COVID-19 stalled clinical trials, halted elective surgeries, and body slammed many med-tech companies’ revenues. Despite that, an industry report released by Ernst & Young (EY) finds that the pandemic also drove some positive changes in the med-tech industry including long-neglected attention to enterprise-wide business continuity. In addition, disruptions caused by COVID-19 accelerated the adoption of digital technologies that increased access for patients and integrated artificial intelligence into healthcare delivery and medical practice at a breathtaking rate. Limited access to clinics and hospitals increased availability of tests and products that patients could use at home on their own schedules.
Perhaps the greatest lesson from the pandemic has been the need to prepare for the unexpected and adapt to new circumstances at lightning speed. To “future-proof” their businesses, Jim Welch, EY Global Medtech leader, recommended that companies evaluate their current business model to see whether it fits for today’s and tomorrow’s ways of interacting with patients, physicians, and other partners.
Part of that process is to “really understand the economics behind the model you evolve to,” Welch said, and building structures to support that. Companies should keep an open mind and recognize that a monolithic approach could be detrimental – different units or product lines may be better suited to different models. Once a model is defined, the company should stick to an execution plan that centers on connection to patients and information in the market rather than relying on the current models and supply chain to push through product.
Supply chains bore the brunt of the initial damage from the pandemic as companies suddenly confronted the consequences of “scaling for efficiency, not redundancy,” EY’s 2020 Pulse of the Industry report noted. A small and shared base of suppliers for low-cost but essential materials contributed to a cascade of shortages that impacted manufacturing and health care across the country. At the same time, the need to remotely monitor and secure devices in use by clients became apparent as a consequence of restricted access to clinics and hospitals. More visibility into the full supply chain and through the product lifecycle – from raw materials to installed equipment – combined with greater built-in flexibility have enabled the industry to overcome the initial challenges of the pandemic and could prepare it for unexpected future events as well.
“The impact of the pandemic will be felt for five to 10 years,” Welch asserted. “Anyone who doesn’t look at how they need to change their supply chain won’t be keeping up with demands of health system, patients, or payers. When the model of care changes so drastically, you don’t have any choice but to look at how your business models and supply chains operate. There’s no other answer.”
Stay-at-home orders thrust even the most reluctant med-tech executives into exploration of digital delivery. “None of us were trained to run companies from our dining room tables, but now we’ve been doing it for 21 weeks,” observed one of the participants at an EY/Advamed med-tech CEO roundtable conducted as research for the industry update. The combination of direct personal experience and necessity pushed clinical trials, customer relationships, regulatory activity, and day-to-day work online in ways no one anticipated in December 2019.
Artificial intelligence applications and remote management tools that had existed for years suddenly leapt to the fore as 2020 eliminated the option of further delay. Digital approaches sped up customer interactions, increased visibility into supply chains, and connected companies and providers to patients in entirely new ways.
Those changes are likely to persist, according to the med-tech CEOs. “Post-COVID-19, companies that scramble back to how things used to be are going to be the losers,” said one. Changed expectations mean that companies will not have a few hours to visit with a customer in the future as quick, virtual conversations have become the norm, industry executives asserted.
Health care providers have adapted just as rapidly. In early 2020, 80% of U.S. physicians did not use virtual health in their patient interactions. By June, 95% of physicians had used telehealth and 58% of them had increased their use by more than 50%. “It was always going to happen in five years, but instead it happened in five months,” said a roundtable participant.
Patients have clamored for virtual care throughout the pandemic, even after facilities reopened. Teledoc Health saw a 200% growth in appointment volume in the second quarter of 2020 compared to the same point in 2019 as patients sought care from physicians across the country from the comfort of their own homes. Teledoc’s acquisition of Livongo for $18.5 billion accelerated adoption of the remote-care model by giving Livongo’s chronic care management technology access to patients in the 175 countries in which Teledoc operates. Low-cost diagnostics like Cologuard for colon cancer, saliva tests for COVID-19, digital apps for mental health conditions, and smart device-based monitoring have all seen significant increases in adoption as patients seek greater control of where and when they receive care.