This document discusses the transformation of the medical technology industry towards value-based care models driven by data and digital platforms. It notes that healthcare expenditures are heavily weighted towards inpatient and outpatient care, while medical technology accounts for a smaller portion. It also summarizes strategies medical technology companies are using to adapt, including new commercial models, direct patient engagement, and partnering with payers and providers. The document advocates for placing data and digital platforms at the core to drive value-based outcomes and reduce total healthcare costs.

1. Kumar Ramananda
Commercial Practice Leader – Life Sciences
Europe
Cognizant Technology Solutions
13/06/2018
Making a Case for Value Based Care in Med Tech:
Putting Data and Digital Platforms at core

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Healthcare Eco System – The New Normal
Inpatient and
Outpatient Care
75%
Pharmaceuticals and
other non-medical
durables
17%
Medical Technology
7%
Others
1%
Healthcare Expenditure
Source: KPMG
• 60% of the Inpatient &
Outpatient costs are labour
• Around 15% of administration
costs
• Cancer and mental conditions
account for 60% of the spend
• Per capita is 14 fold with more
than 4 chronic conditions
• 6 fold between over 85 and
those aged between 55-59

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Medical Devices market is being influenced by M&A, new entrants
Source: KPMG
371
483
671
795
0
100
200
300
400
500
600
700
800
900
2015 2020F 2025E 2030E
Worldwide medtech market forecast to grow more slowly than prescription drug market, with a CAGR of 4.1% till 2020 versus 4.9% for pharma
$483bnby 2020
Downward pressure on prices Drastic changes in
buying processes
Insistent on real-world evidence
for premium medical devices
Create value on patient outcomes,
reduce total costs of care

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The Industry is undergoing a significant transformation
4
In response to Macro Trends.. Strategies Used.. To Drive Results
• Increased Govt. and regulatory
scrutiny
• Consumerization of healthcare
• Technologies like mobile, social,
big data and IoT
• Digital Revolution
• M&A
• Global Expansion
• Captives & shared services
• Smarter Devices
• E-Commerce
• New commercial models
• Product + service ++
• Product focus to a customer
focus
• Partner with payers and
providers
• Increase size & scale leading to
increased negotiating power
• Direct patient engagement & access
• Enhance customer focus and
experience
• Help customer’s business
• Data Monetization
• Value Based Healthcare
• Own disease state/ therapeutic area

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Value Based Care in Med Tech: Minding the Gap
Value in
Healthcare =
Outcomes that matter to patients
Cost of delivering those outcomes
- Peter Drucker
The Dichotomy of 2 curves: Hop too quickly or stuck in Fee-for-Service Station?
Volume Value
• Currently Financial Incentives are
skewed to Volume curve
• Less than 10% of the revenue is
from Value curve
• Quality, cost and market share
gains
• Qualifying for incentive payments
• Development of partnerships with
community physicians and other
providers

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Technology Invention at an unprecedented pace
6
Process
Reimagine
Service Redesign upfront to
extend the “customer-first” front
office promise to middle office
Agile
Operating
Model
Flexible and nimble
models of engagement
aligned to rapidly changing
business needs
Shared
Culture
Co-create a collaborative
environment that embraces change
to drive joint outcomes
Digital
Ready
Talent
Empowered techno-functional
knowledge workers partnering
with front office to focus on rapid
innovation
New Age
Metrics
Pivot to CX and Digital
Adoption based service levels
focused on Machine learning and
Born Digital benchmarks
Smart
Analytics
Drive Convergence of data sets and
build AI powered models for future ready
operations
Customer
First
Intelligent
Automation
Automation on Day 1
for accelerated speed to
value
Human-centric
Design
New age CX driven
architecture based on
deep human insight and
empathy

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Future of Digital Med Tech Industry
PERSONALIZED
CARE &
EXPERIENCE
DEVICES
HEALTH
SURGERY
ENGINEERING,
TECHNOLOGY &
PROCESS
ECOSYSTEMS
Economic Value New Revenue steamsGlobal Reach
Model Based Engineering
Miniaturization | Automation
Intelligent Manufacturing| 3D Printing
Cloud | Mobility |Cyber Security
Field Services, Usage-based Billing
Intelligent Products
Artificial Intelligence | Nano Technology
Remote Upgrades | Predictive
Maintenance
Wearables | Health Apps |
Cognitive Analytics | Patient Engagement
Remote Monitoring & Diagnostics
Home–Care | Telemedicine
Robotics
Augmented Reality
Visualization

