© 2014 IBM Corporation

The future of connected health devices: Liberating the Information Seeker

IBM Institute for Business Value: Healthcare, Life Sciences and Electronics

© 2014 IBM Corporation 2

Key Themes and Findings

The global healthcare system currently consumes significant resources (measured as a

percentage of GDP) by delivering care in a highly inefficient manner. Many of these

systemic inefficiencies are caused by the inability to effectively collect and use health

care data to provide diagnosis and treatment decision support.

Addressing the underlying information problems will help improve the diagnosis-

treatment cycle. Medical device, life sciences, consumer technology organizations and

others with device offerings that target patient and consumer needs will unlock significant

opportunities.

Current health device consumers tend to be those who are fitness focused, actively

monitoring a chronic condition, or recovering from an illness. We expect device demand to

increase from currently underserved markets in the near future, especially as wealth

increases in the developing world and the median age increases.

Recent advances in mobile internet, social networking, and sensor technologies could

be leveraged to address these needs. The adoption rate of these technologies has reached

high levels because they have been deployed as part of well-planned, evolving ecosystems.

However, the healthcare device industry is dominated today by products that provide tightly

bounded, point solutions to address specific conditions, treatments, or fitness needs.

Improving ease of use and other factors that encourage use of devices that are

connected, would likely lead to improved adoption rates.

Executive Summary

© 2014 IBM Corporation 3

Evidence is mounting that the global healthcare system is increasingly challenged by entrenched inefficiencies

Healthcare is the largest contributor to “system of systems” inefficiency, wasting over 2 trillion USD per year1

Economists estimate that the current level of healthcare inefficiency could be reduced by nearly 35%

The integration between the various systems extends and amplifies the impact of idiosyncratic inefficiencies

These inefficiencies were attributed to several factors, including the ineffective gathering, sharing, and use of information

"The problem lies not in technology, but in a lack of common objectives and an incomplete understanding of the importance of efficiencies in the planet’s system, a united long-term view and a system for global optimization.” – Economist, Asia Pacific

Sources: IBM Institute for Business Value “The world‟s 4 trillion dollar challenge”, January 2010

1) IBM Institute for Business Value analysis based on 2009 survey of 518 economists.

Efficiency Analysis of the System-of-systems Size of the bubble indicates absolute value of the system (USD Billion)

15%

20%

25%

30%

35%

15% 20% 25% 30% 35% 40% 45%

System inefficiency as % of total economic value by system Imp

rove

me

nt p

ote

ntia

l a

s %

of syste

m in

eff

icie

ncy

Education

Government

& Safety

Financial

Transportation

(Goods & passengers)

Building &

Transport

Infrastructure

Electricity

Food & Water

Communication

Leisure/Recreation/Clothing

Healthcare $4,270B

Background

© 2014 IBM Corporation 4

But with healthcare shifting to consumer-directed models, consumers may be encouraged to better manage their health and help contain rising costs

Patients turn to doctors to educate them about

their condition

Patients educate themselves about health maintenance

practices

Patients rely on doctors‟ referrals about hospitals

and products

Patients educate themselves about past performance,

ratings and costs of doctors, hospitals, products

Patients seek medical care to “fix” their health

problems

Patients change their behavior to better manage their

health

Patients do not see their own medical records, as

they are stored at each provider‟s office

Patients access medical records and information,

available online across all providers

Providers are paid fee for service under

employer-provided insurance 1

Patients pay a higher share of the total cost of care

with higher deductibles and other consumer directed

elements Expected Benefits

From To

1. Payment models differ by country but there are four basic models. http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/countries/models.html

Patient health improves through prevention and care

Reduces costs and premiums by becoming more efficient

Providers improve quality and safety of clinical practice and improve efficiencies

Reduces the financial burden on employers providing health insurance to employees

Background

© 2014 IBM Corporation 5

Technological advances are also enabling smart new connected personal healthcare systems that can supply some of the crucial information needs

Sources: IBM Institute for Business Value Analysis; IBM Smarter Planet – Healthcare, Electronics, Life Sciences

Background

Smarter health systems automatically capture information to proactively manage and deliver preventive and therapeutic care

Sensors that recognize physical changes such as pressure, motion, or temperature are embedded in portable devices and health / fitness equipment

Smarter health systems remove information barriers and seamlessly integrate data and analytical insights into healthcare processes to enable smarter decisions and comprehensive, coordinated healthcare

