According to McKinsey & Company Senior Partner Rajesh Parekh, “ecosystem” is a word used plenty in the tech world. Now it’s coming into the medtech space.
So, what is an ecosystem? How can medtech companies take advantage of one to provide better care and improved patient outcomes? How can they do so with speed in an ever-changing environment? Three major medtech leaders joined Parekh at AdvaMed’s The MedTech Conference in Boston to try and explain that.
Medtronic Chair and CEO Geoff Martha, Abbott EVP of Medical Devices Lisa Earnhardt and ResMed CEO Mick Farrell offered their views on ecosystems in the space.
What is an ecosystem in healthcare?
Earnhardt said an ecosystem brings a variety of stakeholders together to drive value in the space. That amounts to value for the patient and the customer.
A 25-year veteran of the medtech space, Earnhardt said a traditional viewpoint centers around being a medtech company, having a product and delivering that to a hospital or provider. That two-way relationship no longer has to be the norm, though.
“The real opportunity is coming together as an ecosystem, if you will,” said Earnhardt, “coming together as an ecosystem to really drive value with everyone bringing their unique strengths and assets and capabilities to the table.”
Martha said bringing all types of devices and technologies together and making them as integrated as possible facilitates efficient workflow. It also produces better outcomes.
“There’s a difference between being connected and integrated,” he said. “It’s really about generating better outcomes, not just for patients but for healthcare workers and systems. We have several different areas we’ll be working on.”
Farrell said ResMed aims to improve upon a term he’s heard a lot — “data lakes” — with “data wells.” Those wells for the respiratory device developer provide a deep set of data on sleep, suffocation, sleep apnea, COPD, neuromuscular disease and respiratory insufficiency.
He said ResMed sees patient data from 33% of their lives, from going to bed to waking up. The other 67% isn’t accounted for. That’s where an ecosystem with cardiovascular outcomes, surgical outcomes, wellness outcomes and more comes in.
“I see an ecosystem as combining ResMed data wells with Medtronic data wells and Abbott data wells,” Farrell said. “And that’s not just across medtech but tech companies, too.”
Recognizing needs and pursuing better outcomes
When posed with the question of how to bring technology from concept to difference-maker, Earnhardt gave the example of Abbott’s FreeStyle Libre continuous glucose monitor (CGM) for diabetes.
It all revolves around the patient’s need. Abbott recognized that CGM capabilities help those with diabetes. However, limiting technology to just CGM would leave the company “falling short of the potential.” So, it partnered with insulin pumps and coaching platforms to expand the ecosystem.
“It’s bringing the entire ecosystem together to put the patient at the center with their needs,” said Earnhardt. “It’s empowering them with the information they need, when they want it, wherever they are.”
Farrell pointed to a decision to give patients their data for free. Engaging patients — one example he gave was gamification through things like TikTok — creates better outcomes.
“We liberated the data and then provided each person in the ecosystem a way to extract value,” Farrell said. “Then, they selected our products. Physicians prescribed it more. Patients asked their doctors for it more. It created value that went beyond just our space and went into their diabetes care, their cardiovascular care.”
Business model changes
Parekh asked the executives if the growing ecosystem changes the way medtech companies conduct their business. Martha had no doubts about it — “it totally changed the business model.”
For instance, Martha said the move from open surgery in the spine industry is going toward companies with ecosystems and commitment to evolving the space. That’s disrupting the industry, he explained. Similarly, as Farrell also pointed out, the software as a service (SaaS) model adds another wrinkle.
“It’s based on this ecosystem, and we’re not quite there yet in all transparency, but you can see the path it started with market share shifting,” said Martha. “It started with cost takeout and better outcomes. You’re starting to see better outcomes from this and economic outcomes as well. And then the next phase, which we’re just starting to get into, SaaS models and things like that, a true shift to the payment model. I see that coming, but we’re not all the way there yet.”
Farrell said SaaS can be part of the healthcare ecosystem. In fact, he said, ResMed has successfully used it for seven years and recently invested in it further. But it involves utilizing the strengths of others within the ecosystem.
“You can get there, but you don’t invent them all yourself, and it probably won’t come from your biomedical engineers,” said Farrell. “It will probably come from someone outside your ecosystem. “Reach out, partner with them and then find a way to bring it into your value set.”
Addressing the purpose and recruiting talent
Martha explained that it’s important to think about “the purpose of what we do.” That’s “innovation with a purpose,” he said.
This involves a need to “play offense” and attract talent to medtech. Historically, he said, the talent he’s talking about gravitated toward “big tech.” To establish this ecosystem, Martha wants to bring those people to medtech.
“It’s shifting to wanting to work for a company that stands for something, that’s contributing to society and in a meaningful way,” Martha said. “Looking in healthcare and medtech, we’re blessed with that. We’re working on cutting-edge technologies, and our products are getting more data-based, and they’re getting cooler — if you want to put it in that context — by the day. So you’ve got the purpose.”
That “cool” factor represents a driving force behind attracting talent to medtech. Earnhardt joked that she feels medtech has always been cool but “just didn’t take credit for it.”
She sees a “phenomenal opportunity” to recruit based on new perspectives and capabilities. Earnhardt also sees an opportunity to partner in ways that, perhaps, the industry didn’t feel comfortable doing before.
“The beauty is that you’re starting to see more companies really wanting to make an impact here because that’s exactly what we do each and every day,” Earnhardt said. “I’m encouraged by the state of the industry. There’s a lot of complexity to it. One of the challenges we never talked about was sort of that need for speed. How do you balance the need for speed and the environment in which we’re in?
“Maybe that’s a whole other panel.”