more resourceful recruitment and retention strategies,
including collaborations and partnerships with a diverse range
•• Understanding interoperability requirements – of existing and emerging players, especially academia, data-first
interoperability is arguably the biggest challenge for medtech, tech companies and innovative new start-ups.
including complying with various national and international
standards and protocols around the exchange and use of data. •• Maintaining trust in a digital age – global technology companies
There are also technical challenges such as creating an integrated and other new entrants into the health care ecosystem are
governance framework and obtaining consent for access to becoming more involved in the connected medical device industry,
health care data. For interoperability to work effectively, the and traditional medical device companies are becoming more
direction of travel should be towards open platforms, based involved in data management and analytics. Consequently, as
on open data standards. This will enable payers, providers medtech companies develop strategies and services based on
and technology vendors to come together to make data more the generation and transmission of patient data, they need to
available to each another. ensure they demonstrate clearly to patients, the public and health
care professionals that the data are being protected and used
•• Maintaining cybersecurity – cybersecurity issues are pervasive responsibly. Medtech companies need to develop key principles
across medtech, as the increasing numbers and capability of of data management and consent that give patients control over
connected medical devices present additional risks for data their own data, including the right not to share.
security. The scale and cost of breaches is often significant and
far reaching. Although four-fifths of our survey respondents •• Improving the adoption of medical technology at scale
considered they were reasonably well prepared to deal with – a key challenge for medtech is ensuring that health care
the cybersecurity of their devices, other research suggests organisations, clinicians and patients understand the added-
many stakeholders do not have a strong understanding of such value of connected medical devices and use them at scale to
risks, how to prevent them and what to do once a risk has been drive better economics and patient outcomes. Difficulties include
identified. Regulators acknowledge that cybersecurity threats the lack of governance standards and sufficient, robust evidence
cannot be completely eliminated, and stakeholders need to work that demonstrate that connected medical devices are more cost-
together and adopt a more proactive approach to managing effective, and how they can help drive the VBC agenda.
risks. Medtech companies need to adopt a ‘security by design’ This includes ensuring that the devices are intuitive and easy to
approach and establish real-time monitoring, cyber threat use and, where necessary, providing training and support to staff
modeling and analysis, threat mitigation and remediation. to embed the skills needed to optimise the use of the technology.
03Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Creating an effective IoMT at scale requires collaboration and •• Applying advanced analytics to the data generated from
partnership working between patients, providers, payers, pharma, connected medical devices to provide critical insights and
academia and other medtech manufacturers. Our research empower better decision-making – mining, managing and
identified multiple case studies that demonstrate medtech’s analysing a vast array of data from medical grade wearables,
important role in the IoMT and the conditions that lead to the connected imaging devices and monitoring devices is a key part
adoption of connected products and services. The key enablers of deriving value from the IoMT. The insights generated by linking
driving the IoMT and the transformation of health care include: connected medical device and health data sets can play a key
role in aiding health systems to reduce costs and improve quality,
•• Collaboration between health care providers and medtech identify populations at risk, connect with consumers and better
is key to the effective deployment of the IoMT – integrating understand performance.
connected medical devices into established care pathways is
challenging and requires significant cooperation across the •• Medtech services that demonstrate improvements in patient
IoMT ecosystem. Collaboration strategies such as partnerships outcomes and reduce health care costs – medtech companies
and joint ventures help ensure the effective transmission, are utilising the increasing sophistication of connected medical
aggregation, analysis and management of data from connected devices, improved interoperability across health care organisations
devices. These collaborations allow all stakeholders to improve and advances in analytics to develop service orientated solutions
their understanding of patient needs and deliver more that provide the tenants of VBC. These services include managed
proactive cost-effective care. Our survey respondents ranked catheterisation laboratories and transformations from a product
collaborations with health care providers as the most important manufacturer to a health care provider helping improve patient
for the development of their respective businesses models, outcomes and reducing the costs of health care.
followed by collaborations with health care payers and other
medtech companies. How will the IoMT evolve to impact care?
