The Future of Connected Health Devices

2. © 2014 IBM Corporation2 Key Themes and Findings  The global healthcare system currently consumes significant resources (measured as a percentage of GDP) by delivering care in a highly inefficient manner. Many of these systemic inefficiencies are caused by the inability to effectively collect and use health care data to provide diagnosis and treatment decision support.  Addressing the underlying information problems will help improve the diagnosis- treatment cycle. Medical device, life sciences, consumer technology organizations and others with device offerings that target patient and consumer needs will unlock significant opportunities.  Current health device consumers tend to be those who are fitness focused, actively monitoring a chronic condition, or recovering from an illness. We expect device demand to increase from currently underserved markets in the near future, especially as wealth increases in the developing world and the median age increases.  Recent advances in mobile internet, social networking, and sensor technologies could be leveraged to address these needs. The adoption rate of these technologies has reached high levels because they have been deployed as part of well-planned, evolving ecosystems.  However, the healthcare device industry is dominated today by products that provide tightly bounded, point solutions to address specific conditions, treatments, or fitness needs. Improving ease of use and other factors that encourage use of devices that are connected, would likely lead to improved adoption rates. Executive Summary

3. © 2014 IBM Corporation3 Evidence is mounting that the global healthcare system is increasingly challenged by entrenched inefficiencies Healthcare is the largest contributor to “system of systems” inefficiency, wasting over 2 trillion USD per year1 Economists estimate that the current level of healthcare inefficiency could be reduced by nearly 35% The integration between the various systems extends and amplifies the impact of idiosyncratic inefficiencies These inefficiencies were attributed to several factors, including the ineffective gathering, sharing, and use of information "The problem lies not in technology, but in a lack of common objectives and an incomplete understanding of the importance of efficiencies in the planet’s system, a united long-term view and a system for global optimization.” – Economist, Asia Pacific Sources: IBM Institute for Business Value “The world‟s 4 trillion dollar challenge”, January 2010 1) IBM Institute for Business Value analysis based on 2009 survey of 518 economists. Efficiency Analysis of the System-of-systems Size of the bubble indicates absolute value of the system (USD Billion) 15% 20% 25% 30% 35% 15% 20% 25% 30% 35% 40% 45% System inefficiency as % of total economic value by system Improvementpotentialas%ofsysteminefficiency Education Government & Safety Financial Transportation (Goods & passengers) Building & Transport Infrastructure Electricity Food & Water Communication Leisure/Recreation/Clothing Healthcare $4,270B Background

4. © 2014 IBM Corporation4 But with healthcare shifting to consumer-directed models, consumers may be encouraged to better manage their health and help contain rising costs Patients turn to doctors to educate them about their condition Patients educate themselves about health maintenance practices Patients rely on doctors‟ referrals about hospitals and products Patients educate themselves about past performance, ratings and costs of doctors, hospitals, products Patients seek medical care to “fix” their health problems Patients change their behavior to better manage their health Patients do not see their own medical records, as they are stored at each provider‟s office Patients access medical records and information, available online across all providers Providers are paid fee for service under employer-provided insurance 1 Patients pay a higher share of the total cost of care with higher deductibles and other consumer directed elements Expected Benefits From To 1. Payment models differ by country but there are four basic models. http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/countries/models.html  Patient health improves through prevention and care  Reduces costs and premiums by becoming more efficient  Providers improve quality and safety of clinical practice and improve efficiencies  Reduces the financial burden on employers providing health insurance to employees Background

5. © 2014 IBM Corporation5 Technological advances are also enabling smart new connected personal healthcare systems that can supply some of the crucial information needs Sources: IBM Institute for Business Value Analysis; IBM Smarter Planet – Healthcare, Electronics, Life Sciences Background  Smarter health systems automatically capture information to proactively manage and deliver preventive and therapeutic care  Sensors that recognize physical changes such as pressure, motion, or temperature are embedded in portable devices and health / fitness equipment  Smarter health systems remove information barriers and seamlessly integrate data and analytical insights into healthcare processes to enable smarter decisions and comprehensive, coordinated healthcare  Mobile and home-based devices monitor vital signs and activities in real time and communicate with personal health record services, PCs and smartphones, caregivers and healthcare professionals  Smarter health systems continually analyze information from multiple devices and other sources to derive insights and recommendations for the individual‟s health regimes  Analytics programs monitor device data and use rules and logic to compare against targets, track progress against goals, and send alerts when needed

