From Product To Service: The Changing Role Of Medical Devices

Mandar Paralkar

The medical industry is changing. Digital advancements and hyperconnectivity make it possible to rethink approaches to healthcare. The emphasis on digital customer engagement is getting stronger. Digitization and Big Data technology enable medical devices companies to provide more customized solutions to patients, better meet their healthcare needs, and offer more support to medical organizations and physicians. In future years, life sciences companies will increasingly deliver devices and equipment as a service.

All these new trends enable better patient outcomes and will help reduce cost in hospitals.

In this article, we’ll discuss how this transformation will unfold and take a look at what devices with a service approach could look like.

From product to outcome

One of the biggest changes in the medical devices industry will be a shift on emphasis. In the past, the focus has been rather product-centric. Is there demand for it? How much does it cost? Today and in the future, the emphasis is moving more and more toward whether or not it helps achieve desired patient outcomes.

This change is occurring for many reasons. Part of the driver is that hospitals and other medical organizations are facing budget cuts that force them to be more intelligent about what they purchase, explains McKinsey & Company. This means the medical products they do buy will need to provide whopping value.

Capitalizing on established markets won’t generate healthy profits in future. Instead, companies selling medical devices must carefully analyze where needs lie. They must then tailor their solutions to individual patients to bolster health outcomes.

As AT Kearney puts it, “Companies will no longer be able to earn premium margins by simply selling clinical features and new devices into established markets. Rather, they will need to look at new segments and, particularly, new end-to-end solutions to secure additional revenue and maintain margins.”

Devices with a service approach

Products certainly still play a powerful role in the new digital economy. Medical devices that offer additional services for doctors, care providers, and/or patients will differentiate in the market. For instance, a medical device business might choose to offer as an additional service information on specific illnesses, or it could package the device in a kit that allows the physician to “plug and play” in offering treatment. It might come with software to use the medical device, for instance, or an expert community on which the physician can rely in using it.

So what does it mean for the medical devices industry to follow a service approach? Examples for possible value-adding services for medical devices include upkeep, communication, infrastructure, education, consulting, network services, and outsourcing of non-core competencies. Hospitals, payers, and patients will be billed on time and product usage rather than a one-time price for the product. Patients will interact with their own data in cloud environments, as will physicians in order to better treat them.

The benefits are lower healthcare cost, more time for doctors spent with patients, better patient experiences, and improved patient outcomes.

To learn more about trends in the medical devices industry, stay tuned. Follow us on @SAP_Healthcare, and read the whitepaper “The Digital Health Sciences Network: Collaborating in a Digital World to Improve Outcomes.”


About Mandar Paralkar

Mandar Paralkar is the director of Global Life Sciences Industry Solution Management at SAP, where he has a leading role in creating the industry solution strategy and global business plans. He works with customers to define industry requirements to corporate development and shares global life sciences trends and solution innovations internally and externally. Further, he supports customer engagements with his deep industry expertise that includes a sound compliance and validation background.