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Frost & Sullivan Insights from the Philips Analyst Day, 29 May 2019

A team of Frost & Sullivan analysts was invited by Philips to attend its Global Analyst Day in Boston, Mass., on 29 May 2019. Here are the excerpts and insights the Frost team gleaned from the day-long event, interacting with Philips stakeholders.

We have seen Philips transitioning into a health technology company, and those efforts were on display in full intensity at the event. As we heard from the Chief Innovation and Strategy Officer, Jeroen Tas, as well as the leaders for their Personal Health, Connected Care and Precision Diagnosis and Image-Guided Therapy businesses, it is becoming clearer that Philips is succeeding in making this transition.

Philips’s interpretation of the healthcare continuum is tuned into current trends and conditions for care delivery: from healthy living to prevention, diagnosis, treatment and, finally, to home care. Philips is using this care continuum as its guiding strategy to align with emerging trends in healthcare—consumer-centric, value-based, networked, digital and consolidated, and leveraging digital technologies that are driving the transformation of the industry. In line with these changes in the healthcare industry, and also the Quadruple Aim in healthcare, Philips is introducing new business models, as well as transitioning towards outcomes-oriented models of care delivery. The ultimate outcome of these transitions for Philips is to enable precise, personal, predictive, pro-active, 24/7, holistic and coordinated care, through providing actionable insights for care delivery stakeholders. Its goal is to not just continue to maintain its leadership positions, but also expand on them in the several areas it plays in: Personal Health, Connected Care, Precision Diagnosis and Image-Guided Treatment.

Exhibit 1: Quadruple Aim

From an analyst perspective, the key message we caught on to was the drive to bridge the consumer health and professional health businesses, which is a future-ready concept when thinking about preventive and pro-active care as emerging concepts in the healthcare industry. This is also in line with Philips’s overall strategy to improve the lives of 3 billion people by 2030. Philips is reinforcing this strategy with a holistic view of all the trends in healthcare to emerge on top.

Personal Health

Philips envisions its personal health business as moving in the direction of the personalized health paradigm. More so, it realizes the potential of the data troves emerging from its consumer products, which number 250 million units globally per month. Leveraging the data, Philips can transition from just a product developer to a data solutions provider. An apt example is its Sonicare toothbrush—it is not just about the power toothbrush product, but moving towards a complete oral care solution. Philips cites the example of the partnership with Delta Dental, oral health/dental insurance in the United States where the data from the connected power toothbrush, along with claims data for dental insurance, can help the insurer drive preventive care and in the future provide personalized plans. Philips now has a similar partnership with ONVZ health insurance in the Netherlands where the connected toothbrush is included in the insurance plan. To support oral care beyond prevention, Philips launched the Sonicare teledentistry solution for US consumers to get insights, support and care advice within as little as 6 hours (direct care) or at most 24 hours (complete care)—without an appointment—for an affordable cost of $10 or $35, respectively. Philips is currently exploring new functionalities to enable dentists to connect with their patients between visits. A European pilot of the teledentistry service is also in progress for the end of this year. To enhance access, Amazon subscription services are available for these products.

Philips is also looking at ways to more closely integrate its professional and consumer health businesses. An example is the mother and child care business. While the primary focus for Philips is to further penetrate the markets with its Avent line of maternal care products and expand geographically, it also aims to scale up its Pregnancy+ app. As Philips has learned, developing a bond with the consumer during an emotional time greatly enhances loyalty. This is especially evident with the Pregnancy+ app, which has 4 million active users, with 25 million downloads and a 4.8/5 rating on app stores—all with minimal marketing efforts from Philips. The company aims to deepen its consumer relationships with the app. But further on, it also aims to extend into the professional side while developing consumer relationships where its infant care portfolio of products in the Maternity and NICU departments can integrate with the patient engagement opportunities.

Having a consumer product line is definitely helping Philips reach its full potential to deliver on its care continuum vision that includes healthy living and extends to home care.

Connected Care

Philips highlights the evolving trends in the healthcare industry to break conventional mindsets, to move away from focusing only on diagnosis, monitoring and therapy, and only in the hospital settings. Breaking those invisible boundaries, the firm’s solution sets focus on pre-diagnosis and post-treatment areas. It is also expanding its focus to go beyond hospitals, and into clinics, primary care, community care and even home care.

Going beyond the hype of simply making connected medical devices and software solutions, Philips leverages data, analytics, and adaptive intelligence (Philips’s terminology for contextual artificial intelligence) to collect data from connected devices and software and aggregate the data in context-specific platforms to enable planning of the care pathway with real-time clinical decision support and enable seamless communication between the care teams—all of which enable KPIs to implement and improve upon outcomes-based care pathways and workflows.

As testament to its health IT legacy and focus on becoming a health tech leader, it provides several connected workflow solutions, including Acute Care tele-ICU suite, population health and remote patient monitoring, sleep monitoring suite, Guardian early warning score, IntelliSpace hospital informatics, among others. Beyond improving clinical outcomes (inside and outside hospitals), Philips is also focused on improving productivity and efficiency, as well as staff satisfaction and retention.