6. © 2014 IBM Corporation6 For health devices to be more widely successful, they must address the needs of consumers outside their typical focus Sources: IBM Institute for Business Value Analysis The current state of health devices Fitness focused, highly health conscious Aware of the benefits from monitoring certain diseases or disorders that are not terminally life threateningz Terminally/chronically ill – need constant monitoring

7. © 2014 IBM Corporation7 Information seekers are a significant population that require device offerings targeted at gaps in information for both patient and doctor The current state of health devices Note: Bubble size is illustrative and not to scale. The conditions included in this figure as examples represent only a subset of the overall size of the segment. Enable real-time monitoring, augmenting less frequent visits to the doctor Be a low cost device that is simple to use Seamlessly connect enabled devices to the internet to up/download monitoring data to make monitoring data available to care providers Measure conditions that both doctors and patients are hungry for information about A health device for Information seekers should :

8. © 2014 IBM Corporation8 While many currently available devices lack connectivity and other important features, certain health devices are bellwethers of progress Apple and Nike Combines running and music for the fitness market. Smartphone applications collect data from sensors in fitness equipment, enabling users to monitor their performance Source: “Business model innovation for medical device Manufacturers,” Bruce Anderson, General Manager, IBM Sales and Distribution, Feb. 2009 Motivated Healthy Information seekers Chronically Monitored Fitbit Monitors activity with motion and provides online data storage and analytical tools. Does not provide ability share data outside of its walled garden CareLink by Medtronic Allows for glucose level monitoring and analysis. Data can be exported and easily shared between patients and their medical practitioners The current state of health devices

9. © 2014 IBM Corporation9 Components of this emerging ecosystem have already appeared, but need to be better integrated An emerging ecosystem for connected health devices Web Resources Websites that deliver content such as medical condition descriptions and nutritional details. Includes the variety of interactive tools and data sharing services now available. May be free or subscription based Mobile Devices Applications that provide monitoring capability when the user is away from home. Should include the ability to store and share collected data with PCs and other elements of the ecosystem Electronic and personal health records Electronic health records that are shared among different healthcare organizations. May include a patient‟s entire medical history, test results, and current prescriptions. Web-based personal health records that consumers maintain and selectively shareHome-based Devices Solutions that monitor condition status at home, outside of a clinical setting. May include the features required for data sharing with PCs and other elements of the ecosystem

10. © 2014 IBM Corporation10 A wide spectrum of mobile health care devices and applications continue to enter the market Jitterbug Bigger buttons and fonts than standard mobile phones. One-touch function that connects immediately to a clinician Bayer DIDGET Plug-in for Nintendo DS gaming system for children with diabetes. Makes health monitoring fun OsiriX Interactive visualization program for display and analysis of medical images (e.g., ultrasound, CT scanner, MRI, PET) Smartphone Applications Health and fitness applications specifically designed to cater to individual health needs of wide range of users. Applications range in price and features Healthcare, medical and lifestyle related applications contributed to 10% (1.09 Billion) of 10 billion apps downloaded from iTunes Electr onic Health Recor ds Mobile Devices Home- based Devices Web Resour ces Patient Source: http://www.knowabouthealth.com/health-apps-pitch-in-10-to-speedy-10-billion-downloads/7664/ An emerging ecosystem for connected health devices > Mobile Devices

11. © 2014 IBM Corporation The potential capabilities of home-based gaming and fitness devices are also evolving and converging, thanks to advances in sensor technologies Withings Internet Connected Body Scale Wifi-enabled scale marketed as an interactive weight loss tool. Data can be analyzed using pc and Smartphone applications, stored in electronic health record repositories, and shared with via email and social networking websites XBox Kinect Sensor array and processing software that directs game play by recognizing and evaluating gestures, faces, and voices Electr onic Health Recor ds Mobile Devices Home- based Devices Web Resour ces Patient An emerging ecosystem for connected health devices > Home-Based Devices