The health care and life sciences industries are in transition from
•• Connected medical devices benefit patients, providers and reactive and largely episodic models of care that are proving
payers – partnerships with health care providers allow medtech increasingly costly and inefficient to operate, to care models
companies to understand the clinical context in which devices that are proactive, digitally-enabled and deliver better value for
are used. Medical devices are almost always designed for a patients. Medtech companies and the IoMT can capitalise on
specific application. Adding connectivity to a device allows data the possibilities presented by these changes to help to connect
to be generated on a patient’s condition and the effectiveness patients, providers and payers and enable them all to become
of the health care providers operations. Being able to quantify, more patient centric, productive and cost effective.
contextualise and communicate these interactions allows the
medtech industry to provide solutions that deliver value to all These disruptive technologies are changing ways of working across
health care stakeholders. the whole IoMT ecosystem. Big data, AI, mobile applications, 3D
printing, advanced sensors and other technologies will continue to
•• Joining the dots between connected medical devices and create new opportunities for medtech companies. Voice technology
health care IT systems – a number of large medtech companies is being adopted faster than any previous technology from chatbots
have developed connected ecosystems that act as a common to doctor visits, to home health care. At the same time, large
platform to share, aggregate, and view data to drive both technology companies are using their vast reach and expertise to
clinical and operational value. Linking disparate sets of data create an interoperable electronic health record that can integrate
that sit within health care organisations is central to achieving data from a variety of sources and enable real-time access. Although
connectivity at scale. robotics and automation will inevitably replace some jobs, they
will also add new ones that blend employee skill sets and the
development of transferable skills.
04Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
A growing number of medtech companies are capitalising on the Other companies are utilising IoMT capabilities to aggregate data
above trends to develop service-orientated solutions that support and offer consultative services and predictive analytics, including
VBC. Often these services align closely with the therapeutic opening up health data to organisations that have typically found
expertise and specialised products of the organisation enabling it difficult to gain access to data outside of their own organisation.
medtech to maintain high quality patient outcomes while reducing These and other developments provide clear opportunities for
costs compared to similar services run by traditional health care medtech to transition from a provider of innovative products to an
providers. insightful partner in health care (see Figure below).
Connected medical devices are helping medtech companies move from innovative product suppliers to insightful partners
in health care
Medtech as an innovative product supplier
Clinical advantage Broader value creation Operating leverage
Can meaningful clinical Can differential value be created Can innovation be adopted
advantage be demonstrated? for the system? at scale?
Company transition
Key capabilities required
Deep understanding of care delivery Outcomes measurement and Stakeholder engagement, collabora-
models and how care is delivered end-to-end evidence including tion and partnerships to understand
across patient populations; and partnerships for data creation, the needs of patients, providers and
developing rules and capability capture sharing and analytics to payers in order to generate the next
around patient consent enable real-world evidence-based generation of innovation
approaches to improve care delivery
Contracting and payment models Complementary services and Product innovation based on
that take in to account the value solutions that enhance real-world evidence on patient
added from clinical innovation product offerings and support outcomes and build engagement with
patients’ and providers regulators into innovation models
Medtech as an insightful partner for patients and health care, rewarded for
improving health care performance
05Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Health care is facing numerous challenges
Global healthcare spending is 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 The benefits of the IoMT
Improved drug
management Decreased costs
Enhanced Improved Improved
patient patient diagnosis and
experience outcomes treatment
Remote
Improved disease
monitoring of
management
chronic diseases
Significant IoMT market growth predicted
The overall IoMT market is expected to grow from $41 billion in 2017 to $158 billion by 2022
60 2017
50 2022
$USD billion
52 49
40
30
28 29
20
10 15
10 9 7
0
Medical Systems and Technology Services
devices software
Europe
from $12 billion
North America to $44 billion
from $13 billion
to $45 billion
Asia-Pacific
South America from $11 billion
from $2 billion to $51 billion
to $9 billion Middle East & Africa
from $2 billion to $9 billion
06Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Is medtech ready for the IoMT?
…our survey of 237 respondents working in medtech companies developing
connected medical devices revealed that:
10%
71%
believe that health care providers and
51% To a large extent
clinicians are not ready to utilise data
generated from connected medical devices.
of medtech
To a limited extent
companies are
implementing new Not at all
39% business models
67%
believe that the regulatory framework
will not catch up with what is possible
today for another 5 years.
Medtech is transforming from an
innovative product supplier…
31% 39% 43%
are implementing new are adopting a value-based are using Real World
funding models for data as a approach to pricing to a Evidence to drive business
service to a large extent large extent decisions to a large extent
… to an insightful partner
for patients and health care, rewarded
for improving health care performance
The above percentages are taken from our survey of 237 respondents from connected medical
device companies
07Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Part 1. Connectivity is transforming the
medtech industry
A series of technological and cultural revolutions are allowing technology and people
to be better connected to one another, leading to the development of a network of
connected, smart devices and objects that can communicate with each other and
automate key tasks. This is known as the Internet of Things (IoT).
