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The digital revolution is transforming orthopedic companies’ operations and product initiatives. The largest orthopedic companies are developing robust ecosystems that leverage enabling technology and digital tools. Small digital companies are entering the orthopedic space. Most companies are considering ways that artificial intelligence (AI) could enhance their products, as well as development, supply chain and manufacturing processes.
How far along are companies in terms of implementing digital innovations? What do executives believe to be the greatest benefits of adopting digital innovation strategies? What gaps will companies face on their journey?
To answer these questions, the Deloitte Center for Health Solutions surveyed 100 executives from large medtech companies across the U.S., Europe and Asia. While the survey wasn’t orthopedic-specific, we believe the findings translate to the market. The survey results identified four primary ways that companies are prioritizing digital innovation: business transformation, investments in AI and Cloud, talent management and new partnerships.
Executive respondents said they are focusing on internal and external business transformation by leveraging digital tools to enhance interoperability, insights, agility and resiliency while increasing customer experience and expanding existing revenue streams beyond traditional products. More than 80% of the surveyed leaders said their largest digital investments are spent on funding AI initiatives.
Leaders also noted the importance of hiring the right expertise to carry out a digital strategy. More than 60% of executives said that they believe their companies need dedicated personnel to research and work on digital technologies. Further, more than half of respondents said that they primarily collaborate with partners or co-develop digital solutions.
“Leadership plays a crucial role in driving digital innovation adoption within medtech organizations,” said Sheryl Jacobson, Principal and U.S. MedTech Practice Leader at Deloitte Consulting LLP. “Our study found that 53% of organizations have a top-down approach with a strong leadership buy-in and executive involvement in driving their digital innovation agenda.”
We spoke with Ms. Jacobson about the survey’s findings to help you better understand how digital technologies will change the medtech landscape, where your competition might be in the adoption process, and what internal processes and people can help drive such strategies.
How is digital innovation changing medtech business models?
Ms. Jacobson: Digital innovation is driving a significant shift in medtech business models. Fifty-three percent of surveyed leaders view “as-a-service” business models as among the biggest opportunities to stem from digital technologies within their organizations. Our survey highlights a move away from product-centric models toward as-a-service (XaaS) offerings.
When we asked medtech leaders which of the as-a-service options they considered most promising, 55% selected SaaS, followed by subscriptions (47%) and DaaS (36%). XaaS offers recurring revenue streams and potentially higher margins compared to traditional product sales. Digital technologies also allow for improved product features, personalization and potentially lower upfront costs for customers.
Where are large medtech organizations on the maturity spectrum when it comes to digital innovation?
Ms. Jacobson: Digital innovation adoption varies considerably among large medtech companies. We place companies in three categories: fast followers, early adopters and laggards.
More than half of companies are fast followers and quickly adopt innovative technologies after observing market success. Based on our innovation research, this is where most companies want to be; they don’t want to be the early adopters figuring it out so others can learn from their mistakes. Leaders believe this is the least risky approach.
About 20% of companies are early adopters. These organizations have strong, leadership-driven digital agendas and are actively integrating digital tools across their businesses. Digital innovation is overwhelmingly driven by the executive leadership in this tier of companies, which suggests that often it’s the culture and ambition at the top that shapes the approach to innovation.
The remaining quarter of companies are slow to embrace digital innovation, potentially hindering their long-term market competitiveness.
What gaps do leaders face in understanding and responding to the quickly evolving digital landscape?
Ms. Jacobson: Despite the growing focus on digital, some key gaps hinder a more comprehensive understanding of technology’s potential.
Survey respondents reported the biggest gap in leadership alignment is around the value proposition of digital innovation. Leaders need to understand how digital technologies can generate concrete benefits for the business beyond just ‘keeping up with the times.’
Other gaps include limitations in securing funding for digital initiatives and lack of a well-defined digital innovation strategy. Leaders also realize they need proper human resources and note that they need experts who can help access and manage data, as well as strong, modern IT departments to implement better processes around digital innovation.
What are the main challenges that medtech companies face in adopting digital technology or a digital technology culture?
Ms. Jacobson: One of the key challenges relates to their talent strategy. In our recent analysis of medtech’s digital talent challenge, we found that while access to digital talent is a priority for all adoption levels, early adopters do much more with who they have compared to fast followers and laggards.
To a much greater degree than laggards, early adopters prioritize hiring talent with expertise in digital technologies, have dedicated personnel who research and work on innovative technologies, offer training around the effective use of digital tools and have programs in place to improve workers’ knowledge of innovative technologies.
