The Internet of Things is already revolutionizing our lives. Endowing “things” with better-than-human eyes and ears (sensors) and the ability communicate is leading to improvements in our personal lives and business productivity in countless ways.
The IoT is, however, still a nascent paradigm, and has just begun to penetrate into some sectors such as healthcare. The IoT promises a veritable plethora of time and money-saving innovations for healthcare, including remote patient monitoring, telehealth and behavioral modification platforms that will dramatically improve chronic disease management and reduce costs.
A June 29th report from Goldman Sachs Equity Research titled The Digital Revolution comes to US Healthcare focuses on both private and public players in the emerging digital health field and discusses their business models as well as real-world applications that highlight how these innovators are leading the way in the rapidly changing healthcare ecosystem.
IoT will drive efficiencies, improve patient care and reduce costs in the healthcare sector
One key point to keep in mind is the first wave of successful healthcare Internet of Things technologies are likely to relate to innovations in patient care that improve outcomes and reduce waste and costs.
The new GS report divides the healthcare IoT market into three categories: remote patient monitoring (RPM); telehealth; and behavior modification. All of these segments already demonstrate a business and technology case for adoption and a number of healthcare companies that have developed intriguing platforms.
Authors David H. Roman and Kyle D. Conlee highlight that chronic disease management is clearly the greatest healthcare cost challenge. Chronic conditions represent a growing proportion of overall spend at $1.1 trillion a year, or close to one-third of total U.S. healthcare expenditures, based on data from the National Medical Expenditures Panel Survey (MEPS).
Three conditions each comprise nearly 20% of the total spent on chronic disease – heart conditions, asthma, and diabetes. Roman and Conlee argue that chronic disease management represents “the most fertile ground for digital health since data and modification of treatment paradigms have demonstrated improved patient outcomes, lower adverse events, and reduced costs.”
New Internet of Things innovations represent huge market
Of interest, the report projects a near-term revenue total addressable market of $32.4 billion for healthcare IoT, with 45% coming from remote patient monitoring; 37% from telehealth and 18% from behavioral modification. Chronic disease management via IoT is part of the remote patient monitoring segment and represents moire than 50% of the $32.4 billion TAM figure
Healthcare IoT is just starting to get the ball rolling. Roman and Conlee suggest that current revenues are in the several hundred million range, with firms ranging in size $5 million in revenues to close to $100 million.
IoT represents over $300 billion total savings opportunity
The roll out of the Internet of Things to the healthcare sector means a lot more than just profit for IoT providers, the potential healthcare systems savings are huge and are a major incentive to adoption. The GS report highlights the total savings opportunity (TSO) for IoT in healthcare at $305 billion annually.
This $305 billion figure represents how much can can be saved through “digital health” adoption including eliminating unnecessary/repetitive care and minimizing waste in U.S. healthcare spending. Of note, the large majority of the savings is found through more efficient chronic disease management, where the analysts estimate the savings could total up to $200 billion, or almost two-thirds of our TSO.