These revolutions began with the invention The large volume of data created, along
of the internet and have shaped technology with the devices themselves, IT systems
and society for the past 30 years (see and software, connectivity technologies
Figure 1). IoT technologies are increasingly and services, are combining to create the
benefiting the health care sector, as Internet of Medical Things (IoMT).
advances in computing power, wireless
technology and miniaturisation are driving
innovation in connected medical device
development.
Figure 1: Technological and cultural changes enabling the development of the Internet of Things
1990
Human-to-human
· Fixed telephony
· Text messages
Internet of Content
· Email
· Static webpages
Internet of Services
· Smart IT platforms
· E-commerce
Internet of People Internet of Things
· High speed mobile broadband · Smart devices and objects
· Smart phones and tablets · Connectivity between devices
· Automation of tasks
2018
Source: Deloitte LLP, 2018
08Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
The development of connected and test kits, patient management The medical technology
medical devices software, and software that is used as a
The medical technology (medtech) industry component in a medical device. (medtech) industry designs
designs and manufactures a wide range and manufactures a wide
of medical products that help to diagnose, IoT technologies are increasingly benefiting
monitor, and treat diseases and health the health care sector, as advances in range of medical products
conditions. There are more than 500,000 computing power, wireless technology and that help to diagnose,
medical technologies currently available, miniaturisation drive innovation and the
which all share a common purpose – having development of connected medical devices. monitor, and treat diseases
a beneficial impact on people’s health and Connectivity enhancement can apply across and health conditions.
quality of life. all 21 categories of medical devices.
Medical devices fall within 21 categories The creation of the IoMT ecosystem
of medtech products, as determined by The rise of the IoMT is being fueled by
the Global Medical Devices Nomenclature an increase in the number of connected
(GMDN) Agency (see Appendix).1 They medical devices that are able to generate,
represent a hugely varied product group, collect, analyse or transmit health data or
ranging from simple, disposable supplies images and connect to health care provider
such as plasters and syringes, through to networks, transmitting data to either a
surgical implements, monitoring devices cloud repository or internal servers.
and imaging machines. They also include Figure 2 shows the main stakeholders in
medical laboratory diagnostic instruments the IoMT ecosystem.
Figure 2: The IoMT ecosystem
Connectivity providers Medical device providers
Original Systems and
equipment software
manufacturers providers
System integrators
End users and service providers
Source: MarketsandMarkets, 2017
09Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
The IoMT bridges both the digital and Importantly, the IoMT generates intelligent The methodology for this report
physical worlds and can monitor and and measurable information to help The methodology for this report includes
modify patient behaviour in real time to improve the speed and accuracy of a detailed literature review, market insights
manage chronic conditions such as asthma, diagnostics and target treatments more provided by research companies Yole
diabetes and high blood pressure. IoMT efficiently and effectively. It enables remote Développement and MarketsandMarkets,
technology can also streamline various clinical monitoring, chronic disease and an online survey conducted by
clinical processes and information flows medication management and preventive Research2Guidance, structured interviews
and bring together people (patients, care, and it supports people who require with senior executives from a number of
caregivers, and clinicians), data (patient or assistance with daily living, like the elderly large medtech companies and insights
performance data), processes (care delivery and disabled, to live independent lives for as provided by Deloitte colleagues working
and monitoring) and enablers (medical long as possible. It also has the potential to across the medtech and health care
devices and mobile applications) to improve lower costs, improve efficiency and deliver industries.
health care delivery. better patient outcomes (see Figure 3).
The growth of the IoMT market
Figure 3: The seven main ways the IoMT impacts health care The IoMT market, which can be viewed
through either a component or an
application lens (see Figure 4), is expected
to grow at a compound annual growth rate
(CAGR) of 30.8 per cent, from $41.2 billion
Improved Decreased in 2017 to $158.1 billion by 2022.2 This
drug costs growth is due to the rapid digitisation of
management
health care systems to aid efficient patient
care, the rise in the demand for mobile
health care technologies and an increase
in demand from an ageing population and
people suffering from chronic diseases.