Adoption of a digital technology culture requires leaders to focus on their human capital strategy, redesign their work, and equip their organization for a digital future.
How might digital technologies benefit medtech in the long term?
Ms. Jacobson: The industry will reap numerous benefits. About three-quarters of our survey respondents ranked improved patient/customer experiences as the most important benefit. They believe digital tools can personalize care, improve communication with patients and empower them to manage their health more effectively.
Over half of the survey participants pointed to greater connectivity of devices (57%), product development cycles (55%) and expansion of business models (53%).
Digital tools can lead to greater connectivity of medical devices, which could enable remote patient monitoring, combining data from multiple devices from one patient for a more complete picture of their health, remotely controlling devices, ease of data sharing with providers and more. Digital technologies can accelerate new product development cycles in medtech. Those surveyed also believe that digital technologies can open new business models based on the “as a service” (XaaS) concept, such as software or data as a service, as mentioned earlier.
Two out of five participants said that digital tech can enable more accurate and predictive analysis of real-world data collected after a product launch.
What do leaders in companies of all sizes need to consider as they build their digital strategies for the next five or even 10 years?
Ms. Jacobson: As the industry evolves, medtech leaders of all sizes need to consider several key points when building their future strategies.
Solidify business case alignment and value proposition by developing clear and compelling motivations for digital transformation. Quantify ways that digital solutions can reduce costs, improve efficiency, and ultimately drive growth, even if upfront margins for these solutions may seem lower than traditional product sales.
Embrace experimentation by utilizing pilot programs to test the waters of new digital business models before committing to large-scale investments. This allows for refining strategies and mitigating risks.
Adopt modernization and agility into your operating models. Medtech companies need to adapt their operations to be more agile and experiment quickly. Borrowing successful practices from established technology companies can be a valuable strategy.
Invest in new capabilities by designing digital health solutions with a diverse range of users in mind. Invest in developing new skills within your workforce to ensure flawless solution design and implementation.
The digital revolution is transforming orthopedic companies’ operations and product initiatives. The largest orthopedic companies are developing robust ecosystems that leverage enabling technology and digital tools. Small digital companies are entering the orthopedic space. Most companies are considering ways that artificial intelligence (AI)...
The digital revolution is transforming orthopedic companies’ operations and product initiatives. The largest orthopedic companies are developing robust ecosystems that leverage enabling technology and digital tools. Small digital companies are entering the orthopedic space. Most companies are considering ways that artificial intelligence (AI) could enhance their products, as well as development, supply chain and manufacturing processes.
How far along are companies in terms of implementing digital innovations? What do executives believe to be the greatest benefits of adopting digital innovation strategies? What gaps will companies face on their journey?
To answer these questions, the Deloitte Center for Health Solutions surveyed 100 executives from large medtech companies across the U.S., Europe and Asia. While the survey wasn’t orthopedic-specific, we believe the findings translate to the market. The survey results identified four primary ways that companies are prioritizing digital innovation: business transformation, investments in AI and Cloud, talent management and new partnerships.
Executive respondents said they are focusing on internal and external business transformation by leveraging digital tools to enhance interoperability, insights, agility and resiliency while increasing customer experience and expanding existing revenue streams beyond traditional products. More than 80% of the surveyed leaders said their largest digital investments are spent on funding AI initiatives.
Leaders also noted the importance of hiring the right expertise to carry out a digital strategy. More than 60% of executives said that they believe their companies need dedicated personnel to research and work on digital technologies. Further, more than half of respondents said that they primarily collaborate with partners or co-develop digital solutions.
“Leadership plays a crucial role in driving digital innovation adoption within medtech organizations,” said Sheryl Jacobson, Principal and U.S. MedTech Practice Leader at Deloitte Consulting LLP. “Our study found that 53% of organizations have a top-down approach with a strong leadership buy-in and executive involvement in driving their digital innovation agenda.”
We spoke with Ms. Jacobson about the survey’s findings to help you better understand how digital technologies will change the medtech landscape, where your competition might be in the adoption process, and what internal processes and people can help drive such strategies.
How is digital innovation changing medtech business models?
Ms. Jacobson: Digital innovation is driving a significant shift in medtech business models. Fifty-three percent of surveyed leaders view “as-a-service” business models as among the biggest opportunities to stem from digital technologies within their organizations. Our survey highlights a move away from product-centric models toward as-a-service (XaaS) offerings.
