Beyond AI hype: How partnerships power medtech innovation

For anyone wondering where medtech might focus its energy for the balance of 2024, I just want to say one word to you: partnerships. While partnerships have always been vital to our corner of the healthcare industry, I expect they will take on new prominence as we work to improve consumer wellness and move toward the AI-powered future of health we all want.

I run the risk of inviting the hype machine with the mere mention of the two hottest letters in stock valuations. Right now, everyone who mentions AI seems to get a flurry of attention and a valuation bump. Despite overblown expectations, we still need to remember that medtech uniquely stands to benefit from the application of AI to patient care. I want to spend time defining why I’m so optimistic, but I also will argue that medtech needs to avoid previous tendencies of going alone and instead cultivate partners in this space.

First, a warning: Beware the hype machine. I predict a time of cynicism is coming wherein everything will be called “AI” indiscriminately and truly transformative solutions will struggle to stand out. A key determinant will be that AI needs to actually solve a problem to be valuable. Any good marketer knows the difference between a feature and a benefit, and the same applies here. Also to be transformative, it needs to work with the system, not outside it. The opportunity for AI in healthcare is going to be the ability to accelerate physician and staff effectiveness and to dramatically improve patient care. But these improvements need to happen alongside established systems to avoid organ rejection—or worse.

The opportunity to help clinicians spot a signal in an electrocardiogram, help surgeons identify critical structures during surgery or leverage large data sets to manage chronic illness are all obvious examples. Streamlining procedures, improving workflows, driving care coordination, providing clinical decision support—the list of possibilities goes on.

My optimism for medtech goes beyond just what can be accomplished to also include the role the industry plays in healthcare. Medtech often creates and curates data. The industry often works alongside clinicians and is deeply embedded in workflows and care pathways. The adjacency of data to interventionalist tools means that medtech can both inform decisions and support actions through AI. I don’t see any other industry player with these advantages.

But to avoid the risk of rejection of AI solutions, it’s critical to work with partners. Key ingredients to the AI impact soup include data sources such as electronic health records (EHR), diagnostic and monitoring devices, processing power, interventional tools and, of course, clinicians. For example, partnering with EHR providers allows for seamless integration of our solutions into existing healthcare workflows, improving user adoption and data accessibility. True success in this space will require collaboration across this ecosystem, and medtech needs to play a prominent role.

Back in a 2010 hospital study, we uncovered an emerging willingness of hospitals to partner with medtech manufacturers to address outcomes. The Obama-era Centers for Medicare & Medicaid Services had just introduced significant penalties around hospital-acquired conditions (HAC) and rehospitalizations. The importance of 30-day readmissions, HAC scores and quality metrics shifted solutions from medtech into the spotlight that would reduce the length of a patient’s hospital stay or adverse events such as infections, pressure ulcers and falls. Tools became available in the medtech toolkit to pursue significant partnership opportunities on shared goals. I can point to many different products, solutions and workflow solutions that made a meaningful impact on these outcome scores and represented significant collaboration between medtech and its hospital customers, taking pressure off the traditional zero-sum game of focusing solely on material cost. I think medtech might be at another point of opportunity to collaborate and release pricing pressure by helping improve the difficult situation created by hospital staffing and labor shortages.

While the days of traveling nurses and dangerously insufficient intensive care unit staff are over, the pressure on hospitals is in no way going away. Medtech companies have a significant arsenal of tools to help ease these staffing pressures. Workflow consulting, originally a niche applied to things such as orthopedics, can be brought to bear in other parts of the hospital. Procedural efficiency can show up in the form of surgical techniques, biosurgery products or easier-to-deploy devices. AI and robotics will power labor-saving solutions that tackle routine tasks to ease workflow problems and boost productivity.

Medtech can train unfamiliar staff back into the well-coordinated operating room (OR) team they once were. And it also can help balance capacity and work with alternative sites of care to release the pressure on hospital ORs for the most complex cases. In short, I believe the challenge of staffing represents another opportunity for partnership with health systems to move away from zero-sum negotiation and address persistent challenges plaguing hospitals. This is great news.

We all want to be patient centric. Our various missions, value statements and credos indeed remind us that the patient is the reason we’re here. There are notable reasons why the need for patient centricity continues to grow and why major medtech companies are paying close attention to this mandate.