Mobile and home-based devices monitor vital signs and activities in real time and communicate with personal health record services, PCs and smartphones, caregivers and healthcare professionals

Smarter health systems continually analyze information from multiple devices and other sources to derive insights and recommendations for the individual‟s health regimes

Analytics programs monitor device data and use rules and logic to compare against targets, track progress against goals, and send alerts when needed

© 2014 IBM Corporation 6

For health devices to be more widely successful, they must address the needs of consumers outside their typical focus

Sources: IBM Institute for Business Value Analysis

The current state of health devices

Fitness focused, highly health conscious

Aware of the benefits from monitoring certain diseases or disorders that are not terminally life threateningz

Terminally/chronically ill – need constant monitoring

© 2014 IBM Corporation 7

Information seekers are a significant population that require device offerings targeted at gaps in information for both patient and doctor

The current state of health devices

Note: Bubble size is illustrative and not to scale. The conditions included in this figure as examples represent only a subset of the overall size of the segment.

Enable real-time monitoring, augmenting less frequent visits to the doctor

Be a low cost device that is simple to use

Seamlessly connect enabled devices to the internet to up/download monitoring

data to make monitoring data available to care providers

Measure conditions that both doctors and patients are hungry for

information about

A health

device for

Information

seekers

should :

© 2014 IBM Corporation 8

While many currently available devices lack connectivity and other important features, certain health devices are bellwethers of progress

Apple and Nike

Combines running and music for

the fitness market. Smartphone

applications collect data from

sensors in fitness equipment,

enabling users to monitor their

performance

Source: “Business model innovation for medical device Manufacturers,” Bruce Anderson, General Manager, IBM Sales and Distribu tion, Feb. 2009

Motivated Healthy Information seekers Chronically Monitored

Fitbit

Monitors activity with motion and

provides online data storage and

analytical tools. Does not provide

ability share data outside of its

walled garden

CareLink by Medtronic

Allows for glucose level monitoring

and analysis. Data can be exported

and easily shared between patients

and their medical practitioners

The current state of health devices

© 2014 IBM Corporation 9

Components of this emerging ecosystem have already appeared, but need to be better integrated

An emerging ecosystem for connected health devices

Web Resources

Websites that deliver

content such as medical

condition descriptions and

nutritional details. Includes

the variety of interactive

tools and data sharing

services now available.

May be free or

subscription based

Mobile Devices

Applications that provide monitoring capability when the user is away

from home. Should include the ability to store and share collected

data with PCs and other elements of the ecosystem Electronic and

personal health

records

Electronic health

records that are shared

among different

healthcare organizations.

May include a patient‟s

entire medical history,

test results, and current

prescriptions. Web-based

personal health records

that consumers maintain

and selectively share Home-based Devices

Solutions that monitor condition status at home, outside of a clinical

setting. May include the features required for data sharing with PCs and

other elements of the ecosystem

© 2014 IBM Corporation 10

A wide spectrum of mobile health care devices and applications continue to enter the market

Jitterbug Bigger buttons and fonts than standard mobile phones. One-touch function that connects immediately to a clinician

Bayer DIDGET Plug-in for Nintendo DS gaming system for children with diabetes. Makes health monitoring fun

OsiriX Interactive visualization program for display and analysis of medical images (e.g., ultrasound, CT scanner, MRI, PET)

Smartphone Applications Health and fitness applications specifically designed to cater to individual health needs of wide range of users. Applications range in price and features Healthcare, medical and lifestyle related applications contributed to 10% (1.09 Billion) of 10 billion apps downloaded from iTunes

Electr

onic

Health

Recor

ds

Mobile

Devices

Home-

based

Devices

Web

Resour

ces Patient

Source: http://www.knowabouthealth.com/health-apps-pitch-in-10-to-speedy-10-billion-downloads/7664/

An emerging ecosystem for connected health devices > Mobile Devices

© 2014 IBM Corporation

The potential capabilities of home-based gaming and fitness devices are also evolving and converging, thanks to advances in sensor technologies

Withings Internet Connected Body Scale Wifi-enabled scale marketed as an interactive weight loss tool. Data can be analyzed using pc and Smartphone applications, stored in electronic health record repositories, and shared with via email and social networking websites

XBox Kinect Sensor array and processing software that directs game play by recognizing and evaluating gestures, faces, and voices

Electr

onic

Health

Recor

ds

Mobile

Devices

Home-

based

Devices

Web

Resour

ces Patient

An emerging ecosystem for connected health devices > Home-Based Devices

© 2014 IBM Corporation 12

The growing number and increasing maturity of web-based knowledge resources are providing opportunities for consumer self-service

WeightWatchers.com

Web-based service provides

tracking tools and information.

