Note: This article was originally published on Medical Product Outsourcing.
The healthcare and medical device industries are key verticals that stand to benefit tremendously from the Internet of Things (IoT). Today, a number of medical device companies are developing greater connectivity in order to improve communications between healthcare providers and patients while also enabling real-time monitoring of patient health through bedside diagnostics. Recurring revenue business models and the technology behind them help make these transformative healthcare offerings possible.
Untapping Markets with Recurring Revenue
Consider this scenario—a global manufacturer of big-ticket medical equipment began marketing its newest models of CAT and MRI machines. The manufacturer was met with a slow market because only hospitals in urban centers could afford the price tag and those facilities were not eager to replace the existing machines already in use. Regional hospitals wanted the equipment but didn’t have the capital to make the investment.
To untap this market, the equipment manufacturer began leasing the machines to regional hospitals on a pay-per-use basis—one of many iterations of the recurring revenue model. In shifting from selling devices to selling services, both parties were satisfied; the manufacturer was able to expand its business into a previously untapped market and the hospitals were able to attain the use of a previous “out of reach” capital expense. Even patients benefitted from the switch to recurring revenue as they were able to receive care locally, saving the time and expense of traveling to distant, “big city” hospitals. Other satisfied parties included payors, such as insurance companies and government agencies, because the recurring revenue generated by leasing helped to stabilize the overall expense of healthcare.
In another scenario, providers that adopt cloud-based case management strategies can generate recurring payments when recommended treatments continue over a long period of time. For example, a provider could pinpoint a course of physical therapy through secured medical records, then recommend a fitness center to provide the treatment. The provider then generates recurring sales by managing the subscriptions to the fitness center. The more patients trust their providers, the more likely they are to participate in suggestions for improved health and fitness.
The healthcare company that harnesses the power of recurring revenue often sees dramatically increased earnings because this model provides more choices. The patients’ levels of satisfaction increase, making them less likely to opt-out of recommended therapies.
Enhancing Patient Monitoring
Wearable IoT devices are increasingly popular, making it easier for medical teams and patients to stay on top of health issues on an ongoing basis. Subscription-based services are available for many of these devices, which provide patients and providers with additional insights and analysis based on the data the devices track. For example, the tiny BioStamp is worn on the skin like a Band Aid. It tracks health status in real time for a broad spectrum of patients and allows practitioners to monitor patients remotely. With IoT devices such as the AliveCor heart monitor, patients can self monitor their conditions, reducing the need for costly in-person visits.
Gleaning Timely Insights from Medical Data
Thanks to IoT innovation, it’s easier than ever to capture data from an array of connected medical devices such as respirators and cardiac monitors. But making sense from the oceans of data each device produces becomes an enormous challenge.
Enter Capsule Tech, a data integration solution that leverages IoT information streaming from different medical devices and delivers it directly to doctors. The doctors are able to see patient data in context, resulting in faster and more accurate medical decisions. These types of integrated analytics often rely on an assortment of usage and subscription-based billing alternatives that appeal to doctors’ different needs.
Transforming Hospital Efficiency
Hospitals are deploying cloud-connected smart sensors to improve care and reduce costs in nearly every phase of their operations. For example, embedded sensors can alert medical staff if individual units of heat-sensitive supplies, such as certain drugs or plasma, ever fall out of safe ranges during shipment, storage, or handling. Additionally, IoT-powered healthcare platforms, such as the one from GE Healthcare, combine smart chips, wireless technology, and geo-location features to help hospitals better manage the flow of patients, staff members, and medical equipment throughout their facilities. Sophisticated solutions such as these often encompass the full range of billing options, including one-time payments, pay-per-use, and subscription services.
We’re only at the beginning of an IoT disruption that will change the way manufacturers, providers, patients, and payors approach healthcare. However, one thing is certain—the many health benefits and cost savings made possible by the Internet of Things in the coming months and years will open up new avenues for recurring monetization, along with valuable lessons applied and life-saving services delivered.