The healthcare industry is slow to innovate, which narrows many opportunities for new technology and business models, particularly, and most failingly, platforms.
The medical device space is no exception. However, in the near future the vertical will be dominated by a business because of its software, not its hardware. This entity will grow to be larger and more profitable than even the biggest medical-device manufacturers today, and that entity is a platform.
There are millions of medical devices in the world today, yet, as with most of medicine, that data is highly siloed and localized. Should the industry let Google build a version of Android for medical devices and take a percentage of all revenue remotely related to the data?
As it did with smartphones, Google would leave the expensive process of device development and manufacturing to the existing players while reaping the benefits of owning the real value in the industry.
The most lucrative opportunity in this space is to create the operating system for the medical device industry as a development platform, which should be owned by a company that understands medical devices, a maker native to the space.
Medical device manufacturers have a tremendous competitive advantage over a new entrant like Google or a startup. They have deep industry knowledge and the relationships with doctors and hospitals that will enable faster execution of the platform.
However, if no existing player takes action, then a tech company will likely be the winner. Google and Apple have already indicated their interest in this area by standing up business units like HealthKit and Google Health. Both have yet to take on mainstream adoption (Google Health was added to the graveyard) but the effort to put this in place shows these innovative giants are eyeing this vertical for disruption.
Yet the opportunity here is equally massive. If a platform is done right, there may well be several winners across the many different areas of medicine.
On its own, the data opportunity is colossal. Widespread collection of anonymized health data, once made accessible through an API, would allow for developers to create software that make better recommendations to doctors and empower them to perform more advanced procedures.
A closed development platform around medical data would foster an app ecosystem capable creating faster turnaround times, better patient outcomes, reduced cost, and more efficiency in medicine, especially from first- and second-tier medical professionals like nurses, EMTs, and paramedics. The ecosystem would also aid in early diagnosis and prescribing the right, high-impact preventive care.
Alas, this platform strategy is merely the tip of the iceberg.
The greater opportunity is that once a development platform that opens up this currently siloed data, it will create many more platform opportunities. One example is a medical ad exchange. Medical device and healthcare sales in general are quite antiquated, but an ad marketplace can allow companies to efficiently target high-intent users, such as a medical device company targeting practicing urologists in the greater New York City area.
Healthcare represents billions of dollars in untapped platform business opportunities. The primary opportunities in healthcare are around a development platform for medical devices and medical data.
We are currently working on building a platform that addresses a small portion of this opportunity for one of our clients. A startup specializing in portable point-of-care ultrasound devices has presented many opportunities for platform disruption, including not only the app ecosystem, but also an educational platform for device users and a tailored cloud computing solution akin to Amazon Web Services.
“Very happy we worked with the team and looking forward to building a platform”
–KKR Healthcare portfolio company with $100 million in funding
Any device that is used to extract information from the human body, from ultrasound scanners to MRI machines, collects incredibly valuable data that can be offered to developers. Apps can be created to benefit researchers, doctors and nurses, technicians, regulators, and even patients. Device manufacturers can receive more information on how their products are working and optimize them further for the market.
Whichever company builds out this platform and invests in the network will be leading an industry-wide change and may even redefine the world of medicine.