Delivers free and premium content

ADHD.com

Provides access to ADHD tests,

symptom tracking forms, and

treatment tools for a monthly fee

Drugs.com

Medical dictionary and source of

independent drug information for

consumers and clinicians. Free

Electr

onic

Health

Recor

ds

Mobile

Devices

Home-

based

Devices

Web

Resour

ces Patient

An emerging ecosystem for connected health devices > Web Resources

© 2014 IBM Corporation 13

Personal health record services are catching the attention of consumers, care providers and payers

Dossia Built on an open-source platform and

sponsored by several large US employers.

Users can securely share their complete

medical history

Microsoft HealthVault Currently maintains a larger base of

compatible sensing and mobile devices. We

believe others in this area will be reach the

same degree of capability in the near future

Electr

onic

Health

Recor

ds

Mobile

Devices

Home-

based

Devices

Web

Resour

ces Patient

An emerging ecosystem for connected health devices > Electronic Health Records

© 2014 IBM Corporation 14

So what are the potential opportunities within this emerging ecosystem?

An emerging ecosystem for connected health devices> Potential Opportunities

Web Resources • Web-based information

repositories help to increase understanding of conditions and their treatments

• Consumers seek out trusted sources of health information, and are willing to pay for it

• A patient‟s access to his/her personal health condition may soon be possible automatically and remotely while ensuring privacy and security of the data

Mobile Devices • Users spend a significant amount of time with interactive devices regardless of their location • The growing smartphone application market has created a new gateway for consumers to

transmit health data to care providers and others • Mobile applications designed for care providers will increasingly be adopted as privacy

and security concerns are resolved

Electronic & personal

health records • Doctors can make more

informed diagnosis and treatment decisions from having direct access to information on a patient‟s health condition

• Reduced risk of drug interaction errors caused by miscommunication

• Hospitals and payers will realize significant efficiencies from reduced complexity & duplication

Home-based Devices • Human-machine interfaces are evolving to a state where accurate measurements of movement are possible • Technology that makes current gaming possible could be used to develop healthcare monitoring capabilities • Providing an accurate health condition assessment may soon be possible remotely and automatically

© 2014 IBM Corporation 15

This new ecosystem is needed to deliver connected health devices that bring technology to daily health monitoring

An emerging ecosystem for connected health devices

Source: IBM IBV Analysis

(1)Medical portals are also provided by hospitals, medical centers, government payers, public health, etc.

© 2014 IBM Corporation 16

Key Findings and recommendations

To be successful in this new environment, players across healthcare, life sciences and the

consumer electronics industries should:

Focus on the total solution design Focus on ease of use of device solution to reach

targeted „Information seekers‟, consumers who are aware of the benefits from

condition monitoring

Identify your position in the connected health device ecosystem Evaluate core

capabilities and the benefit of intellectual property investment and partnering

Use the power of the social network to help individuals to stay healthy Examine

emerging digital media and social networking business models

Get involved with building the ecosystem ‘infrastructure’ Promote industry-wide

efforts to improve interoperability and ease-of-use, as consumer and clinician adoption

are tightly linked to these attributes

Learn to collaborate with new partners Develop partnering skills to collaborate

effectively within the connected device ecosystem

Conclusion

© 2014 IBM Corporation 17

For more information

To download the study, please visit -

http://ibm.co/1mVHTJr

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For queries:

Dr Sumeet Kad (sumeet.kad@in.ibm.com)

Heather Fraser is a pharmacist with over 25 years of industry experience in pharmaceutical R&D,

consultancy and community pharmacy. She leads the Healthcare and Life Sciences team at the IBM

Institute for Business Value, where she has published extensively on the future of the

healthcare and life sciences industry. She has also developed a set of viewpoints based on interviews with Life Sciences and Healthcare CxOs. Heather

holds an MBA from Warwich Business School. She can be contacted at hfraser@uk.ibm.com

Heather Fraser Study Co-Author

Contact details

Follow Heather at:

© 2014 IBM Corporation 18 IBM Confidential 13 March 2014 18 13 March 2014

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