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MedTech innovation myth – time to realign to reward shareholders and ensure success

MedTech companies’ commitment to broadly defined, clinically oriented operations are proving less profitable—Accenture has three recommendations.

Powerful external forces are disrupting the traditional strategies of medical technology leaders. Companies face greater economic pressures, a reformed healthcare system, new hospital and physician alignments, and new technological challenges. Accenture’s High Performance Business research indicates that—for these and many other reasons—the disconnect between product innovation and financial performance is widening. To ensure profitability and remain competitive, Accenture has three recommendations for MedTech companies:

  1. Innovate Your Business Model

  2. Connect With the New Customer

  3. Excel at Operational Excellence

MedTech companies now have the opportunity to truly partner with their customers to deliver comprehensive solutions that increase quality of care, cost effectiveness and begin repairing this disconnect. These recommendations intend to help medical technology companies prove their economic value and drive positive financial outcomes while maintaining their commitment to improve patients’ lives.

  1. Innovate Your Business Model
    As product innovation becomes less valued by customers and investors, medical technology companies will need to hike their investments in business model innovation. Some companies may continue their focus on disruptive, breakthrough technologies while others will continue their efforts on creating incremental enhancements. Regardless of their focus, companies that overspend on R&D and M&A could incur as much risk as those that do not spend enough. MedTech organizations will need to ensure that spend and activity levels capture targeted clinical opportunities while also maintaining alignment with corporate goals and strategic missions.

  2. Connect with the New Customer
    As economic pressures reshape healthcare delivery and customer business models, medical technology suppliers will need to understand how those shifts alter buyer perceptions. Product features and benefits have become less significant, and MedTech value propositions will also have to change. Companies will have to cater to new types of customers by crafting different kinds of offerings, articulate the value of those offerings to a wider variety of stakeholders, and hire/train sales reps that can successfully partner with a broader set of economically driven stakeholders.

  3. Excel at Operational Excellence
    As cost pressures continue to weigh on healthcare delivery systems, medical technology companies will no longer be able to reach desired profitability levels by relying primarily on innovation. Companies will not be able to afford to operate inefficient back office functions, so they must aggressively pursue operational excellence. They should critically review all processes to ensure they create customer value, increase their ability to respond to marketplace changes and ultimately reduce costs.