Health device makers, to date, have primarily targeted consumers who are either fitness focused or chronically ill. But between these two extremes sits a large, fragmented and often overlooked population who seek better information to effectively manage their health. Our research suggests that successful solution providers will approach this market opportunity as an ecosystem of partners – with an integrated solution that extends beyond the device itself. By plugging the information gap for these consumers, solution providers can help fuel healthcare innovation.

1. © 2014 IBM Corporation
The future of connected health devices:
Liberating the Information Seeker
IBM Institute for Business Value: Healthcare, Life Sciences and Electronics

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:

18. © 2014 IBM Corporation18 IBM Confidential13 March 201418 13 March 2014
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