consumerization of medical devices

CONSUMERIZATION45 Minutes

1. Medicare requires Value based (i.e. CJR, spine next).

2. 5% early 2016 to 85% by 2018.

3. Surgeons align with hospital for cost reduction.

4. Middlemen seen as excessive cost.

5. OEM manufacturers have opportunity to step up with low price option, and disrupt market.

VALUE BASED DISRUPTION (BRISK)

1. Hospital is moving to bundle and scrutinizing cost.

2. They align with surgeon and operationalize the Episode.

3. Implant partners that can support the Episode are at the tableand not on the menu.

HOSPITAL GETS INVOLVED (ADOPTION TODAY)

1. Payer has much more transparency on outcomes and costs.

2. Able to negotiate with manufacturer based on value.

3. Steerage to providers that comply.

PAYER GETS INVOLVED (YOUNGER POPULATIONS)

1. Transparency on value and outcomes becomes so readily available that consumer can now make sense of it.

2. They choose best surgeon and implant that they can afford.

3. High deductibles continue to climb and out of pocket expense drives adoption of preference.

4. Highly optimized bundle providers offer choice to extract maximized value from customer.

CONSUMER GETS INVOLVED (2020)

Empl

oyer

Insurance

Governm

entPh

ysici

anHospital

Pharmacy

Risk

TransparencyTech

nolog

yconsumer

costchoice

THE REASON WHY IT IS SO DIFFICULT FOR EXISTING FIRMS TO CAPITALIZE ON DISRUPTIVE INNOVATIONS IS THAT THEIR PROCESSES AND THEIR BUSINESS MODEL THAT MAKE THEM GOOD AT THE EXISTING BUSINESS, ACTUALLY MAKE THEM BAD AT THE ONE COMPETING IN DISRUPTION.

Clay Christensen

DISRUPTION

REMOTE CARE

GOVERNMENT

MENTAL FINANCIALCOMMUNITIES

DEVICE

big data

wearables

IoT

smart home

PATIENTSmobile health

FFS VBPpop health

patient engagement

PHARMA

wellness

EMPLOYERS

PAYERS

GOVERNMENT

PATIENTS

REMOTE CARE

CARE COORDINA

TIONHEALTH

IT

EHRDEVICES

PHARMAHEALTH SYSTEMS

PAYERS

EMPLOYERS

DOCTORS

patient engagement

mobile health

big datapop health

wellness

AGING

CHRONIC DISEASE

NUTRITION FITNESS

claims

CARE COORDINA

TION

HEALTH IT

EHR

DOCTORS

HEALTH SYSTEMS

SurgeryTrack.com outcome data made useful

FitnessBuilder.com rehab anywhere

acute care

community care post acute

Home

e-Visits

conservative options

Health Literacy

clinic visit

diagnostic imaging urgent

care

ambulatory procedure

pre-op evaluation

efficient surgical

intervention

safe recovery

discharge optimization

rehab

recovery at home

outcome data

functional recovery

•Convenient •Trusted •Professional •Accurate

•Convenient •Data Driven •Successful •Personalized

•Quality •Value •Efficiency •Safety

.CARE

CLINICS

THREE PHASE DIGITAL SOLUTION INTERFACE… EXECUTION STRATEGY

surgerystepssurgery done right

outcomes convenience cost

6 MIN WALK TEST = A SIMPLE HABIT$15 TRACKER

AFTER SURGERY

562

BEFORE SURGERY

388

Activity Based Outcomes!Lower DVT risk and…

The most important thing is to remain active, and to love what you are doing.

Activity keeps us young

Running is your passion, keeping you running is ours

SURGEONS PROFESSIONAL

DECISION

HOSPITAL CONTRACTING

MARGIN ON DRG

CREATE & MANUFACTURE

PRODUCT

PAYER COMPENSATES

HOSPITAL

MARKET, PACKAGE & SHIP

SALES, SERVICE & DISTRIBUTION

Direct to Consumer Marketing

Rep Less

Bundled Payments

High Deductibles

50-70% of Implant Cost

Activity Based Costing

Physician Aligned for Cost Reduction

Cost TransparencyPATIENT

Yesterday's Value Chain

TOMORROW'S VALUE CHAIN

CREATE & MAKE

PRODUCT

MARKET, PACKAGE

& SHIP

SALES, SERVICE,

DISTRIBUTE

PROVE VALUE, CONVENER?

Bundled Payments Expand to 85% in 2020.

Competition on Value = outcomes/cost becomes normal

Deductible Financing and Implant Up Sell Based on Evidence

Networks of High Performing Providers

Activity Based Costing Rids Episode of Low Value Support, Such as Implant Reps

Manufacturers that can Take Risk have “Seat at Table”, all others are “on the Menu”

THE PATIENT SHOPS

HOSPITAL ORGANIZES

BUNDLE

SURGEON TEAM LEAD

PAYER PROVIDES CHOICE TO PATIENT

episode support by device companyprovider role