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Innovation in Medical Devices and Diagnostics Collecting Objective Data: Analysis of Products Compared to U.S. Healthcare Spend


Data in healthcare is becoming more prominent, with a growing number of companies focused on data insights as a primary value driver. Beyond interest from therapeutic companies, technology giants such as Google, Apple, IBM, Baidu, and Tencent are developing or investing in healthcare data-focused solutions.

With so much going on in the space, it can be challenging to obtain a clear view of the landscape and understand which efforts are transforming — or might soon transform — healthcare. I work with a number of promising early-stage companies in this space and see the potential of data to drive significant improvements in healthcare and create better patient outcomes. I undertook this analysis to gain a greater understanding of the products in development and to uncover any over- or under-saturation of products for specific disease areas or methods of treatment.

One interesting takeaway is that while musculoskeletal devices and diagnostics were under-saturated and well care products were over-saturated compared to total healthcare spend, all have the space for innovation under the right conditions.

An Analysis of Medical Device and Diagnostic Data Collection 

Delving into this rapidly shifting landscape, companies can be divided into two categories: data collection and data analysis, with subdivisions possible inside of each group. The Apple Watch, with its de novo FDA clearance for its ECG feature, is a well-known example of data collection, and Flatiron Health, now owned by Roche, is an example of data analysis. While Apple conducts significant data analysis on the backend of the Apple Watch and Flatiron collects large amounts of oncology data, each company’s primary data function dictates which group they belong to.

This analysis focuses on the first category: data collection. It’s a natural first step, as the value of the insights uncovered through data analysis are highly dependent on the quality of the inputs. For data collection, a good source of information captures medically relevant data in large, well-organized data sets, where the data can be properly analyzed and primed to produce actionable insights. (The quality of data that each product collects is not considered in the analysis for this article.)

To understand the ecosystems and to obtain deeper specific insights, a narrow scope of analysis is required to pull trends within particular areas. This article, which excludes in vitro diagnostics, focuses on startups and earlier-stage companies that are developing or have developed medical devices and diagnostics with physical products that generate objective data. The analysis is intended to show higher-level trends and provide a general overview of these companies’ products and foci. While this analysis spans more than 400 products, the product data set is far from exhaustive.

Seeking to understand where data collection is utilized most, this analysis compares the number of products capturing data from each disease to the overall spend for each healthcare category. The classification is rough, with 24% of the products not aligning with a specific category. Two examples of products not included are surgical instruments developed for multiple general surgical uses and general imaging technologies.

Emergency and musculoskeletal are the two data points above the trend line worth evaluating because of the limited devices in development compared to healthcare spend, while well care is the most interesting category below the trend line and has the greatest number of products of any category.

Musculoskeletal Data Collection

Musculoskeletal devices use various methods of implementation, but wearable products outnumber non-wearables nearly two to one. This makes sense given that 87% of the products focused on musculoskeletal diseases focus on capturing motion data, and wearables provide a direct method for obtaining this information through accelerometers. The lack of non-motion products may explain why fewer companies are pursuing musculoskeletal products compared to the overall annual healthcare spending. With only one primary method of data collection, the space that most companies are focusing on is crowded, despite the musculoskeletal area being underserved compared to healthcare spend. This suggests that there is a good opening for innovation in non-motion-based technologies where other solutions are scarce.

musculoskeletal data capture,musculoskeletal technology,data collection startup

musculoskeletal devices,medtech diagnostic data

Emergency Medicine Data Collection

The number of emergency medical solutions is low enough to make detailed analysis difficult. As a complicating factor, multipurpose surgical products and general hospital imaging technologies are highly relevant for emergency medicine but are excluded from this grouping due to their multiuse case. Because these multipurpose instruments are used for emergency medicine but are not classified as emergency medicine, this analysis underestimates the number of emergency medical products that startups are developing.

With the multipurpose instruments, which are more likely to be used inside of the hospital, not included in the analysis, more than half of all emergency medicine technologies are developed for use outside the hospital, before the patient can receive full treatment. What is more interesting is that only 11% of the products are designed to be used both inside and outside of a hospital setting. As a result, despite the lower number of innovations compared to healthcare spend, there is less indication that emergency medicine is ripe for additional innovation, as the initial data would suggest.

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Well Care Data Collection

The well care category in this analysis includes only those devices intended for healthcare purposes and excludes those focused on general wellness. The lines between wellness and healthcare have blended for a number of devices that are developing similar products that are both consumer and medical facing, in which case the healthcare version was included.

A prediction was that a greater-than-expected number of well care products would come from wearables, including those that have been developed for combined healthcare and wellness purposes. The wearables category has grown 47% annually from 2012 to 2018, based on the number of clinical trials on ClinicalTrials.gov. On the surface, well care seems like one of the areas where wearables are most applicable, and that the adoption of wearables may explain the greater-than-average number of products based on healthcare spend.

The data disagrees with this prediction. The analysis found that 42% of well care products are wearables, compared to 38% of all healthcare products in development that are wearables. The 4% difference does little to account for the significantly greater difference between the amount of expected well care products and those being developed.

Stepping back from the data and looking at the companies inside of the well care category, the reason why well care has more products than average becomes more apparent. The average level of complexity of products in the well care category is lower than the other categories. Complexity, in this case, is based on the difficulty to collect the measurement and how common the measurements collected are.

Only 4% of the products in the well care category require more than a 510(k) clearance from the U.S. Food and Drug Administration. As a result, the product development cycle and associated costs yield a lower initial barrier to entry, which has translated to more products in development. This seemingly lower bar to entry may do companies a disservice, as Silicon Valley Bank’s 2019 report highlights that 510(k) medical devices that reach an exit, raise on average more money and take longer to exit than premarket approval medical devices.

The combined data suggest that companies in this space need to be especially focused on ensuring product differentiation and market need, given the crowded space, lower initial barriers to entry, and exit economics. It also suggests that there may be space for innovation with higher barrier to entry products.

Healthcare Data and the Future of Medical Treatment

Data presents a large promise for the future of healthcare and medical treatment. The collection of high-quality objective data is vital to the ability to improve patient outcomes. In the near-term future, there are many disease areas, where medical devices and diagnostics can collect this information, which are ripe for innovation, while many other disease areas are more saturated compared to the overall healthcare spend. The number of innovative and unique products collecting a wide variety of medical data yields a highly optimistic perspective for the future of medical treatments and improved patient care.

Next Analysis Article: Wearables

Wearable devices and diagnostics are 38% of the products in this analysis, and the category is growing at 47% annually, based on the number of clinical trials according to data collected from ClinicalTrials.gov. The article will delve into this trend and the wearable products in development.

About the Author

David Saxner is a consultant at Longfellow Associates where he focuses on earlier stage medical device, diagnostic, and digital health companies. 


Publically available data from the websites of the companies included in this analysis.

Dieleman JL, Baral R, Birger M, et al. US Spending on Personal Health Care and Public Health, 1996-2013. JAMA. 2016;316(24):2627–2646. doi:10.1001/jama.2016.16885





David Saxner

David Saxner

    David Saxner is a consultant at Longfellow Associates where he focuses on earlier stage medical device, diagnostic, and digital health companies.

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