EMDT_European Medical Device Technology

European Medical Device Technology, Spring 2014

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36 | Spring 2014 European Medical Device Technology emdt.co.uk special report Owning the Disease: How MedTech Companies are Adapting to Survive Traditional medtech companies are increasingly turning to more integrated business models that focus on delivering services and solutions across the continuum of care. G one are the days when it was enough for medical device com- panies to simply enhance existing products with new features in order to be successful. Instead, the medical device industry is preparing for a monumental shift toward outcomes-based, or value- based, healthcare during a period fraught with economic uncertainty and funding challenges. To compete in this changing land- scape, many traditional medical device manufacturers are reevaluating their business models and exploring the concept of "owning the disease," a term popularized by consultancy Pricewater- houseCoopers (PwC). "The migration of medical device manufacturers from product-centric business models to solution-driven busi- ness models is the result of government or payer financial constraints, an expec- tation of demonstrable outcomes and innovation," says Brian Williams, direc- tor of global healthcare strategy at PwC. "In the medical technology industry, manufacturers must now look beyond the episode of care to the continuum of care and understand where and how their products enable and enhance better outcomes." A Changing Healthcare Landscape Approximately one-third of European hospitals are losing money, according to a study recently conducted by the consul- tancy Accenture. The report, which anal- ysed the economic situation of a number of hospitals across the continent, found that almost half of hospitals are running the risk of "defaulting on their financial commit- ments." Such vexing statistics suggest that the pressure on the medical device market will likely only increase in coming years. The gloomy economic situation in hospitals, coupled with the financial calamities of the public sector, have already led to a change in purchasing policy. "Suppliers no longer deal with thousands of hospitals, each purchasing from individ- ual suppliers," according to Jörg Kruetten, head of the global life sciences practice at the consultancy Simon-Kucher & Partners. "Instead, they are facing big buying groups with a tremendous bargaining power and professional purchasing strategies." In combination with the changing poli- Thomas Klein ES430833_EMDT1405_036.pgs 04.29.2014 03:30 UBM black yellow magenta cyan

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