From Idea to Impact: A Framework for Evaluating Medtech Opportunities in Product Development
Medtech and healthcare challenges represent significant opportunities for product innovators to have a considerable impact. The response to the recent pandemic is an acute example of this. Teams collaborated across disciplines to make foundational technological improvements for vaccines, diagnostics, and therapeutics.
Take the case of the mRNA COVID vaccines; a combination of innovations were pushed together by an urgent unmet need. Advancements in vaccine design and delivery, developed by teams in relative obscurity, created a fertile ground for innovation unlocked by a focused need.
Few projects will conjure the urgency paired with the resources to reach the finish line so quickly. So development teams need to bring the proper mindset and frameworks to sustain their concepts to a point where they can make a difference.
Two decades of experience with product development teams and entrepreneurs have informed my perspectives on evaluating product opportunities and effective healthcare innovation strategies. Knowing when and how to apply your resources can be the difference between success and failure.
I’ll share a few examples in this article.
Economic Impact and Projected Growth in the Healthcare Industry
The US population is aging. At the same time, we are getting better at finding and treating diseases. Accessibility to quality diagnostics, such as medical imaging and laboratory testing, enables the deployment of more therapies, such as orthopedic implants, cardiac interventions, and novel cancer treatments. Chronic disease such as diabetes is now monitored and managed with ever-improving technology.
All this adds up to a growing healthcare bill for our country. According to the National Health Expenditure (NHE) data, the healthcare industry continues to grow steadily in both the public and private sectors. In 2021 the NHE reached a total expenditure of $4.3 trillion, equating to a per-person expenditure of $12,914 for healthcare costs. It has a projected growth of 5.4% annually between 2019 - 2028. This strong growth rate is likely to continue due to the abovementioned trends.
What do all these numbers mean?
They indicate a growing need for healthcare in the United States and an opportunity for innovators who can add efficiency and effectiveness to diagnoses and therapies.
So, where to begin?
You probably don’t have to look far to find people impacted by the disease. A quick review of the list of leading causes of death will likely hit on some that have impacted your family or friends.
Benefits to the General Public
Heart disease, cancer, stroke, and respiratory illnesses are all too common, taking a toll on US individuals and society. This is where bold medtech innovations can substantially impact by addressing these pressing health issues.
For example, transcatheter aortic valve replacement (TAVR) is a medical technology innovation that helps treat chronic heart conditions. TAVR is a minimally invasive procedure that involves using a catheter to replace a diseased aortic valve with a new one rather than open-heart surgery. This technology has revolutionized the treatment of aortic stenosis, a common heart valve disorder affecting millions worldwide. It is as effective as traditional surgical valve replacement while reducing complications and recovery time.
Investing in healthcare innovations like TAVR can reduce the disease burden, improve overall health and well-being, and make healthcare more affordable. What a great thesis for an investment strategy or a fulfilling career.
Substantial Progress Requires Substantial Investment
Before you jump in on the first opportunity with both feet, recognize that product development is a complex and costly process. Research, design, prototyping, testing, and manufacturing require significant financial investment, expertise, and time. Product development expenditures can dominate the budget for companies bringing innovations to market.
The table below offers a few examples of development budgets in recent medtech deal pitches that I reviewed as an angel investor. You can see a wide range of budgets depending on complexity and company stage. Notably missing from this lineup is a development budget of less than $1MM to reach a design ready for market.
Substantial progress requires substantial investment in medical device innovation. So choosing suitable projects and the right development approach are critical to success.
Let’s explore how to evaluate your opportunities and consider strategies for advancing the development process of your medical device.
The Opportunity Evaluation Framework
At Product Creation Studio, we use an Opportunity Evaluation Framework to assess the viability of a new product idea. This is a gap analysis, similar to what an investor might apply but slanted toward how we approach design and engineering projects here at Product Creation Studio.
This approach enables us to minimize the unknowns inherent in the innovation space and streamline the product development process –– while focusing on the most impactful milestones for users and investors.
We use three main pillars to guide our medical device strategy and innovation development efforts here at Product Creation Studio:
User Experience: How well does your product idea or solution meet the user’s needs?
Functional Technology: How feasible is your medical technology?
Business Strategy: How viable are your commercialization strategies?
Below, I’ll cover each pillar highlighted by a real-life product example. These are intended to demonstrate what could happen when a pillar is missed or on a shaky footing.
User Experience Pillar: Lessons Learned from Infusion Pumps’ Failure
The first pillar in the Opportunity Evaluation Framework centers on the user’s experience with your device.
Usability is essential for patient safety because it ensures the device is easy to use correctly and consistently. This reduces the risk of human error (or use error in human factors engineering parlance), which can lead to medical complications or even death.
And while it seems obvious that user experience should be a top priority, that’s not always the case. Unfortunately, devices with poor usability still manage to make their way onto the market.
In early 2000, a 19-year-old mother was found dead in her maternity ward bed just six hours after she delivered her baby. A toxicology test showed she had four times the lethal amount of morphine in her blood that was given intravenously via her bedside infusion pump.
What happened?
While her death was ultimately cited as human error, it pointed to a deeper issue with the pump’s human factors and user experience design.