Enhanced Improved In 2017, North America accounted for the
patient diagnosis and
largest share of the IoMT market ($13.3
experience Improved treatment
billion or 33 per cent of the total market)
patient
followed by Europe ($12.4 billion), Asia-
outcomes
Pacific ($11.0 billion), the Middle East and
Africa ($2.4 billion) and South America
($2.1 billion). The IoMT market in Asia-
Remote Improved
Pacific is projected to grow at the highest
monitoring disease rate, at a CAGR of 34.3 per cent during the
of chronic management forecast period, due largely to the level of
diseases
unmet need and the increasing number of
hospitals and surgical centres being built in
this region.3
Source: Adapted from The Internet-of-Things: A revolutionary tool for the health care industry,
Inside Magazine, Deloitte LLP, 2017
10Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Figure 4: IoMT market segmentation by component and application, 2017 ($ billion) Estimates of the size of the current and
forecast market value for connected
Market segmentation by component Market segmentation by application medical devices vary significantly depending
on the criteria used. For the purposes of
$2.3
$7.3 this report we use estimates from market
$5.0
$12.9 research firm MarketsandMarkets. They
$14.9
categorise connected medical devices into
$5.7 three groups:
$9.3
•• stationary medical devices – include
$6.6 $8.8 X-ray and mammography devices, CT and
$9.8
MRI scanners, ultrasound machines and
nuclear imaging devices that measure
Medical devices
Systems and
Telemedicine
Clinical operations and physiological parameters. These relatively
software workflow management
high capital cost, high-tech devices, which
Connectivity Medication Connected transmit images wirelessly to clinicians,
Services
technology management imaging are generally deployed by hospitals,
Inpatient clinics and diagnostics centres with the
Others
monitoring images incorporated into the patient’s
Electronic Health Record (EHR). In vitro
Source: MarketsandMarkets, 2017
diagnostic devices (IVD) are also included
The market for connected medical in this category. Stationary medical
The increasing numbers of devices devices are critical to diagnosis and
The ability of the IoMT to help reduce increasingly are integrated with other
connected medical devices the cost of care while improving its health care applications to overlay patient
and rising adoption of effectiveness is driven by the evolution of data and imaging to facilitate faster and
artificial intelligence (AI), particularly the more precise decision-making
smartphones are expected rise of machine learning technologies.
to fuel the growth of the Increasing investment for health care •• implanted medical devices – include
IoMT solutions are driving market growth. hip replacements, pacemakers and
market still further. The increasing numbers of connected defibrillators that monitor and treat
medical devices and rising adoption of cardiac conditions, nerve stimulators,
smartphones are expected to fuel the bladder stimulators, diaphragm
growth of the market still further. Potential stimulators and a variety of biosensors
constraints to this estimated growth to process different signals. Patients
include the extent to which health care who require constant monitoring often
organisations, clinicians and patients are receive implanted medical devices, which
willing to deploy IoMT solutions and a lack are intended to remain in the human
of governance standards. body and are implanted following surgical
or medical intervention, or are clinically
inserted into a natural orifice
11Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
•• wearable external medical devices The remaining components of the IoMT •• connectivity technology – connectivity
– include insulin pumps for diabetes ecosystem technologies are the enablers of the
monitoring, skin patches, cardioverter- The other three key components of the IoMT ecosystem, connecting people
defibrillators and other devices, including IoMT ecosystem are: and devices to the internet. Wireless
smartwatches and activity trackers that technologies such as Wi-Fi, Bluetooth low
produce data that are monitored by •• systems and software – IoMT systems energy (BLE), near field communication
clinicians. Wearable external medical and software primarily focus on reducing (NFC), Zigbee, cellular and satellite
devices are used to monitor patients the delivery time and cost of projects technologies are primarily used in health
while in hospital and post-discharge, as through device management and care. Factors that facilitate seamless
well as on-going monitoring of patients integration, information security, data wireless connections are interoperability
with chronic conditions or frailty. collection and data analytics. Systems between wireless standards, low energy
Wearables used only for fitness tracking and software include remote device consumption, and range extension. The
or self-monitoring are not included. management, network bandwidth market for connectivity technology was
management, data analytics, applications $9.3 billion in 2017 and is expected to
The market for these connected medical security and network security solutions. increase to $28 billion in 2022
devices was $14.9 billion in 2017 and is The market for systems and software was
expected to increase to $52.2 billion in $9.8 billion in 2017 and is expected to •• services – IoMT services include system
2022 (see Figure 5).4 increase to $48.3 billion in 2022 integration services, professional
services and support and maintenance
services. Service providers are providing
Figure 5: The market for connected medical devices is predicted to grow from
personalised and optimised services that
$14.9 billion in 2017 to $52.2 billion in 2022
offer predictable and better business
outcomes for health care organisations,
2017 2022
which allow these organisations to
manage the entire life cycle of the IoMT
in health care solutions. The market for
Stationary medical devices $17.0bn services was $7.3 billion in 2017 and is
$5.7bn expected to increase to $29 billion in 2022.
