This past week I met with Sjoerd of CTMH, the Centre for Technology in Medicine and Health here in Stockholm. CTMH is the result of a joint effort by the KTH Royal Institute of Technology (research university), the Karolinska Institute (medical university), and SLL, the Stockholm County Council. I was interested by CTMH’s clinical innovation fellowship program, in which fellows are put in teams of 4 to identify a problem or a need in the healthcare industry and then come up with a solution. It’s almost like a startup accelerator for startups that don’t exist yet, and it’s entirely problem-based. The CTMH program is based on a similar program at Stanford University called the Biodesign Innovation Fellowship.
According to Sjoerd, Stanford found that a huge success factor for start-ups – that is, what distinguished the winners from the losers in business – was whether or not the proposed solution actually met a real need. With that in mind, the idea of both the Stanford and CTMH “biodesign” fellowships is to identify medical problems long before solutions are discussed. The CTMH fellowship mentors a few teams every year, each team consisting of one medical fellow (a doctor); one technical fellow (an engineer); one fellow in management (an economist or businessperson); and one fellow in design. Each team spends the first two months in a hospital context, simply observing. They are tasked with identifying 250 needs in the first 6 weeks without thinking of any solutions or letting their own ideas cloud their judgment. Sjoerd told me that while 250 needs sounds like a large number at first, no team has ever found fewer than 300 needs or issues in a hospital context in the given amount of time.
The next few months of the fellowship are spent refining and validating the needs, removing those that are not real or recurring, as well as figuring out what is a feasible need to tackle. For example, one need that is absolutely real and recurring is the need to standardize electronic health record systems, EHRs, across the country. If a patient moves from Stockholm to Gothenburg, for example, it will be surprisingly difficult for their health records to transfer from one hospital to another if the two hospitals use different software systems to manage their EHRs. However, this is not a problem for CTMH fellows to solve; it’s a large scale problem that requires the influence and resources of the government.
Once each fellow team has a recurring, real, and solvable problem, they are finally allowed to brainstorm solutions. At this point, the business plan becomes important. How will they fund their idea? Sjoerd said that there must be an alignment between who experiences the need and who pays for it. He told me about the company Ortivus, which created an electronic patient service for ambulances. The system allows paramedics in an ambulance to gather a patient’s diagnostic and medical information and transmit it to a hospital emergency team before the patient arrives. This addresses a need of the hospital workers: they save time and money when they are fully prepared for the arrival of a new patient. However, the Ortivus system must be paid for by the ambulances where it is installed, rather than the hospitals.
Unfortunately, many ambulance services work independently of hospitals, delivering their “clients” to the hospital that is nearest at any given moment. Since Ortivus’s solution would directly benefit a hospital rather than an ambulance, ambulances were not motivated to invest in it. In short, while Ortivius’s e-health solution perfectly addressed the existing need, no one was willing to pay for it. The company finally made money by marketing to hospitals with proprietary ambulance services (where the ER workers in the hospitals would have the same boss as the paramedics in the ambulances).
The ZIO Patch is another example that illustrates the importance of a business plan. The patch is a heart monitor that is less invasive than traditional ECG techniques. Patients wear the patch for two weeks as it collects data. After two weeks, the patient’s general physician receives a ZIO Report based on an algorithmic analysis of the collected data. It’s easy to see why the ZIO Patch is a great idea as it is more comfortable for patients and collects longer-term data than the typical approach of an ECG, during which a patient might wear up to 12 leads and a cardiologist is needed to analyze the results.
However, the company had trouble selling the ZIO Patch to cardiologists, as it threatens their jobs. Sjoerd said that the typical cardiologist’s response to the ZIO Path was similar to, “Well, that does seem like a good idea. But what I do now works well, and it requires my presence. Why would I invest in a tool that takes away my role?” So, the makers of the ZIO Patch thought about who benefited most from their solution and therefore who would be motivated to pay for it. They realized that they should market their product directly to the general practitioners who would receive the final analysis of the patient’s data, and this way the GP would interact directly with the patient without the need of a cardiologist.
The ZIO Patch example shows that finding the motivation to pay is a key tool for success, as well as recognizing and bypassing the competition (in this case, cardiologists). Sjoerd summarized that there are 3 important considerations when addressing a need: the solution needs to be feasible; there must be a monetary benefit; and finally, the overall impact must be big (that is, the solution must affect many people rather than just addressing one person’s need or solving a very rare problem). Finding the motivation to pay is wrapped up both in the feasibility of the solution (will someone be willing to pay for it?) and the monetary benefit (will the cost of the product be worth the amount that it saves the payer?).
There’s another aspect to all this, though, that relates to both the monetary benefit of a device and its overall impact: the value of human life. Sjoerd stressed that good tech must have a large positive impact on human life not in terms of duration of life, but quality of life. Such a discussion requires monetizing the value of life. Sjoerd suggested that, while other cultures might consider this to be a “taboo” topic, Swedes are surprisingly pragmatic and understand the need to determine the monetary value of human lives. (As it is the case that Swedes are the people who invented IKEA and created the highly functional society I’ve been living in these past few months, I definitely agree that “pragmatic” is a good way to describe Swedish attitudes towards, well, everything).
To be more technical, budding companies must do a cost-benefit analysis based on QALY and DALY figures. I hadn’t heard these terms before, but they make sense. QALY stands for “quality-adjusted life year,” and it is a monetary measure of the health outcome associated with prolonging a patient’s life. Adding life years with a poor quality of life is worth far less than adding life years with a high quality of life. A similar measure is the DALY, the disability-adjusted life year, which essentially counts as “one lost year of ‘healthy’ life,” or a negative life year (World Health Organization; http://www.who.int/healthinfo/global_burden_disease/metrics_daly/en/). So finally, this is another factor that contributes to whether or not a medical device is successful; it must save or improve enough lives, while maintaining a high quality of life, to justify its costs of production.
To sum up, according to the Swedish Centre for Technology in Medicine and Health, successful medical devices are borne out of a true need; are paid for by the people that benefit most from having that technology; address a need that is recurring and real, experienced by multiple people; and make a significant impact on improving the quality of life for patients, meaning that they are worth their cost in quality life years saved.