The complex maze of health economics in Europe means that the journey from idea to launch can be quite a challenge for medtech companies. In the second instalment on the topic, Sue Montgomery continues her discussion with two industry experts about how to navigate the complexities
So far, we’ve discovered that there are no easy answers when it comes to money, medicine and Europe. Lorena Macnaughtan MBA, PhD researcher with the Horizon Digital Economy Research Institute, University of Nottingham, says that the European health economics landscape significantly affects medtech companies. ‘When in Europe, innovators have to understand a few things – aside from its umbrella policy for medical devices. First, the size of a market doesn’t make it attractive by default. Markets most permissive to innovation have a good representation of both private and public health systems. Second, markets that foster private/public collaborations are very attractive (the public sector is often a source of legitimacy for innovation). This may indicate that the health systems are open and permeable. In addition, there is a relevant tension between public and private sectors that stimulates growth and a healthy attention to consumers/patients, but also to consumers/doctors,’ she continues. ‘Third, if the system has gatekeepers – in most instances, GPs, but also other organisations (the National Institute for Health and Care Excellence in the UK) – proceed with caution. Last but not least, at present, most medical innovation is assimilated first by specialists, or by patients whose role in innovation is understudied. However, with the explosion of smart devices, patients have become major drivers, either as innovators or adopters.’
Martin Kelly, co-founder and CEO of medtech matchmaking community HealthXL, adds that innovators in Europe are often tied up by the slow flow of revenue. ‘They have great ideas and great products, but the end users can’t pay them in a manner that is timely enough to keep them sustainable.’
Macnaughtan says that coping with these complexities depends on device positioning, ‘on where on the continuum of medical innovation a device is sitting – from a low-risk/layperson device to a high-risk/specialist technology. Innovators have to clearly define the problem their device/technology is trying to solve. If that problem is recognised as such by policy-makers and/or the health system, then it becomes a bit easier only if the system is open.
Macnaughtan continues: ‘Then, innovators have to understand not only the end users but also their larger contexts. Thinking in terms of externalities would help. The healthcare market has many dependencies and widespread regulations. As a consequence, innovators’ rhetoric and strategies have to deploy on multiple levels – and surely keep the future in mind. Is the device is going to mature along with the Millennials, which John Sculley, former CEO of PepsiCo and Apple, says is “a highly adaptive” generation, with little regard for traditional ways of doing business, prescriptions and channels.
‘I would go further and say that this generation operates right here, right now. It connects, disconnects and reconnects in serendipitous and simultaneous ways. Within this generation, we mustn’t forget that there are doctors, too. Such behavioural and cultural propensities would transfer to expectations from healthcare, as an essential part of an autonomous, mobile and connected life,’ Macnaughtan adds.
Kelly agrees that it’s not about a shortage of innovative solutions, but creating the right ones to fit the needs. ‘I think the big issue is that it’s not a supply problem – it’s a demand problem. We’re working with part of the NHS at the moment on this. Here, the issue relates to figuring out how to get the clinical teams and the people who buy the services to articulate what the problem is.
‘Currently, what we have are a lot of new companies being formed and building solutions that they think are important. So, the question is, how do you change the conversation? How do you move it from an oversupply of innovation to really understanding where the demand is and then understanding how you catalyse that – rather than just creating a lot of companies and a lot of innovation? How do we solve the real problems, and how do we get the people who understand those problems to engage when they’re busy delivering care?’
When asked what he would recommend to make that happen, Kelly cited real-time, face-to-face collaboration as the key. ‘What HealthXL does is use a challenge process – as we did at our Hack Aging event in Australia, with Northern Health and IBM. There, people who understood the problem came forward and said: “Look, the big issue is around aged care, and within that there are related problems around malnutrition, social isolation and dementia. Within that there are specific needs that we’re trying to work with.”
‘Within dementia, they wanted to find a solution that would help patients have some type of device on them that would either play a piece of music or video that would remind them of their earlier years and help decrease their agitation,’ Kelly adds. ‘However, they couldn’t find anything on the market, so they brought that need to the challenge.
‘The basic idea of our challenges is to allow people to come forward with the problems they’re trying to solve, and then we try to connect them with the large players who can help pay for it – because at the end of the day, somebody’s going to have to pay for it, and somebody’s going to have to put it into the care pathway. In addition, we want to find the most interesting innovators, if there are already solutions out there. If there aren’t, then we try to connect people so that they can go ahead and build these solutions together.’
Kelly reiterates that it’s vital for demand to drive the innovation process. ‘We always begin with the demand. We usually start with one of our industry or clinical partners who says they have a problem. I’ll go back to the example of Norton Health on ageing. The team there said they had specific problems they were trying to solve, so we started to work with a number of their senior patients to really understand them. Then, with their permission, we used those profiles and went out to the developers and entrepreneurs and said: “Here are the people who would use your product. Here are the people who are the decision-makers and the clinical teams around them. And here are the people who are the payers – the insurance companies.” We brought all those folks together. But we started from the problem, not from “here’s a cool technology or a cool solution”.’
— HealthXL (@health_xl) November 25, 2015
The complex maze of health economics in Europe can significantly hamper the journey from idea to launch for medtech companies. However, by understanding the landscape and the need, putting demand first, and optimising collaboration, there is great hope for the innovation horizon – seen by many as a bright one.
— Tomas Novotny (@tomtny) November 18, 2015
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