$18.9bn
Implanted medical devices
$5.1bn
Wearable external
$16.3bn
medical devices
$4.1bn
$14.9bn $52.2bn
Total
Source: MarketsandMarkets, 2017
12Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
How medtech can help health care (e.g. using connectivity to track equipment Increasingly, companies are developing
organisations tackle current health patient and staff workflow), improve access products that enter the market with
care challenges to and speed of diagnosis ( e.g. advanced the capability of internet connectivity.
Health care is increasingly expensive, with point of care diagnostics), deliver more The same devices that companies have
global health care spending expected to targeted precision treatments, improve been producing for years are now able to
grow 4.2 per cent per year, from $7.1 trillion medication adherence (e.g. apps, smart connect to other networks and systems
in 2015 to $8.7 trillion by 2020.5 Among G7 pills and pill boxes) and support virtual and generate data that provides a huge
countries, expenditure on health care as patient monitoring (e.g. sensors placed benefit for health care professionals in
a percentage of gross domestic product under the patient’s mattress or within terms of delivering insight into outcomes,
(GDP) increased from 10.8 per cent in 2010 a chair and patches that continuously patient health and effectiveness of care
to 11.4 per cent in 2016.6 Indeed, health measure vital signs). IoMT solutions delivery. The challenge for medtech is
care in many countries risks becoming can help reduce health care costs by demonstrating to payers and providers the
unaffordable, as governments and other reducing hospital re-admissions, lowering added cost-benefits of these enhanced or
payers find their budgets increasingly medication non-adherence, and increasing new connected products, and ensuring
constrained at a time when the challenges wellness management using connected that clinicians and patients are convinced
they face are growing significantly, driven by: smart devices and wearables to collect and of the benefits and ease of use.
analyse medical data. Connected medical
•• unrelenting demand pressures from a devices can also engage and empower Wearable medical devices and home health
growing and ageing population – 8.5 per patients and their carers to improve self- monitoring devices are becoming more
cent of the global population (617 million management. MarketsandMarkets expect prevalent among patients of all ages. These
people) are aged 65 and over, with the that potential savings from deploying IoT in devices allow vital data to be transmitted
total expected to double by 2050 to health care could be as much as $63 billion from a patient’s home directly to hospital
1.6 billion people7 globally.11 Case examples of some of the and other health care staff, resulting in
savings that can be generated are included real-time monitoring of a patient’s health.
•• increasing public expectations for more throughout the report. Utilising these types of devices could
personalised, equitable and convenient result in considerable cost reductions
services Drivers of connected medical device and operational efficiency improvements.
development Similarly, advances in sensor technology
•• advances in new treatments and The medtech industry is characterised by are making the creation of data much
technologies – prescription drug sales a constant flow of innovation based on a easier. Early stage examples of sensors
are expected to rise by 5.5 per cent a high level of research and development embedded in novel ways include adding
year (2016-2022) to $1.06 trillion by 2022,8 (R&D) and close co-operation with them to pill bottles and hospital beds.
while medtech sales are expected to users. Medtech companies constantly Globally in 2016, the number of patients
increase by 5.1 per cent a year (2016- update their technology to improve being monitored remotely grew by 44
2022) to $522 billion by 20229 their engagement and interactions with per cent to 7.1 million and is projected to
patients and health care providers, with exceed 50 million by 2021.14
•• a mismatch between the demand for and products often upgraded or replaced every
supply of adequate numbers and types 18-24 months.12 In 2017, 13,090 medtech However, the generation of data points
of staff – staff are the largest cost driver patents were filed globally – the most of through millions of connected sensors will
of health care, accounting for between any category of products, and a 6.2 per have little impact unless the data can be
60 and 70 per cent of health care running cent increase from 2016. Across Europe, turned into insight and utilised effectively
costs.10 this trend was even more pronounced, as in the clinical workflow. Currently, the
medtech patent filings increased by 7.1 per limiting factor is the ability to aggregate
The medtech industry is well placed to cent from 2016.13 data. Companies are addressing this by
help alleviate some of the cost, access working to increase interoperability and aid
and care coordination challenges facing data aggregation, but its complexity means
health care. Medical devices can help staff progress has often been slow.
