Ernst & Young has been taking the pulse of the medical technology industry for several years, and has issued a report annually that discusses their findings. The 2014 report highlights the shift toward valuing better patient outcomes over other criteria. They also emphasize that one of the most important procurement metrics is going to be reduced total costs of care.
In reaching their conclusions, EY surveyed 161 respondents in the US, UK, Germany and Spain. 85 respondents were in clinical roles (chief of cardiology, department head, etc.) and 77 were in administration or management. The consensus was that end users (doctors, surgeons, clinicians, etc.) would have less influence in medical device/product purchasing decisions and that centralized procurement would have more influence in the coming years.
That improving patient outcomes is becoming the benchmark in measuring the value of medical products seems like a valid assessment, considering the goals of the Affordable Care Act and the push toward Accountable Care Organizations. This represents a significant change that medical device designers will need to adapt to. In the past, medical products and devices could be successfully marketed based on new features and improvements aimed at product and device users. Now, the indication is that benefits to the user will have little value if adoption of the device does not improve patient outcomes.
The report further contends that many medtech product segments will be commoditized. Unfortunately, the authors give no evidence of this, other than citing that China has become the low-price leader in many industries and that medtech will follow. I can foresee China becoming a competitor in some medical product segments, but I am skeptical that their entry will lead to commoditization. The Ernst & Young report notes that when barriers to entry into an industry are low, commoditization can occur. The medtech industry is highly regulated. The costs of developing a medical product and getting it approved are substantial and create a substantial barrier to entry. I am seeing no evidence of commoditization occurring.
EY suggest that to fight this (supposed) commoditization threat, companies will have to find ways to differentiate their products other than through brand and design. On the contrary, brand and design are among the only tools that companies can use to differentiate a commodity.
Another problem I have with the Ernst & Young report is that survey respondents felt that user-friendly design was going to become a less important factor in purchasing decisions. That sentiment is illogical. If devices are going to be valued based on their ability to provide better patient outcomes, user-friendly design is going to be more important, not less: a poorly designed device can contribute to user error, which in turn can certainly contribute to a detrimental outcome for the patient. What is behind the reasoning that user-friendly design is going to have less value?
I look forward to the EY report each year to get an idea of where medical device design might be headed in the future. Usually I find it prescient. This year I think I’m going to discount it.