By Mitch Beaumont, Prashanth Prasad, Ulrica Sehlstedt and Mandeep Dhillon, Arthur D. Little
The healthcare sector has changed dramatically in recent years, due to new digital products and services emerging. However, established “analog-native” medical technology companies may need to make significant business and operational model changes in order to create significant value from these developments. We have identified a framework with two sets of primary “levers” that executives can use to impact the changes to their companies’ business and operational models to support a digital business. The specific levers used, and the degree to which they are “pulled”, will be unique to each company’s environment and its ultimate goals for digital. Most medical technology companies will focus more on two or three levers, with minor changes in the others.
Business model levers
• Digital products and services can enhance or shift a medical technology company’s value proposition in the market. Or it can offer tools such as applications and reminders to increase patient engagement and improve adherence. Typically, a digital business will want to build upon the company’s existing core value proposition, rather than creating a new one.
• Most medical technology companies have focused on selling devices, or generating revenue per unit. However, monetization of value can take on alternative forms with digital, such as service-oriented and data-centric models.
• Digital can enable a company to shift or expand the markets it serves to open up new business opportunities. Alternatively, companies may be able to create new business relationships with other value-chain players, such as home health companies, by providing information that improves the effectiveness and efficiency of in-home care delivery. [Read more…]