Medtech take note: stress induces adaptation and evolution (deja vu)

One of the most tiresome refrains I hear as I review markets and developments related to medical technology is that this or that trend or force or dynamic is stifling innovation.

When in the 1990s managed care began to utterly disrupt the sensibilities (and cash cows) of well-established healthcare systems by dictating that a response was needed to the previously unacknowledged problem that there is indeed an upper limit of available funds for healthcare and that something must give, the refrain was that managed care, with its accountants and bureaucrats dictating healthcare delivery instead of physicians, was stifling the advances in medical technology to serve the needs of bean-counters.  What emerged was a response by medical technology companies to recognize that healthcare systems simply would no longer contract with dozens of manufacturers of devices that varied little in feature or benefit, and would instead contract for those devices that demonstrated better outcomes, lower cost, or both.  In response to the stress of potentially being shut out of the contracting process, manufacturers rolled up their sleeves and began to consider (perhaps in a real sense for the first time) just how competitive their products were against not just other similar products but also against any and all products, technologies or clinical practices that were targeting the same patients, disease states or clinical outcomes. The required shift in focus to the larger view ended up, for many companies (but, no, not all), revealing tremendous opportunities.

Now, there is an explicit acknowledgement that the status quo in the U.S. healthcare market is unacceptable — costs are still too high and there are too many uninsured patients who are either being denied adequate healthcare or whose inevitable treatment under less than proactive conditions are simply adding to the cost of healthcare.

Obamacare, otherwise more appropriately known as “The Patient Protection and Affordable Care Act”, is the response by POTUS to provide a solution to some of these problems.  Even if such a thing as bipartisanship were even possible in D.C., Obamacare would be controversial, but it is real and in force now.  Whether it or some of its key elements (read this to mean the “2.3% excise tax”) survive intact or become watered down or replaced, the undeniable stress that led to the act being signed into law will not change.

Therefore, manufacturers of medical devices who contest Obamacare are welcome to lobby aggressively for changes that they deem would be more palatable to their businesses, but they are also well advised to consider that the new forces, incentives, dynamics and economics (or whatever other metric they wish to use) will exist despite whatever happens with Obamacare.

Environmental stress inevitably leads to adaptation and evolution. The choice manufacturers face is whether to recognize the opportunity or face a diminished chance for survival competing against those who do see the opportunity.