to work more effectively and productively
13Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Medtech companies who participated Over half of respondents from small Again, this is likely due to the difference in
in our survey are increasing their focus companies said all their products are product portfolios between the companies.
on connected medical devices connected, compared to around a For example, our interviews with large
In April 2018, we commissioned market quarter in medium-size companies and medtech companies highlighted that
research firm Research2Guidance to a third in large companies. This is likely significant investments in emerging IoMT
conduct a survey of medical device because larger companies surveyed have technologies are being made.15
companies with connected medical significantly larger product portfolios with a
devices. Of the 237 respondents, 73 per number of well-established non-connected
cent were from small companies (less than device offerings.
250 employees); 15 per cent from medium-
size companies (251 to 5,000 employees); Across our survey respondents, the
and 12 per cent from large companies average percentage of their overall R&D
(six per cent had more than 50,000 budget allocated to the development
employees). See our separate methodology of connected medical devices was
paper for full details. estimated to be 34 per cent; all expected
this percentage to grow, with the overall
Survey respondents on average estimated average in five years’ time increasing to 42
that 48 per cent of their current portfolio per cent (see Figure 6). Smaller companies
of products are connected medical devices surveyed are currently allocating a
able to generate data today and expect the significantly higher percentage of their R&D
percentage to increase to 68 per cent in budget to the development of connected
five years’ time (see Figure 6). devices (43 per cent), compared with their
medium – and large-sized counterparts
(both ten per cent).
“Being a large company, we need to gain flexibility and agility in order to compete with new
entrants and mainly with automated tech. Therefore, we are pivoting our business models
and operations, that today requires ‘high touch’.”
R&D Manager, Medtech company
14Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Figure 6: Connected medical device manufacturers are anticipating an increase in The intention of medical device companies
the percentage of devices that are produced, as well as an increase in R&D budget to invest increasing proportions of their
R&D budget in connected devices, systems
Estimated percentage of connected medical devices today and in five years’ time and software is supported by our literature
Today 5 years review and from our structured interviews,
with one global company now investing
60 per cent of its R&D budget into systems
and software development.
32%
52% 48%
Smaller companies
surveyed are currently
68%
allocating a significantly
higher percentage of
Other Connected Other Connected
their R&D budget to
the development of
Estimated R&D budget allocation towards the development of connected medical technologies
today and in five years’ time connected devices.
Today 5 years
34%
42%
58%
66%
Other Connected Other Connected
Note. The figures from our research survey relate to medtech companies with connected medical devices
and are not representative of the medtech industry as a whole. Due to rounding the figures may not total
100 per cent.
Source: Deloitte research commissioned from Research2Guidance, 2018
15Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Part 2. Challenges and opportunities for
medtech
Cost, staffing and demographic challenges, combined with the exponential rate
of technological change and advances in medical science are forcing a shift in the
conventional model of health care provision towards value-based care.
The traditional fee-for-service health care Participants in a Deloitte US survey of 20
model focuses on volume of care, where Health system CEOs say that the transition Deloitte’s view:
providers are compensated by the number to VBC is happening, but at a slower rate Medtech companies
of tests, visits or procedures performed. than initially anticipated. Many of the need to develop a
In a value-based care (VBC) model, CEOs report that they are developing and
deeper understanding of the
hospitals and health care providers are expanding innovative delivery and payment
compensated based on measures such as models.16 A successful value-based end-user and their emerging
patient outcomes and satisfaction. payments strategy requires payer/provider needs, and create new
collaboration, sharing of patients’ health business models and scenarios
Today, a number of governments and other data, and IT and analytical support. As that demonstrate how their
health care payers are expecting providers more providers adopt VBC models, the rate new and existing devices not
to adopt new VBC payment models that of adoption and integration of connected
only improve patient outcomes
shift a higher level of responsibility and medical devices will also increase. While the
risk from payers to providers. Medtech IoMT can provide these data and insights but also create value for key
companies have an important role to play to help improve patient care and the overall health care stakeholders.
