The Promise and Peril of Technology
Yesterday Diabetic Investor had the opportunity to demo the new CareLink Pro 3.0 software from Medtronic (NYSE:MDT). While almost every insulin pump and continuous glucose monitoring system comes with a software package, most of these packages do nothing more than collect data and place all this information in series of charts, graphs and tables. Basically it’s up to the patient, physician and educator to then look at all this information and come up with therapy recommendations.
This is one reason Diabetic Investor has been somewhat skeptical of this push for greater connectivity among diabetes devices, it’s not that the information isn’t useful, it is, rather the amount of time necessary to analyze all the data before any action is taken. In the real world physicians lack the time and resources to analyze the vast amount of data produced by a patient with diabetes.
Just how much data are we talking about here, consider the following:
- When working properly a CGM system can accumulate 288 glucose readings per day.
- Insulin pump patients, even those using a CGM, use a conventional glucose monitor on average 8 times per day. Besides having to calibrate the CGM, pump patients also confirm high or low readings as well as use conventional monitors when they are about to eat.
- Although pumps are like mini-computers and have some settings that don’t change, an insulin pump is still interactive technology with the patient entering new information on a daily basis. This includes entering carbs when the patient eats, setting up the pump for extended bolus or temporary basal rates.
Simply put while the current crop of insulin pumps are much smarter than their predecessors there is still a fair amount of interaction between the patient and the pump.
Another issue Diabetic Investor has had besides the time involved in analyzing all this data are the factors the physician and/or educator does not know because they are entered into the pump. Perhaps one of the most misunderstood aspects of diabetes managements is the role outside factors play in achieving good control. Factors such as stress, non-diabetes related medications, exercise and actual food type are just some of the outside factors that impact a patients glucose levels. Factors that are not tracked by a patient and therefore do not show up on any report generated by this software.
This is one of the more frustrating aspects of diabetes management as not every factor that impacts a patient’s outcomes can be quantified or easily tracked. Or put another way diabetes management is not a simple math problem where 2+2=4, and more like an algebra problem with unknown and sometimes changing variables.
Be that as it may, there is still value in having systems such a CareLink as it can facilitate a discussion between the physician and patient. Studies have shown that this communication between a patient and physician is more productive when the patient’s data set is included in the discussion. This helps both the physician and patient visualize what’s going on inside the patient’s body.
This version of CareLink also adds some functionality to this discussion as the system goes beyond collecting and presenting data by providing the physician with “therapy considerations.” Here we see Medtronic understanding the value of the physician’s time helping the physician focus on possible discussion points with the patient. The software is not telling the physician to necessarily make changes rather directs them to areas that should be discussed with the patient. Given that on average physicians spend less than 10 minutes actually face to face with a patient, the more upfront work done by the software the better.
Diabetic Investor also believes in the real world while the physician may be the start this discussion with the patient, more detailed conversations will be conducted by the educator or pump trainer. Software such as this is also the first step towards having an automated discussion. As Diabetic Investor has been stating it’s just a matter of time before companies like Medtronic take over some of the functions previously performed by physicians. They do not seek to replace the physician rather they understand that insulin pump patients are very labor intensive and if they hope to secure more patients in the future their role as an insulin pump company needs to expand into patient management.
The fact is the less time the physician spends face to face with a patient or analyzing data, the more patients they can see each day and the more money generated for their practice. It is also well known one of the reasons more physicians do not recommend insulin pump therapy isn’t because they don’t see the value in this therapy rather they also area aware of the labor intensive nature of the therapy. Frankly it’s good business for Medtronic to transfer some this labor from the physician to their own group of educators.
As we have noted on several occasions if anyone is to break Medtronic’s stranglehold on the insulin pump market they not only have to make insulin pump therapy easier for the patient, they must also make insulin pump therapy easier and more profitable for the physician. With CareLink Medtronic is leveraging their installed user base, years of insulin pump expertise and established customer service departments once again raising the bar for their competitors. Animas and Insulet (NASDAQ:PODD) may have better insulin pumps but neither has Medtronic’s scale.
Diabetic Investor can see the day coming when the patient interfaces with a Medtronic educator via CareLink. This is a win –win scenario as the patient does not have to leave their home or pay for an office visit. The physician can easily be kept in the loop by having access not just to the patient’s data but notes from the discussion between the patient and educator. Basically this discussion between the patient and educator will make the visit to the physician even more productive as ultimately it will be the physician who recommends the exact changes that need to be made, if any. In the end everyone is happy, the patient gets the help they need, the physician still controls the patient and Medtronic gives the patient another reason to stay on their systems.
Further down the road Diabetic Investor can also see a system similar to this actually taking over the costly function of training a patient new to pump therapy. The technology for face to face meetings conducted via the internet already exists and while it’s nice to have a pump trainer sitting down next to the patient teaching the patient, the actual cost of this type of training must be taken into consideration. Moving to this type of training really isn’t that much different than the way many companies offer tech support. While the consumer has the option of calling an 800 line, many companies now offer the consumer the ability to have an interactive chat with a tech support person. The reality is consumer are becoming more comfortable with this type of communication with many actually preferring a web chat rather than calling in, hitting a bunch of buttons, being placed on hold until someone finally picks up the phone.
Diabetic Investor can also envision Medtronic copying what some computer companies now do and actually offer their patients different support options. It’s not all that unusual for a computer or software company to offer basic support for free over the web or enhanced support for additional cost that provides the consumer with a special support number that directs the consumer to live support personal. This is not all that different than what banks have been doing to control their costs some going as far as actually charging more if the customers wants to conduct their banking with a real live bank teller. The reality is with ATM’s, direct deposit and the internet the majority of people don’t need to see a live human to conduct their banking.
The stark reality is growth in the insulin pump market has been slowing and costs have been rising. As we noted last week the key for Medtronic is not adding new patients but keeping their existing patients from switching to another pump system. The more tools they can provide these patients the more difficult it is for the patient to switch. CareLink also expands the role of the company from being a product supplier to actually helping the patient more effectively manage their diabetes.
The true bottom line is Medtronic continues to place more hurdles in front of the competition, making it even more difficult for them to eat away at their huge installed user base. As we noted many times before building an insulin pump is actually the easiest part of the process, the true test for any company in this space or who wants to enter the space is effectively running an insulin pump company; a task that seems to be becoming more difficult with each passing day.