This article is based on interviews conducted for our recent whitepaper, “A Winning Data Strategy for Smart Connected Patient Devices”, which features insights from industry experts at S3 Connected Health, Cochlear, Omron, Dexcom, Medtronic, and Vocxi Health.
Reports of data fatigue in the healthcare industry and beyond are not surprising, particularly when you consider the many challenges of implementing an effective data strategy for smart connected patient devices. Yet, the race is on, and the global software as a medical service (SaMD) market, which was $1.32 billion in 2023, is projected to reach $5.73 billion by 2032. The importance of data for this market cannot be overstated; among many other benefits, effective data strategies present an opportunity to reduce the clinical burden through AI and machine learning and ensure patients have access to medical devices and treatments outside of traditional hospital settings, all while feeding back evidence to validate reimbursement.
One of the biggest challenges is understanding the path to reimbursement to make a stronger case for putting resources behind implementing an effective data strategy. The panel of experts spoke in depth about the investment needed to fill the skill gap and ensure the right people are available to drive the project forward. Hiring a team of experts or partnering with those who understand the potential of data (and how to navigate the significant challenges and risks) will make a path to reimbursement possible for medical devices and will likely increase the value of a medical device.
“Transitioning from a traditional medical device company to one that runs a data-driven business requires new expertise. Medical device companies have typically been set up for manufacturing and maintaining devices over the years, not for continuous updates and data processing. Shifting to this new model is challenging and requires significant changes in the organization's mindset and operations. Developing the necessary skills and capabilities within the organization requires substantial upfront investment. This includes hiring skilled data scientists, regulatory experts, product managers, and legal professionals who can navigate the complex landscape of data strategy.”
Paul Stevens, Director of Digital Health, Omron Healthcare Global
Reimbursement remains a core challenge for medical devices, and leveraging data is essential to navigate this issue effectively. Piotr Sokolowski gave the example of the DIGA framework in Germany as an approach that exemplifies how data can impact reimbursement decisions by establishing clear guidelines for the regulatory approval and financial compensation of digital therapeutics. This structured pathway allows companies to have their health applications prescribed by doctors and subsequently reimbursed for their services. However, despite the framework's promise, the number of approved applications is limited, and reimbursement amounts are often modest. Moreover, the adoption rates of these apps remain low, highlighting a gap between regulatory approval and widespread usage.
“In Germany, the DIGA framework serves as a notable example of how data can influence reimbursement decisions. This framework provides a structured pathway for the reimbursement of digital therapeutics, establishing clear guidelines for both regulatory approval and financial compensation.”
Piotr Sokolowski, Chief Medtech Strategist, S3 Connected Health
Other countries, such as France and Belgium, have introduced similar reimbursement frameworks, yet they, too, face challenges with limited uptake and reimbursement rates. In Germany, companies are granted a one-year grace period to demonstrate the efficacy of their digital therapeutics, during which they must provide compelling data to secure ongoing reimbursement. While well-resourced companies may succeed in meeting these requirements, many others struggle to deliver convincing outcomes within the tight timeframe, leading to diminished reimbursement opportunities.
A pertinent example is ResMed's model for sleep apnea treatment in the US, where patients must demonstrate usage data for at least five out of seven days to qualify for reimbursement. This model places pressure on both patients and manufacturers to ensure consistent device use, making data collection critical for validating usage and supporting reimbursement.
In reflecting on strategies to overcome challenges in the medical device sector, some suggest that a mergers and acquisitions (M&A) strategy may well emerge as a viable approach to accelerate capability changes and market entry. This trend parallels practices in the pharmaceutical industry, where companies typically acquire advanced projects rather than starting from scratch.
Identifying startups with cutting-edge technology can facilitate efficient market introductions through strategic partnerships or acquisitions. Balancing in-house development with M&A offers the potential to enhance sales, distribution, and marketing strengths while integrating new technologies.
This approach raises questions about the optimal placement of skills and capabilities within multinational corporate structures versus startups, with the latter often providing specialized medical expertise. Ultimately, fostering a robust data strategy alongside market agility will be crucial for navigating reimbursement landscapes and maximizing patient outcomes.
This article only touches on some of the challenges facing those who are trying to implement effective data strategies in medtech companies. For a more in-depth analysis our whitepaper is available for download. Featuring insights from industry leaders at Cochlear, Dexcom, Medtronic, Omron, Vocxi Health, and S3 Connected Health, the paper offers a practical framework for leveraging data to stay competitive and succeed in a data-driven healthcare landscape.