• Patient choice has never been more important. The choice to have an intervention and engage with medtech is often driven by the patient. Even when medical devices have a strong indicated population for proactive treatment such as interventions for atrial fibrillation, heart failure, profound hearing loss, weight loss, incontinence, pain, joint replacement and insulin delivery—the list goes on—they’re all highly dependent on a patient’s decision to have a procedure. Patients may exert less influence on the brand choice, but they certainly have the last word on whether to treat their condition surgically.
• More and more medtech devices are driving direct patient engagement. This is great in the sense that it can lead to disease management insights, behavior change and general awareness of the impact of medical device therapy. However, it means medtech needs to be much better at understanding how the patient interacts with the device. Medtech must be much more purposeful in the design of interfaces, digital or otherwise. It means the discipline of user experience needs to take more prominence in the design process.
• The prominence of the need to partner with the patient is tied to AI. If we aspire to work with large sets of patient data to bring AI to the forefront of our therapies, it’s essential that medtech engage the patient to build trust in how we use the data ethically and in how to equitably collect and integrate data for accurate diagnoses. Patients own their data and need to consent to its use. They won’t do that with a nameless, faceless industry they don’t trust. There are many ways to drive trust, but recent work with patient research has made it imminently clear we have work to do. ZS's 2024 Future of Health Survey revealed that 66% of U.S. consumers trust retailers to act in their best health interests, more than healthcare companies.

I’ve long heard medtech bemoan the shifting sites of care. For too long, the industry has treated alternative sites of care (ASC) and office-based labs as a dirty word, hoping they stop growing and wishing pricing pressure would subside. The rising wave of ASCs is not going to subside. It makes too much sense to patients, providers and payers to move routine high-volume procedures that can be safely performed to sites of lower acuity. Of course, this trend is not new, but the diversity of procedures and the magnitude of the shift make it unavoidable.

Unfortunately, the heterogeneity of customer structures, as well as pricing pressure that is often more fierce than traditional sites of care, have meant the response from medtech has too often been to ignore this and hope it goes away. When it’s clear that it will not go away, smart companies are creating value propositions specifically for these sites of care. The most successful in the space look at their product offerings, pricing, services and portfolio to create a compelling offer that’s not simply more of the same at lower margins. Removing friction through greater B2B integration, workflow assistance, financing and throughput marks a significant opportunity to partner with customers for mutual benefit.

For many years, the ASC trend has almost exclusively been a U.S. phenomenon, but this is changing. Eye-popping wait times in the U.K. have made the National Health Service increasingly open to addressing shortages of hospital resources by moving procedures to lower-acuity sites. A slow-moving but potentially dramatic change in Germany will most certainly shake up the nascent surgery center market. It’s been a long time coming, but there are indications that ASCs will finally be a more global conversation.

Predictive analytics will play an important role by equipping healthcare providers with the insights they need to determine who will most benefit from an ASC such as the patient’s home or a telehealth visit. AI-powered remote monitoring devices can call for timely interventions by tracking vital signs, therapeutic adherence and other health-related parameters.

With all this talk of partnerships, I am remiss if I don’t mention the medtech-pharma dynamic and the effect of new drug launches on medical device viability. At last year's AdvaMed conference, we saw some volatility in medtech stocks following positive trial results for GLP-1s in treating chronic kidney disease—and no medtech leader could speak more than a few sentences without being asked about these wonder drugs. While GLP-1s generated significant attention and discussion, notably about bariatric surgery, there is still a very real impact from this class of drugs in some areas that may never completely return to the previous trend.

Beyond GLP-1s, which are a visible and very public development, biopharma innovations can have broader implications for medtech treatment rates. Heart failure drugs have dramatically disrupted referral patterns for cardiac interventions, often leaving patients on “medical management” while their condition worsens. Despite studies that identify certain cardiac ablations as a first line of treatment for atrial fibrillation, the market remains stubbornly underpenetrated. Early detection and innovative oncologics and therapies have changed cancer treatment practices, often obviating or altering the role of surgery. While many of these advancements offer promising patient benefits, we must acknowledge the implications for the medtech sector. Medtech needs a strategy to continue expanding its strengths to remain a healthcare leader.

If 2023 was a year of reckoning, on the whole, there’s a lot to be excited about in 2024. Medtech has significant opportunities across the ecosystem to embrace technology, improve outcomes and drive efficiency. While AI will help focus the industry’s energy, we cannot work alone or stick to our silos. The key to making the most of these opportunities is going to be bolstering a shared commitment to helping improve patient health and effectively identifying therapeutic areas where partnerships make the most sense. Medtech can approach this by driving stronger relationships with providers and patients that go beyond the customer-supplier dynamic and by actively forging partnerships with other industry players to convene a more interconnected and impactful healthcare ecosystem. Like every journey, this one begins with first steps—open communication, enhanced collaboration platforms and aligned goals and incentives.