Should Medtech Consider A New Go-to-Market Model? | Deloitte US has been saved
Limited functionality available
By Neal Batra, principal, and Andy Davis, principal, Deloitte Consulting LLP
It has been more than a month since we returned from the annual Consumer Electronics Show (CES) in Las Vegas…and we are still marveling at some of the health innovations we saw there. We also noticed that a growing number of health-related devices are being marketed directly to consumers—rather than to health systems and clinicians. As consumer-focused companies move deeper into the health care space, they are challenging medtech’s traditional go-to-market model.
We last attended this event in early 2020, a few months before COVID-19 was declared a pandemic (see Your Toothbrush has Some Important News!). While there were fewer exhibitors, fewer attendees, and a little less sizzle this year, CES remains an important event—particularly for innovators who are bringing the Future of HealthTM closer every day.
More than 100 health companies participated in this year’s event, according to the Consumer Technology Association. As we perused the exhibit hall, we examined and tested a number of devices that line up remarkably well with Deloitte’s vision for the Future of Health. Andy tried on a headset developed by Boston-based Neurable. The device, which resembles a standard pair of headphones, can play audio and take phone calls. It also has sensors that translate the user’s brain activity into actionable data. When Andy tested the device, we could clearly see that his attention was highly focused as he worked through some math exercises, but it plummeted whenever he was interrupted. This device could be used to diagnose and treat attention deficit hyperactivity disorder (ADHD). People who have ADHD often don’t realize when they’ve lost focus. Neurable says it is starting to collect information that could lead to the detection of depression and other chronic conditions such as Alzheimer’s disease (see We Talked About the Future of Health…Now We’re Living It).
Here are a few other consumer-centric devices that caught our eye:
Consumers are an untapped place to market
There is a perception that people will continue to rely on their physician for care and medical advice. The vast majority of health start-ups at CES were hoping to generate interest by catching the attention of health systems, clinicians, and health plans. While those stakeholders still control the continuum of care and reimbursement today, the traditional model could break down as data and technology make it possible for people to detect illnesses early, or take steps to prevent them altogether. As we noted in our report, Breaking the cost curve: The future of health care spending, we anticipate that emerging technologies, an ability to cure and prevent disease (or detect disease in the earliest stages), and highly engaged consumers will lead to a deceleration of health spending in the years ahead.
At this point, however, few medtech companies market their products directly to consumers. We expect this dynamic could change as venture capitalists and other investors recognize the growing value of consumers who are empowered to make decisions about their own health. In addition, launching a health device aimed at consumers could be less expensive than developing a regulated medical device and could provide a faster path to generating revenue.
Consider this: In 2008, Fitbit was named the best new product in the Health & Wellness category at CES. It wasn’t long before millions of Americans were seeing how close they could get to 10,000 steps each day. Today’s fitness trackers do much more than count steps or heart beats. They can count calories, monitor sleep quality, measure blood oxygen saturation, and collect other granular pieces of health information that could help prevent future health issues. The smartwatch might be one of the most successful medtech devices in history, but it was developed for (and marketed directly to) consumers. One in five US adults regularly wears a smartwatch or fitness band, according to the Pew Research Center. Moreover, smartwatch shipments increased nearly 50% in the second quarter of 2021, according to Strategy Analytics.
While going after the consumer market might be a faster path toward having a regulated medical device, transitioning from a traditional business-to-business model to a business-to-consumer model requires a radically new way of thinking. Can medtech start-ups show us where the future of health is headed? Deloitte recently analyzed a database of 1,000 start-ups and interviewed company leaders. See our report here.
We are in the early innings of this game. The first couple innings will likely revolve around devices that gather data, and companies that developed fitness trackers and health sensors will likely become data conveners. The middle innings will likely focus on the insights that are generated by the data, which will require connecting datasets together. The final innings might focus on making those insights actionable. For example, how can data be used to influence healthy behaviors and better health outcomes? There could be some long innings ahead, and we might even see some extra innings as this game plays out.
Neal is a principal in Deloitte’s Life Sciences and Health Care industry and heads Deloitte’s market-leading Future of Health™ practice, which focuses on business model and operating model innovation, re-design, and transformation. Neal’s work puts into practice the award-winning ideas that anchor the bold and visionary Future of Health point-of-view that he co-authored in 2018. Neal has more than 20 years of experience advising health organizations on critical strategic challenges, serving clients across the ecosystem, including biotech, medtech, health insurers, hospitals, and health retailers. He is also the Lead Alliance partner for Deloitte’s global relationship with the world-class, Israel-based hospital Sheba Tel Hashomer, a partnership focusing on helping provider systems and governments replicate the success of Sheba’s Tel Aviv-based health innovation ecosystem. Neal lives in New York City and holds an MBA from London Business School and a BBA from the College of William and Mary.
Andy Davis is a principal for Deloitte Consulting LLP’s Health Care practice, with over 15 years of experience as a leader in our health actuarial practice, driving change across the ecosystem with payers, providers, and life sciences companies. He is known for bringing an understanding of how to quantify the economic value of services to members, patients, and customers, which spans payers, providers, PBMs, large pharmaceutical manufacturers, medtech, and diagnostics companies.