Precision Diagnosis & Image-Guided Therapy

Robert Cascella, Chief Business Leader for Precision Diagnosis, presented on the overall strategy of the business units, including the Image-Guided Therapy business, which is guided by the principles of the Quadruple Aim. Philips’s rechristening of Diagnostics and Image-Guided Therapy to Precision Diagnosis indicates the future path of Philips’s solution development to address the challenges in healthcare and also highlights the critical role of imaging in precision medicine. The transitioning towards the value proposition of precision diagnosis was clear from the various sessions at the event, including the realignment of the Healthcare Informatics unit from the Connected Care segment to the Precision Diagnosis segment in early 2019.

Exhibit 2: Collaborative approach in Precision Diagnosis

Being a leader in many of the imaging modality businesses, Philips is taking a bold step in charting the future growth of the business segment. The business leaders are quite clear that precision diagnosis will play a critical role in shaping the future of medicine. The key to a successful transition to the precision paradigm rests on access to high-quality clinical data, longitudinal patient information, a strong data analytics practice and access to AI tools. The realignment of the healthcare informatics unit under the Precision Diagnosis vertical provides the necessary momentum in realizing this objective. The platform approach enables the various business units to leverage longitudinal patient data from the Electronic Medical Record (EMR) facilitated by the Health Suite system of applications. Data from various care settings such as primary can also now be leveraged to provide precise, predictive and proactive care. Philips also highlighted its oncology informatics solution as part of the collaborative care and precision diagnosis. The solution integrates phenotypes, genomics, proteomics and bioinformatics data for targeted cancer treatments and matches appropriate clinical trials with the patient condition. The solution also integrates Dana Farber clinical pathways for clinical decision support in EHRs.

Another key element which was highlighted strongly was the transformation of the industry business models from products to value-based solutions. To thrive in this new environment, a collaborative and patient-centric approach that connects technology, data and people has to be maximally leveraged to arrive at the optimal operational, financial and clinical outcomes. Lifecycle contract management relationships will play a key role in the successful transitioning of Capex to Opex operating models. In this context, we could find a definitive role of the PerformanceBridge suite of solutions, which leverages data to optimize workflow challenges and improve productivity of imaging departments. The demonstration of PerformanceBridge highlighted the value of operational insights and performance across modalities in designing impactful solutions and empowering the customers with actionable insights to improve their departmental efficiencies and outcomes. Philips also highlighted its Command Center solutions, which address the need for trained technical staff to operate advanced imaging equipment, essentially targeting rural areas in developed markets and short-staffed emerging markets.

Some other key announcements prior to the Analyst Day event reinforced the technology stack of enterprise imaging and workflow solutions. Philips had previously announced the acquisition of Direct Radiology and Carestream’s Healthcare Information Systems business unit. While Direct Radiology adds value in the teleradiology solution set, the Carestream deal is expected to provide significant mileage to Philips in terms of market expansion and access to high-quality configurable and interoperable cloud-based enterprise imaging solution sets that comprise of state-of-the-art vendor-neutral archives, viewers, reporting and workflow orchestrators. One of the themes constantly reverberating across the sessions was the transition towards vendor-neutral and open-source solutions to extract maximal value from the captured clinical data.

In its quest for a continuing leadership position in image-guided precision therapy, Philips has upped the ante by proposing to combine augmented reality (Hololens II) with image-guided procedures. With the proposition changing to patient centricity across the imaging industry, Philips has introduced a highly impressive Azurion platform with demonstrated radiation dose reduction benefits and a host of other efficiency and productivity tools that include compatibility with other third-party interventional tools.

Conclusion

Philips has embarked on a remarkable vision to transform the way healthcare is delivered across the globe. In its quest to address the ever-growing needs of the provider community to improve the outcomes of care delivery across the different care paradigms, ranging from hospitals, physician offices and the home, Philips has taken a unique path of boldly deviating from product-based propositions to solutions and services enabled by the innovations in digital technologies and artificial intelligence. It envisages leveraging clinical and non-clinical data to make the transition to precision diagnosis and treatment enabled by the ecosystem of data created by all business segments. In line with the recent trends in the industry, Philips is taking the lead in transitioning from transactional relationships with the clients to one which is long-term, consultative and solution-based in nature. Philips is betting big on adaptive intelligence considering the immense value it will bring to its solution capability, which will ultimately help its clients in reaching better clinical, operational and financial outcomes. Taking the lead amongst the large MedTech entities, Philips has opened up the solution co-creation ecosystem by engaging with other stakeholders. Going forward, Philips will be guided by the Quadruple Aim in bringing to market value-based solutions that leverage innovative technologies that will help in its effort to become the preferred partner for organizations involved in healthcare delivery.

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