When we asked medtech leaders which of the as-a-service options they considered most promising, 55% selected SaaS, followed by subscriptions (47%) and DaaS (36%). XaaS offers recurring revenue streams and potentially higher margins compared to traditional product sales. Digital technologies also allow for improved product features, personalization and potentially lower upfront costs for customers.
Where are large medtech organizations on the maturity spectrum when it comes to digital innovation?
Ms. Jacobson: Digital innovation adoption varies considerably among large medtech companies. We place companies in three categories: fast followers, early adopters and laggards.
More than half of companies are fast followers and quickly adopt innovative technologies after observing market success. Based on our innovation research, this is where most companies want to be; they don’t want to be the early adopters figuring it out so others can learn from their mistakes. Leaders believe this is the least risky approach.
About 20% of companies are early adopters. These organizations have strong, leadership-driven digital agendas and are actively integrating digital tools across their businesses. Digital innovation is overwhelmingly driven by the executive leadership in this tier of companies, which suggests that often it’s the culture and ambition at the top that shapes the approach to innovation.
The remaining quarter of companies are slow to embrace digital innovation, potentially hindering their long-term market competitiveness.
What gaps do leaders face in understanding and responding to the quickly evolving digital landscape?
Ms. Jacobson: Despite the growing focus on digital, some key gaps hinder a more comprehensive understanding of technology’s potential.
Survey respondents reported the biggest gap in leadership alignment is around the value proposition of digital innovation. Leaders need to understand how digital technologies can generate concrete benefits for the business beyond just ‘keeping up with the times.’
Other gaps include limitations in securing funding for digital initiatives and lack of a well-defined digital innovation strategy. Leaders also realize they need proper human resources and note that they need experts who can help access and manage data, as well as strong, modern IT departments to implement better processes around digital innovation.
What are the main challenges that medtech companies face in adopting digital technology or a digital technology culture?
Ms. Jacobson: One of the key challenges relates to their talent strategy. In our recent analysis of medtech’s digital talent challenge, we found that while access to digital talent is a priority for all adoption levels, early adopters do much more with who they have compared to fast followers and laggards.
To a much greater degree than laggards, early adopters prioritize hiring talent with expertise in digital technologies, have dedicated personnel who research and work on innovative technologies, offer training around the effective use of digital tools and have programs in place to improve workers’ knowledge of innovative technologies.
Adoption of a digital technology culture requires leaders to focus on their human capital strategy, redesign their work, and equip their organization for a digital future.
How might digital technologies benefit medtech in the long term?
Ms. Jacobson: The industry will reap numerous benefits. About three-quarters of our survey respondents ranked improved patient/customer experiences as the most important benefit. They believe digital tools can personalize care, improve communication with patients and empower them to manage their health more effectively.
Over half of the survey participants pointed to greater connectivity of devices (57%), product development cycles (55%) and expansion of business models (53%).
Digital tools can lead to greater connectivity of medical devices, which could enable remote patient monitoring, combining data from multiple devices from one patient for a more complete picture of their health, remotely controlling devices, ease of data sharing with providers and more. Digital technologies can accelerate new product development cycles in medtech. Those surveyed also believe that digital technologies can open new business models based on the “as a service” (XaaS) concept, such as software or data as a service, as mentioned earlier.
Two out of five participants said that digital tech can enable more accurate and predictive analysis of real-world data collected after a product launch.
What do leaders in companies of all sizes need to consider as they build their digital strategies for the next five or even 10 years?
Ms. Jacobson: As the industry evolves, medtech leaders of all sizes need to consider several key points when building their future strategies.
Solidify business case alignment and value proposition by developing clear and compelling motivations for digital transformation. Quantify ways that digital solutions can reduce costs, improve efficiency, and ultimately drive growth, even if upfront margins for these solutions may seem lower than traditional product sales.
Embrace experimentation by utilizing pilot programs to test the waters of new digital business models before committing to large-scale investments. This allows for refining strategies and mitigating risks.
Adopt modernization and agility into your operating models. Medtech companies need to adapt their operations to be more agile and experiment quickly. Borrowing successful practices from established technology companies can be a valuable strategy.
Invest in new capabilities by designing digital health solutions with a diverse range of users in mind. Invest in developing new skills within your workforce to ensure flawless solution design and implementation.
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Carolyn LaWell is ORTHOWORLD's Chief Content Officer. She joined ORTHOWORLD in 2012 to oversee its editorial and industry education. She previously served in editor roles at B2B magazines and newspapers.
