The Internet of Things: Where healthcare and electronics converge

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Product Manager IoT Division - Connected Products, IBM

The government heavily scrutinizes medical devices, but few laws are passed regulating the design safety of washing machines or copiers. Silicon chips can go for over a million dollars a piece, but flat-screen televisions go obsolete every two years and cost less than a pair of good tickets to the NBA playoffs.

Industry focus is incredibly relevant. In my opinion, without it we’re just selling a bill of goods and we’re not partnering with our client and providing solutions that pertain to relevant industry challenges.

I attended IFA 2014 in September 2014, CES 2015 in January 2015 and Mobile World Congress (MWC) 2015 in March. The overarching theme across all three events was the Internet of Things. A technology such as the Internet of Things emerging with such broad implications is rare. Yet despite the vast differences between medical devices and consumer electronics, they all will be significantly impacted by the transformative affects of Internet of Things–related technology and business model disruption.

Why is that? The answer is data. A friend of mine who has a connected home start-up said to me early on, “it’s all about the data.” Electronics organizations are detecting, storing and analyzing volumes of data that will result in unprecedented insights. These insights are expected to transform business models, segment leaders and quite possibly change the human experience itself.

Medical device transformation

What are some of the things electronics organizations can and will use that data for? Rather than try and provide a grand overview, I’ll focus on one specific segment within the electronics industry—medical devices.

Medical devices stand to be significantly transformed by the Internet of Things, and with the implementation of the Affordable Care Act (ACA), both technological and regulatory influences are reshaping the industry.

First, consider the ACA. It “puts consumers back in charge of their health care. Under the law, a new ‘Patient’s Bill of Rights’ gives the American people the stability and flexibility they need to make informed choices about their health.”

The medical device industry has taken notice of the ACA, which is designed to improve the quality of healthcare while reducing the costs and levels of the uninsured within the US. Recent Unique Device Identification (UDI) system legislation further enhances the quality of healthcare by ensuring each device is identifiable and secure during all points in the supply chain. Implementation of the UDI system began in late 2013 and should improve the quality of information in medical device—adverse event reports, help the Food and Drug Administration (FDA) identify product problems quickly, target product recalls and enhance patient safety.

Two components of these regulatory changes stand out as areas in which technology could play a critical role in any strategy formed in response to the ACA and UDI legislation.

  1. Part of the ACA is a 2.3 percent excise tax on revenue
  2. Full UDI implementation is forecasted for 2020

A 2.3 percent tax on revenue instead of profit is analogous to 2.3 percent of your sales disappearing every year. In an industry where research and development (R&D), manufacturing and operation costs can be prohibitive for start-ups (and a nightmare to chief financial officers [CFOs] in established companies) the ACA excise tax puts further pressure on improving operational efficiencies to offset this new cost. Companies that find ways to reduce expenses and maintain margin will have relative advantages to those that are unable to follow suit. And, those that can’t may lose momentum and market share, which opens them up to acquisition or bankruptcy.

With full UDI implementation forecasted for 2020, there’s a potential to improve consistency and security with the various distribution networks, within the medical device industry. Improved supply chain could represent an opportunity for cost savings, along with the potential for improved rationalization of delivery networks, inventory management and overall keen insight into important supply network attributes. Again, early adopters who execute effectively against a rationalized strategy stand to be the winners, while those who fall behind on implementation won’t realize the benefits of early adoption. If opportunities are missed for reducing supply chain expenses, we may find additional medical device companies up for sale within the next few years.

Internet of Things innovation

On the technology front, Internet of Things use cases are plentiful when imagining a medical device industry of the future. The term “connected health” has entered popular nomenclature and will likely become ubiquitous as innovative organizations seek Internet of Things use cases that solve some of our most challenging health-related issues.

Imagine a future in which your medical profile, vitals and dialysis machine inputs are captured with the help of connected medical devices. You won’t even have to visit the doctor to receive treatment. Instead, you get dialysis done with the assistance of a portable device that’s kept in the home and was manufactured for that purpose. Data captured is analyzed and used to make well-informed decisions regarding your health. Doctors can monitor your vitals remotely and respond to any concerns proactively.

Imagine a future in which pediatric and elderly care is done largely through the use of sophisticated wearable devices that can monitor heart rate, blood pressure, movement, sleeping patterns and even blood sugar. Data collected is scaled up to do bulk analysis on specific treatment types or prescribed medicines. Emergency response is fully automated, so when a fall is detected, or heart rate rises to dangerous levels, emergency medical technicians (EMTs) are alerted and on the way well before any caregiver notices a problem.

Imagine a future in which personal health is managed through wearable devices similar to the Fitbit, or the iWatch. Steps are counted, and sleep patterns are recorded. How often you stand or walk or run or bike is all collected and analyzed for the purpose of providing guidance on how best to achieve personal health goals. If you don’t walk enough one day, perhaps you’re notified the following day that you’ll need to make up for your lack of exercise by running a given distance in a given time period. And of course you shouldn’t eat desert that day, or else you may be off your plan.

Systems such as these can provide the insight needed for average people to manage their own day-to-day fitness and health. And these systems will likely aid the individual in achieving fitness goals. The data that is captured and displayed may certainly compel the individual to be more accountable.

I read a great quote recently: “The human body has become a source of real-time contextual data.” If a small device such as a Fitbit can be worn without inconvenience, yet still collect significant volumes of data on the wearer’s health, the use-case scenarios are quite numerous. They are only limited by our own creativity and the economics supporting the adoption of these devices.

As regulation and the emergence of the Internet of Things compels huge changes, the medical device industry will likely look much different by 2020, when full UDI compliance is mandated. In addition, by 2020 the Internet of Things is estimated to have fifty percent more connected devices used globally than are being used today.

The convergence of these two industry characteristics will make for some interesting times. I’m excited to see what the future holds.

For more on how IoT is changing the electronics industry, check out IBM Electronics and High Tech solutions.