in supporting this shift, including providing cost-effectiveness of provider operations,
robust, reliable data and information to challenges include the extent to which
providers (and payers) on the downstream provider organisations’ IT infrastructures
value that their devices, including are able to handle or process the
connected products, provide. Indeed, the connections and data, and whether
data and insights provided by connected clinicians and patients can be convinced of
medical devices can help providers the safety and effectiveness of the devices.
improve cost, quality and productivity of Medtech companies will need to address a
care delivery, and support better patient number of systemic challenges if they are
engagement. to optimise their role in the IoMT.
“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.”
CxO, Medtech company
16Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Developing new funding, business and Figure 7: Medtech companies are implementing new business models and ways
operating models of working
Health care organisations looking to
reduce their expenditure on services are Implementing new business
10% 39% 51%
taking a number of measures to lower the models
costs of equipment and devices, such as
forming group purchasing organisations, Implementing new operating
models 10% 46% 45%
consolidating purchasing to a small range
of trusted products and changing the
Adopting a value-based
way medical devices are reimbursed. approach to pricing
17% 44% 39%
These factors are changing fundamentally
the way in which medtech companies Implementing new funding
models for data as a service 22% 47% 31%
commercialise their products, leading
companies to develop new funding and
0% 20% 40% 60% 80% 100%
business models for their connected
Percentage of survey participants
medical devices and software.
Not at all To a limited extent To a large extent
Our survey of connected medical device
Note. The figures from our research survey relate to medtech companies with connected medical devices
companies found mixed results in the and are not representative of the medtech industry as a whole. Due to rounding the figures may not total
success they are having in developing new 100 per cent.
business models. While 90 per cent of Source: Deloitte research commissioned from Research2Guidance, 2018
our surveyed companies said they were
implementing new business models, 51 per A significant challenge for medtech is These start with comprehensively defining
cent were doing so ‘to a large extent’ versus whether, and if so how quickly, these new the categories where a medical technology
39 per cent ‘to a limited extent’. Similarly, business and operating models will be can have impact, as considered from the
most respondents are implementing able to increase revenue and profitability. perspective of the different stakeholders
new operating models, although this was Furthermore, new entrants are disrupting (ranging from the patient and their family
split evenly between 45 per cent ‘to a the sector, which will require incumbents and caregivers, through to individual
large extent’ and 45 per cent ‘to a limited to take significant portfolio decisions clinicians, provider institutions, commercial
extent’. The majority of companies are (including divestitures of lower margin payers, and government bodies).
also adopting a value-based approach segments) and adopt new channels of care
to pricing, with a lower percentage (e.g. telemedicine and remote monitoring).
implementing new funding models for data These factors are changing
as a service (see Figure 7). In 2017, Deloitte Consulting LLP and fundamentally the
AdvaMed, in collaboration with taskforces
of member companies representing
way in which medtech
medical device and diagnostic companies, companies commercialise
developed an approach to help
stakeholders more effectively assess
their products, leading
the value of medical technologies. At the companies to develop
heart of the recommendations are a set
of core principles to guide the assessment
new funding and business
process. models for their connected
medical devices and
software.
17Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Figure 8: A value framework for innovation in health care
Clinical Non-clinical Care delivery Public/
impact patient impact revenue and population
cost impact impact
The extent of clinical utility and The impact on non-medical benefits The impact of the technology on The impact of the technology to the
health outcomes associated with for the patient (or caregiver): patient revenues and costs for the provider, health care system at large and
medical technology offering experience and patient economics payer, and provider-sponsored plan employers or the public as a whole
(such as out-of-pocket costs) via bonuses or penalties associated
with care quality metrics, as well as
the impact on clinical workflow and
other sources of operating
efficiency
Source: Deloitte Consulting LLP and AdvaMed, 2017
Figure 8 describes the four main categories of value drivers which are a core consideration
in deciding the appropriate business model to adopt.17 We explore some specific examples Deloitte’s view:
of the new and emerging business models in Part 3. While some new
reimbursement
There is also a large spectrum of innovation types, from engineering driven incremental
models are already in use,
innovations that mostly result in enhanced products aimed at identifying improvements
to stay competitive – which are unlikely to attract additional payments – to concepts like most focus more on prevention
human centred design that clearly create additional value for the health care system and and longer-term cost avoidance
which require new reimbursement models (see Case study 1). 1819 that traditional reimbursement
mechanisms were not built
to reward. It is likely to take
Case study 1. Medtronic’s outcomes- several years for the health
based reimbursement model with care system to evolve to
two large insurance companies be able to truly reward
innovation. The different types
Medtronic reached agreements with two large American health insurers to employ of innovation will require
an outcomes-based reimbursement model for patients opting in to use the different business models, and
Medtronic insulin pump systems. One such agreement utilised Medtronic’s new
progress will depend on both
insulin pump, the MiniMedTM 670G, a hybrid closed loop system that leverages
a continuous glucose monitoring sensor to instruct the pump to deliver insulin to
the innovators themselves
the patient automatically when required. The outcomes-based reimbursement working in new ways to take on
model enables a risk sharing approach by both the payer and manufacturer risks and rewards, and the
that links reimbursement of these new devices to improved A1C (glycated evolution of existing payment
haemoglobin) levels in the patient.18,19 systems by both public and
private payers.
18Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Addressing interoperability Figure 9: Barriers to and benefits of interoperability
Health systems and equipment increasingly
connect over wired and wireless networks.
Interoperability describes the extent to
which systems and devices can exchange Privacy and
security challenges
and interpret shared data. It also allows associated with Lack of adoption of
for the authorised use of data and the widespread health standards-based
information EHR systems
exchange of medical data to facilitate
exchange
decision-supported patient centric care
Lack of incentives
and reduce medical errors.
to develop
interoperability in
Interoperability in health care is extremely the private sector
complex and relies on being able to
establish connectivity and communication
between devices and IT systems, and
between data and workflows while
enabling secure and transparent data
exchange through consensus standards
and protocols. However, there are serious
barriers to achieving interoperability that
Interoperability
medtech companies need to understand if
they are to ensure the effective deployment
of their connected devices and realise the
benefits of interoperability (see Figure 9).
A key question that needs to be resolved is Benefits
who ‘owns’ the data and can drive direct or
indirect commercial benefit from it?
Consented sharing of
patient information
There are serious Increased patient/physician
engagement
barriers to achieving
interoperability that Safer transitions of care
medtech companies
need to understand. Increased efficiency
Improved continuity and
consistency of care
Lower costs
Improved patient outcomes
Source: Deloitte LLP, 2018
19Medtech and the Internet of Medical Things| How connected medical devices are transforming health care
Hospitals often use hundreds of The increasing deployment of value-based The Act made health care providers
customisations to make EHRs user-friendly care models means collaboration between accountable for keeping protected
and have multiple connecting systems payers and providers will be a necessity. health information (PHI) confidential, and
that increase the complexity of sharing Although new regulations are attempting to infringements invite hefty fines and potential
information. Connected medical devices introduce new standards, these standards jail terms for those who fail to comply.20
introduce even more data sources, are not always implemented in the same
challenging providers still further, especially way within and between organisations, There are also a number of technical and
in finding ways to store, share, and use impacting the chances of interoperability. organisational challenges that need to
patient-generated data from wearable be overcome if interoperability is to be
health technology and smartphones. A number of our interviewees noted implemented effectively (see Figure 10).
Indeed, many health systems still lack that the Health Insurance Portability However, recognising the importance
interfaces that can gather and interact and Accountability Act (HIPAA) that the of interoperability is crucial for all
with emerging technology. Payment and US Congress passed in 1996 proved professionals working in the health care
behavioral information is also likely to be to be a barrier to the development of industry and for all medtech companies
a future application that will require more interoperability. wishing to optimise the use of their
sophisticated layers of interoperability. connected devices.
Figure 10: Key actions life sciences and health care stakeholders should consider when tackling the interoperability challenge
Working towards a unified and technology friendly platform for
sharing clinical data (open Application Programming Interfaces (APIs))
Implementing uniform messaging
standards for health care data
Developing a consensus on
(e.g. HL7 and increasingly the Fast
standards for interoperability
Healthcare Interoperability
Resource (FHIR))
Creating an integrated
governance framework Obtaining consented access
among stakeholders to to data across stakeholders
improve data integrity
Interoperable medical devices,
systems and services
Source: Deloitte LLP, 2018
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