The Coming Boom of Healthcare IoT
IoT growth continues to skyrocket with an annual growth rate of 23%, and IoT devices are on track to surpass the number of smartphones to become the largest category of connected devices by 2018. The low cost and wide availability of sensors and radios used to connect everyday objects, such as traffic signals and thermostats, to the Internet has tipped the scales in favor of this boom.
Healthcare IoT has already emerged as an expanding market, but it may be poised to grow even more rapidly. Here’s why:
Markets Are Moving Past the Fear of Healthcare Uncertainty
There is plenty of rancor over what the future of healthcare in the United States will look like and who will provide it. Regardless of the actual impact, enough noise was made over 2010’s Obamacare’s 2.3 percent excise tax on medical device companies that it was at least one of several factors that led investors to shy away from device startups with long pathways to profitability.
Companies like Signus Medical’s chief complaint was that the tax was calculated based on gross sales rather than profits, cutting into margins of once attractive investments. However, it appears as though investors and entrepreneurs are no longer willing to wait for stability before making investments in med-tech. Instead, they’ve offset those risks by shifting away from more complex devices like implantables, and have crept into medical devices for diagnostics and monitoring, both ripe categories for internet connectivity.
Major Device Manufacturers Are Pursuing IoT Applications
The premium cost of implementing new technologies has never been a huge barrier to the medical device industry. Device innovation has often led the way in use of more expensive hardware technologies such as exotic materials, complex assembly, and micro-miniature part fabrication. More often, new technologies meet resistance when it comes to quality and regulatory hurdles that aren’t a factor in the development of traditional consumer electronics.
Traditionally, FDA regulation governing the sales and marketing has been slow to react to technological developments. Presently, the FDA seems to be preparing for the oncoming trend in medical IoT development, establishing a Digital Heath Unit and releasing relevant non-binding guidances for areas like radio frequency wireless technology, mobile medical applications, and cybersecurity. Most analysts are hesitant to attribute FDA action to forward thinking, and in fact it may be far more likely this action is partly caused by highly publicized articles touting the ability to hack and control life-sustaining devices like pacemakers.
Even though the guidances may be non-binding and relatively straightforward, the signal that FDA is anticipating this trend is a good indication the medical IoT boom has already begun. Furthermore, their issuance reduces the potential risk medical device manufacturers face in meeting new regulation by putting forth an expectation of what those future requirements may be. As the development leaders forward, behind them stand an army of more conservative startups and large corporations waiting to capitalize on the learnings of early adopters especially in previously unestablished areas like risk management, quality control, and security.
Implementation Barriers Are Lower Than They Used To Be
Achieving regulatory clarity is not the only challenge that will lead to increased medical IoT development. Only a few years ago, hospitals struggled to implement internet connected devices. Multiple networks, lack of wireless connectivity options, and a myriad of security layers made conducting small clinical studies with connected devices extremely cumbersome. Today, hospital IT systems are being built to accommodate the growing need for flexibility and sheer number of devices connected to those networks. Hospitals and medical device manufacturers must comply with HIPAA and privacy requirements, and the knowledge around building IoT products that meet these requirements are also better understood.
Compelling Use Cases Drive Medical IoT Development
Given the higher barrier to entry in the medical device market, connectivity will be driven by discrete clinical benefit. There are some incredibly compelling and practical reasons to connect a medical device to the internet. Here are three:
Monitoring, Data Mining, and Machine Learning
Big data has been an area of investment interest for some time now. But how does all of that data get gathered, especially when it is frequently personalized medical data that must be retrieved from patients, and not always easily gathered in a clinical setting? Enter the world of medical monitoring – removing therapeutic benefit in lieu of simply collecting data typically comes with much lower FDA scrutiny. Once biosensor data is collected, resulting information can be used for applications such as customization of alert parameters for individual patients. One company doing exactly that is Sentrian. Their “Remote Intelligence” platform uses machine learning to create an algorithm that detected 88 percent of hospitalizations five days in advance, with only a 3 percent incidence of false positives.
Harnessing the Power of the Cloud
A medical device startup that spun out of Johns Hopkins University is using internet connectivity to do the heavy lifting. Cardiosolv sends pre-operative imaging to the cloud so that computers more powerful than a typical tablet or laptop can reconstruct the human heart in three dimensions to calculate and model tissue death caused by heart attack. The model can be used to conduct an analysis of the heart’s electrical pathways and map precise treatment, potentially sparing patients with abnormal heart rhythms hours under anesthesia and saving physicians the trial and error of tedious electrophysiology mapping procedures.
The soaring popularity of fitness wearables may be on the decline, but it has ushered in the era of the health wearable. Where fitness wearables have failed in accuracy, companies are eyeing an opportunity to bring them up to medical device quality standards, and also have their sights on the more attractive accompanying margins and longer product lifecycles. Earlier this year consumer electronics company, Jawbone, once valued at three billion dollars, announced that it was dissolving its existing business and raising capital to focus on the medical wearables market. One key factor in the future growth of health wearables lies in companies’ ability to open up insurance reimbursement, as the cost of meeting medical quality standards will make it difficult for consumers to pay for these devices out of pocket.
Many challenges to medical device IoT have yet to be solved, but the sector is well positioned for rapid growth.
*Disclaimer – Greg Schulte is a founder and shareholder in Cardiosolv.