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Transforming the Medical Devices Industry Through Unique Device Identification

Mon, 01/27/2014 - 12:36pm
Rajeev Kapoor & Chris Paddison, A.T. Kearney

As consumers, of course, we’re all familiar with bar codes. But consider the profound transformations resulting from this universal product identifier. Today’s consumer-goods industries rely on bar code–powered innovations in inventory management, labor (think: self-checkout lanes), and data analytics. So what will happen when medical devices receive their own unique product identifiers?

As advertised, the new unique device identification (UDI) system should help manage adverse events such as product recalls. But in the long run, its other effects may be equally or even more important: Could UDI transform the way device manufacturers run their businesses? Could UDI affect power relationships among various healthcare players (manufacturers, patients, payers, providers, etc.)? Could it affect the way device markets approach risk, business intelligence (BI), or product development?

In this article we raise such questions. We’re not taking stands on these questions. Rather, we’d like to encourage thought-provoking discussions among the business leadership—not just IT leadership, but business leadership—of companies involved in the medical device industry.

1. What if meeting the requirements isn’t enough?
As table stakes to continue competing in the medical device industry, every company must assign UDI codes and label its products. It must make necessary adaptations to people, processes, and IT systems. And as many in the industry have noted, this is no small challenge. Do you know which classes of products require a UDI labeling, and by what dates? Can your ERP system handle the data? And more importantly, do you know who owns that data, which people in your organization are responsible for its success?

Yet even if you are successfully answering these questions, you will merely be meeting the requirements of the new law. What if some other companies do more with the all-new, standardized UDI data?

2. Will markets be transformed?
Whenever a new force upsets a market equilibrium, some sort of transformation is likely. It’s not always easy to predict what the transformation will look like, but it’s foolish to bet on everything staying the same. We see three areas of important questions about changing external markets:

  • Quality and responsiveness: Much public attention is currently focused on product failures. And it’s true: UDI should make recalls quicker and more responsive to patient needs, thus markedly improving patient health outcomes. But as data about product and brand success rates accumulates over the long term, how will providers and payers respond? In the data-soaked new world of evidence-based medicine, will your company, and its now-transparent quality record, be able to compete?
  • Competing by doing UDI better: As the transforming healthcare market increasingly focuses on cost and quality, efficient implementation of UDI can improve quality while reducing costs. Are you viewing your UDI efforts as a potential source of competitive advantage?
  • Potential redistributions of power: Furthermore, the availability of data could lead to power redistributions among various players along the healthcare delivery chain. As a historical analogy, consider WalMart, which in the 1980s used the new bar code technology to improve its efficiency and its knowledge of customers; those strengths made it a mega-retailer, far more powerful vis-à-vis consumer-goods manufacturers than any pre–bar code retailer could have been. How might similar dynamics disrupt the fragile web of interdependencies among today’s healthcare players?

3. How can organizations transform to take advantage?
When it comes to organizational transformation, some companies limit their discussion to data. They ask: how will we transform our databases for UDI? But what if that’s the wrong question? A better question might be: how will we use UDI to transform our business? Here are five areas to which that question could apply:

  • IT: A plain-and-simple view is that UDI is an IT challenge: data compliance. But could you take advantage of the new data? For example, will you link UDI to electronic health records, or even to social-networking data? Indeed, can you see ways to take this issue beyond IT, to make it a business opportunity? Do people outside your IT department understand UDI and its business implications?
  • Business intelligence: For years you’ve had an excuse for poor BI: it requires structured data. But with UDI you can have structured data, and thus have the tools to do all sorts of intelligent analysis. For example, do you know the 38 days when sales of inhalers in zip code 59923 are at their peak?
    With UDI, you have the opportunity to do three kinds of analytics. You can look at product performance across time and location. (Is this information on your executive dashboards?) But you can also anticipate where or how a product might fail, and how you need to prepare for that. Finally, you can do predictive analytics: if a product is used at a certain time in a certain way, it will behave with certain characteristics. But are you able to take advantage of this opportunity—do your analytics capabilities extend across this entire continuum?
  • Risk: In the case of an adverse event involving a UDI-labeled product, your knowledge of it will be instantaneous. But what will you do with that knowledge? Are you ready to send the appropriate messages to the right customers?
  • Commercial-ready: UDI makes a product traceable from the manufacturing floor to the doctor’s table. You know a device’s history: who touched it and when, where it is and how long it’s been there. So what’s your plan for streamlining inventories? And when a customer gives a UDI to your customer service rep, can the rep look up past complaints to see how they have been addressed? Can that intelligence be applied back to improve the device’s assembly?
  • Product development: With the new wealth of data, you should be able to know how people are using your product (as intended? or do you need to change your marketing collateral?). Will you use this data to quantify your product development inputs—including the voice of the customer, how past products have performed, and how competing products are performing?
    Furthermore, the data brings more opportunities to co-innovate with partners along the value chain. For example, failure data may point out issues with an otherwise-promising supplier. Are your supplier relationships robust enough to share specific data and co-create your way out of the problem?

Conclusion
Many companies seem to be scrambling to meet the basic UDI requirements; they think they don’t have time to look at a bigger picture. But now is in fact the best time for an entire business to start contemplating how to use UDI to transform not just IT systems but processes and markets—and thereby stay ahead for decades to come.

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