12. © 2014 IBM Corporation12 The growing number and increasing maturity of web-based knowledge resources are providing opportunities for consumer self-service WeightWatchers.com Web-based service provides tracking tools and information. Delivers free and premium content ADHD.com Provides access to ADHD tests, symptom tracking forms, and treatment tools for a monthly fee Drugs.com Medical dictionary and source of independent drug information for consumers and clinicians. Free Electr onic Health Recor ds Mobile Devices Home- based Devices Web Resour ces Patient An emerging ecosystem for connected health devices > Web Resources

13. © 2014 IBM Corporation13 Personal health record services are catching the attention of consumers, care providers and payers Dossia Built on an open-source platform and sponsored by several large US employers. Users can securely share their complete medical history Microsoft HealthVault Currently maintains a larger base of compatible sensing and mobile devices. We believe others in this area will be reach the same degree of capability in the near future Electr onic Health Recor ds Mobile Devices Home- based Devices Web Resour ces Patient An emerging ecosystem for connected health devices > Electronic Health Records

14. © 2014 IBM Corporation14 So what are the potential opportunities within this emerging ecosystem? An emerging ecosystem for connected health devices> Potential Opportunities Web Resources • Web-based information repositories help to increase understanding of conditions and their treatments • Consumers seek out trusted sources of health information, and are willing to pay for it • A patient‟s access to his/her personal health condition may soon be possible automatically and remotely while ensuring privacy and security of the data Mobile Devices • Users spend a significant amount of time with interactive devices regardless of their location • The growing smartphone application market has created a new gateway for consumers to transmit health data to care providers and others • Mobile applications designed for care providers will increasingly be adopted as privacy and security concerns are resolved Electronic & personal health records • Doctors can make more informed diagnosis and treatment decisions from having direct access to information on a patient‟s health condition • Reduced risk of drug interaction errors caused by miscommunication • Hospitals and payers will realize significant efficiencies from reduced complexity & duplication Home-based Devices • Human-machine interfaces are evolving to a state where accurate measurements of movement are possible • Technology that makes current gaming possible could be used to develop healthcare monitoring capabilities • Providing an accurate health condition assessment may soon be possible remotely and automatically

15. © 2014 IBM Corporation15 This new ecosystem is needed to deliver connected health devices that bring technology to daily health monitoring An emerging ecosystem for connected health devices Source: IBM IBV Analysis (1)Medical portals are also provided by hospitals, medical centers, government payers, public health, etc.

16. © 2014 IBM Corporation16 Key Findings and recommendations To be successful in this new environment, players across healthcare, life sciences and the consumer electronics industries should:  Focus on the total solution design Focus on ease of use of device solution to reach targeted „Information seekers‟, consumers who are aware of the benefits from condition monitoring  Identify your position in the connected health device ecosystem Evaluate core capabilities and the benefit of intellectual property investment and partnering  Use the power of the social network to help individuals to stay healthy Examine emerging digital media and social networking business models  Get involved with building the ecosystem ‘infrastructure’ Promote industry-wide efforts to improve interoperability and ease-of-use, as consumer and clinician adoption are tightly linked to these attributes  Learn to collaborate with new partners Develop partnering skills to collaborate effectively within the connected device ecosystem Conclusion

17. © 2014 IBM Corporation17 For more information To download the study, please visit - http://ibm.co/1mVHTJr Join the conversation On Twitter: @ibmhealthcare On LinkedIn: Smarter Healthcare Group On Google Plus: IBM Healthcare On Blog: Insights on Business/ Healthcare For queries: Dr Sumeet Kad (sumeet.kad@in.ibm.com) Heather Fraser is a pharmacist with over 25 years of industry experience in pharmaceutical R&D, consultancy and community pharmacy. She leads the Healthcare and Life Sciences team at the IBM Institute for Business Value, where she has published extensively on the future of the healthcare and life sciences industry. She has also developed a set of viewpoints based on interviews with Life Sciences and Healthcare CxOs. Heather holds an MBA from Warwich Business School. She can be contacted at hfraser@uk.ibm.com Heather Fraser Study Co-Author Contact details Follow Heather at:

The Future of Connected Health Devices

IBM in Healthcare

The Future of Connected Health Devices