Critical medical devices that are technically reliable but so difficult to use that they can invite deadly mistakes are a huge problem. In fact, over a 12-year period, improper programming of this exact pump caused at least 65 recorded deaths, with some estimates suggesting over 600 people may have died from similar, accidental overdoses.
Prior warnings were made that the infusion pump was at risk for misprogramming due to the 27 steps required for each patient. There was too much room for error. And the issues were not isolated; incidents of patient harm were so common that the FDA created an infusion pump improvement initiative to guide manufacturers and users.
And the results from that initiative were dramatic.
It is reported that user errors dropped by 56%, and the specific usability issue linked to patient deaths was eliminated by using a barcode system.
In our world, the user experience pillar supports user safety and preference. Either aspect can impair product success, and they often go hand in hand. But the infusion pump example illustrates the life and death stakes in getting this pillar solid, so don’t skip this one.
Functional Technology Pillar: Lessons Learned from the Theranos Failure
The second pillar in the Opportunity Evaluation Framework focuses on your medical technology’s functionality.
Proving your medical technology’s functionality is crucial before sinking time, money, or resources into product development. Your core technology must work as intended and offer a feasible path to market for your product to have a chance at success.
Theranos is one of the most well-known examples of medical technology failure in the healthcare industry.
The healthcare technology startup validated the potential of a great user experience coupled with a strong business strategy. The retail pharmacy market (Walgreens, Safeway, and others) embraced the Theranos narrative of an in vitro diagnostic that would revolutionize the workflow and price points for blood testing.
But their functional technology pillar was woefully weak by all qualified accounts. Their proprietary hardware never did the number of tests with the promised diagnostic performance. As a result, they could not run the necessary tests, in a timely fashion, at the necessary price point with the tiny blood volumes.
Theranos failed to prove the feasibility of its medical technology before raising money, garnering media coverage, and achieving widespread fame within the innovation industry. These factors resulted in the founders, Elizabeth Holmes and Ramesh “Sunny” Balwani, being charged with multiple counts of fraud.
Helping our customers understand the true state of their functional technology is a big part of our work at Product Creation Studio. It can be easy to believe that a system can or will perform adequately based on anecdotal evidence, thought experiment, and extrapolation from other products. But feasibility to support a business model should be confirmed with statistical evidence, under representative conditions, and with empirical experiments.
Business Strategy Pillar: Lessons Learned from the AirXpanders Failure
The third pillar in our Opportunity Evaluation Framework focuses on business strategy.
Considering the business strategy of your new medical device before spending time and money on development will help you validate the true market fit. Better function and experience (sadly for us) aren’t enough for commercial success. Aspects of intellectual property, competition, price point, profit margins, supply chains, and market access can squash a better mousetrap any day.
AirXpanders identified a pain point in the surgical workflow of breast reconstruction. Their AeroForm Tissue Expander was wirelessly controlled by the patient, eliminating visits to the hospital for saline injections during the weeks of tissue expansion. The benefits to the patients and physicians were clear, but AirXpanders may not have thoroughly evaluated the competitive landscape before the product launch.
Even though the AirXpander technology could deliver a better user experience, the product offered a solution in the middle of a commercial medical workflow dominated by prominent, long-standing players like Allergan and Johnson & Johnson.
These companies had well-established distribution networks, large sales teams, and significant resources to promote and market their product lines to the relevant physicians and healthcare systems.
AirXpanders failed to fully understand and address the competitive landscape and create a successful business strategy from these findings. Ultimately, they were forced to close their doors and file for bankruptcy.
Business strategy is a BIG pillar that supports many aspects of success that a design firm may not necessarily foresee or impact. But we know enough to look for reasonable plans that address freedom to operate, product pricing, and go-to-market strategy. Your team should be exploring these aspects from the early days to increase your chances of device success.
Unlock Your Product’s Potential with Phase Zero
Phase Zero is a critical stage that most inventors miss (and it’s where the Opportunity Evaluation Framework comes in).
This initial stage of product development is where your ideas are generated and evaluated. There are certain milestones you must hit in this phase to even determine whether your product meets the target market's needs and has the potential to gain traction.
Your next milestone will always be your most important milestone … and jumping into phases 01-04 too soon is the #1 reason we see new development opportunities fail.
Recognizing your development’s maturity (or lack thereof) is critical.
Product teams who let themselves believe they are almost to market but don’t yet have a comprehensive set of requirements written down have poisoned their investment narrative and are heading for an uncomfortable reckoning with their investors.
This image shows a basic development approach with Phase Zero that we use at Product Creation Studio:
You are still in Phase Zero if:
You can’t define your user’s needs, behaviors, and challenges. (User Experience Pillar)
You have yet to prove that the functionality of your medical technology is feasible. Your technology must be consistently successful. (Technological Feasibility Pillar)
Your business strategy does not include a reasonable and comprehensive commercialization plan. (Business Strategy Pillar)
If even one of those pillars is unstable, you are not ready for product development (Phases 01-04 in the image above).
Embrace Phase Zero.
It’s your opportunity to evaluate the opportunities available and focus on that shaky pillar without the total weight of all product requirements that must eventually be addressed.