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Beyond The Device – From Stand-Alone Products To Value-Based Solutions
Patient Education &
Engagement Diagnosis Intervention & Therapy
Post Acute Care,
Monitoring & follow-up
Device Maker
Extended Value Based Solutions
Health Outcomes & Care Costs Data Solutions
Integrated Care Delivery Offerings
Products
Value Based Services
Value Measurement
Value Based Care Delivery
Traditional high-touch sales model Deep understanding of care delivery
Substantial Deep Pockets to disrupt
the Care Pathways
Cloud Adoption Automation AI & Data Insights

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RWE is most useful in the post market setting to move into Value Measurement...
9
Data Management
• Data integration – at whose expense?
• Data sourcing – stability of patient
linkage over time – across EMRs
• Data Cleansing – initial scrubbing and
ongoing stewardship – by whom?
Record Integration
• Lack of Standardization
• No common naming conventions
• Administration costs and improving
outcomes
Compliance and Privacy
• HiPAA compliance
• Other privacy regulations may
impede progress
• Public relations ramifications
Record Design
• Designed for hospitals & medical
offices
• Multiple template and data storage
configurations will be encountered
(locally, off‐site, “cloud”, backed
up, etc)

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Underpinned by Commercial Insights for Improved Market Access
0101
1110
Coverage Criteria
Procedure/Device code
Payment rate
Hospital
Clinic
Home
Existing
New
GPM /Launch Sequencing Tender Management Contract Management Rebate Management
Compliance & Tender/ Contract Analytics / Simulations
Account / Country / Regional Sales
Performance
Contract Revenue / Leakage
Contract Performance : Number of
contracts, revenue, profitability,
win/loss rate, cycle times, contract
milestones, renewal rates
Account / Country / Regional
Tender Performance
Pricing / P&L Simulators
Tender Outcomes: Scenario
Simulations
Forecasts vs Targets
Price Volume Bands / Addressable
Market Shares
Brand launch performance
Pricing and reimbursement
favourability
Better Access
Optimized allocation of clinical
development costs & resources
Chargeback and Rebate
Analytics
Pricing and Reimbursement
Analysis
Outcome based / Risk Sharing /
Gain Sharing
Launch Collaboration Platform Tender Management Platform Contract Lifecycle Management Platform

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In Summary
11
Payers, providers, Pharma
and Med Tech have large
legacy enterprise IT
systems that cannot
deliver the newly needed
capabilities.
This transformation
fundamentally changes
the business models
of payers, providers
and pharma – on how
they operate.

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The Digital Era is dictating the behavior of Business and Information…
Quickly respond
to rapid changing
business needs
Business Agility
To perform
sophisticated BI
and Analytics
Leverage universal
data - anywhere,
anytime
Cost visibility with
proven
technologies and
easy to build and
manage
New Business Apps
Structured & Unstructured
Data Integration
Flexible Platform
Provisioning

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MarketAccess,Tenders&Contracts,newGen
CommercialConstructs
EvidenceGeneration,ValueConstructs(RWE)
PostMarketCustomerExperience&SupportServices
DeviceledOperations&Insights
IntegratedSales&Marketing,E-commerce,
HumanCentricDesignforExperience
Integrated Digital Platforms and Data to be agile and responsive to digital opportunities
13
User Experience
| Insights, Strategy & Design
| Digital Solutions | Interactive
Process Harmonisation
| Business Process Services | Cloud
| Intelligent Automation
Data Insights & Analytics
| Analytics & Information Management
| Data Sciences
Digital Engineering
| Intelligent Products & Solutions
| Next-gen Application Services (AD, AVM, QA, Agile, DevOps)
| Cloud Lift | Enterprise Security | Enterprise Applications
| Human Capital Management | Supply Chain

14. Thank You!