In a digital goldrush, how can medtech stake its claim? - Thoughts from the Centre | Deloitte UK

By Sheryl Jacobson, US Consulting Medtech leader, Deloitte Consulting, LLP


In 2018, our report Medtech and the Internet of Medical Things (IOMT)  highlighted how major advances in technology were driving innovation in medtech, leading to the development of the IoMT – a digitally connected infrastructure of medical devices, software applications and health systems and services. We examined how the IoMT was transforming medtech’s role in health care and what medtech companies needed to do to get digital transformation right. In May 2023, our colleagues in the US Center for Health Solutions surveyed 100 executives from large medtech companies across the United States, Europe, and Asia to understand how medtech companies are employing digital technologies to grow, innovate, and develop a competitive edge. This week’s blog which first appeared as a Center for Health Solution’s Health Forward blog, explores key findings from this survey including the maturity of digital transformation, the role of partnerships in accelerating the transformation and strategies to execute this long-term plan.

Progress in digital transformation of medtech companies

While digital transformation might be inevitable for medical technology, nearly one-third of medtech companies do not yet have a digital strategy, according to new research from the Deloitte Center for Health Solutions. Although surveyed medtech executives appear to see the value of a digital transformation, many of them might be missing an opportunity to improve internal efficiencies while enhancing external engagement.

When medtech executives discuss digital transformation, they are typically talking about two sides of the same coin—internal transformation and external transformation. The focus on the internal side typically focuses on streamlining processes and improving efficiencies (e.g., supply chain, inventory, contract review, provider compliance). The external digital transformation tends to focus on improving engagement between a device and the patient and/or the clinician, improving health outcomes, or using data and digital to enable new business models. Companies can and should focus on internal transformation or external transformation at the same time.

More than 80 per cent of the surveyed leaders said their organisation’s largest digital investments have gone toward artificial intelligence. Cloud was the second highest area of investment, with more than 70 per cent of the surveyed leaders’ organisations identifying it as an area of interest. However, medical device manufacturers might still be a step or two behind other industries when it comes to the adoption of digital technologies. Less than 10 per cent of surveyed medtech companies have made digital investments of more than $5 million. However, some medtech leaders I’ve spoken with say they are interested in advancing their use of data and digital technology to improve efficiencies and engagement.

This changing landscaping is prompting some companies to consider an Everything-as-a-Service (XaaS) model. Xaas refers to the bundling of products (such as hardware, devices, equipment, consumables) and/or software with value-added services. This would be a departure from legacy product-only offerings that have one-time, upfront capital expenditures as a hallmark (see Beyond the device).

Partnerships could add value…and risk

Medtech doesn’t have to go it alone. Partnering with consumer-centric technology companies could help medtech companies accelerate their digital transformation and transition to Xaas. While such partnerships could help medtech companies gain a competitive advantage, there is a risk that a collaborator today could become tomorrow’s competition (see Coop-etition’ Could Grow as Medtech Companies Prepare for Transformational Innovation). Some technology companies could be viewed as a competitive threat, but they also could be valuable partners.

Partnerships between consumer and health technology companies can be potentially synergistic, where medtech companies contribute clinical expertise and the partner contributes the digital expertise. While this may call for new approaches to handling intellectual property rights, existing intellectual property frameworks may offer some answers. Acquisitions are another, generally more familiar, strategy for external digital innovation since it resembles existing models. But it could carry more risk.

Deep clinical expertise, cutting edge medical knowledge, and established customer relationships and trust can be enormous advantages medtech companies have over digital disruptors—and medtech companies should play to those strengths. The expertise tends to put the industry in a strong position to incorporate data and evidence-based insights into decision support that can help providers deliver high-quality and efficient care and help patients in self-care and prevention—which could ultimately improve healthcare outcomes. 

Four strategies for an internal/external digital transformation

Our survey respondents recognise that digital innovation is a long game for their organisations, but one that is necessary to keep pace with the competition. Here are a few ways that medtech leaders can begin to think about an internal and external digital transformation:

  1. Align on the business case and value proposition to customers:While relative margins may be higher today on sales, parts, and maintenance of high-per-unit-price legacy equipment, volume could be considerably greater from smaller, portable, point-of-care technology that is far less expensive on a per-unit basis. In absolute terms, this could be beneficial to an organisation’s bottom line and growth potential. The value proposition to customers could be the reduced use of capital equipment and facilities, and more efficient labour utilisation (if the technology does not require technicians or highly specialised clinicians to perform a procedure, operate a device, or interpret the data).
  2. Experiment with new business models:One of the biggest potential benefits of investing in digital technologies and data is enabling new business models. One possible opportunity for medtech companies is to identify pilot opportunities with small investments to test the waters.
  3. Modernise the organisation’s operating capabilities:Leading companies appear to be borrowing business and operating models from disruptive technology or software companies to stave off competitive threats. Medtech companies should consider ways to adopt agile models with adaptable operating structures.
  4. Invest in new capabilities:Because digital health technologies serve multiple users, they should be designed accordingly. This approach will likely involve new ways of thinking about who the customer is, gathering new insights about the customer, and establishing new skillsets to design solutions flawlessly.

Digital transformation is a long-term goal

Innovating via digital technologies and transforming traditional medtech business models may be essential for long-term success, but the second can’t happen without the first. Nearly 20 per cent of our surveyed medtech executives said digital innovation is “necessary at all costs.” Despite the challenges, medtech organisations can unlock new growth opportunities, deliver better patient experiences, and stay ahead in an ever-evolving healthcare environment by implementing an internal and external digital transformation.

By playing to their strengths, including deep clinical expertise, cutting-edge medical knowledge, and established customer relationships and trust, medtech companies may be in a strong position to keep digital disruptors at bay. Incorporating data and evidence-based insights into decision support can help providers deliver high-quality, efficient care, and help patients with self-care and prevention—ultimately improving healthcare outcomes.


Sheryl Jacobson, US Consulting MedTech leader, Deloitte Consulting

Sheryl leads US Deloitte Consulting’s MedTech practice and is the lead business partner for Deloitte’s largest global client relationship. She came to Deloitte in 2013 through the acquisition of Monitor Group. Her focus has been on helping clients see the future opportunities and risks and make the right strategic, operational and leadership choices to capitalize on those opportunities. In recent years, Shreyl has particularly focused on the AI, data and digital driven transformation happening in the MedTech industry.

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