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Hype Cycle for Wireless Health

January 7, 2010

While there are a number of caveats to the bullish market forecasts for wireless health (most notably the dearth of payer reimbursement), the majority of reports seem to indicate that we’re finally at the long-awaited inflection point for the industry.

Since this is a very heady time, I got to wondering how much confidence we should have in what the prognosticators are saying. Prior to this rumination, I had a conversation with one of the people behind Corventis, who had suggested that, similar to what drove large-scale utilization of the Internet, wireless health needed a “killer app”. In other words, for wireless health to really take off, it needs something akin to what email did for computer networks and what web browsers did for the Internet.

The Internet, as it turns out, is a prime example of a “hype cycle”, an idea that Gartner introduced in 1995 as a commentary on the common pattern of human response to technology. A hype cycle is a graphic representation of the maturity, adoption, and business application of specific technologies. It has five phases: Technology Trigger; Peak of Inflated Expectations; Trough of Disillusionment; Slope of Enlightenment; and Plateau of Productivity.

The salient point of this discussion is that, in Gartner’s 2009 review of hype cycle positioning for various technologies, they placed Home Health Monitoring (HHM) near the bottom of the “Trough of Disillusionment”. They also indicated that HHM has 5-10 years to go before it achieves mainstream adoption. The spot where they placed HHM is associated with “Second/third rounds of venture capital funding”, which seems to jive with the investment deals we’re seeing in the space. Lastly, the next bubble on the curve is “Less than 5 percent of the potential audience has adopted fully”.

In digesting all of this, I was first left wondering if Gartner had selected HHM as a surrogate for the entire wireless health sector. Unlikely, of course, but it came to mind. My second thought was whether their assessment of HHM was in alignment with the market forecasts we’re seeing. For example, the oft-cited Parks Associates forecast that the U.S. market/sales of wireless home-health technology (home-based healthcare applications and services) will grow from $304 million in 2009 to $4.4 billion in 2013; a five-year cumulative annual growth rate of over 180 percent.

For a sanity check, I went back to the sticking point of reimbursement which, according to Zachary Bujnoch at Frost & Sullivan, is expected to be extraordinarily challenging for the next two to five years. In the Frost press release, he states that “market participants are forced to seek alternative payment strategies, and while some of these have proved successful, the huge billion dollar market potential this space possesses is unlikely to be reached without some form of direct reimbursement.”

Conclusion

Brian Dolan, et al. at MobiHealthNews summed things up quite succinctly in saying that, if Frost is correct, “more wireless health start-ups will pursue a direct-to-consumer model or an indirect to consumer model through their employers, who are financially motivated to keep their employees healthy and working.” And that “Next year will bring substantial revenue growth for the industry, increased capital investment, a number of strategic acquisitions and little progress on reimbursement from payers.”

So, it does appear that sales will certainly take off in the near term – it’s just that we’ve got a few more years left to go in slogging it out in the aptly-named Trough of Disillusionment before we start making our way up the Slope of Enlightenment!

-Paul

References:

Gartner PPT Presentation “Inside the Hype Cycle: What’s Hot and What’s Not in 2009” (Slide #6 illustrates technology placements for 2009
http://my.gartner.com/it/content/1101800/1101817/august12_hype_cycle_final_jfenn.pdf

Gartner’s 2009 Hype Cycle Special Report Evaluates Maturity of 1,650 Technologies (Shows an image of a PPT slide illustrating Gartner’s hype cycle technology placements for 2009)
http://www.gartner.com/it/page.jsp?id=1124212

Gartner Webinar: Inside the Hype-Cycle: What’s Hot and What’s Not from 2009 to 2019 (has link to PPT presentation)
http://my.gartner.com/webinardetail/resId=1209713

Video: Jackie Fenn from Gartner: Innovation In a Tough Economy
http://www.youtube.com/watch?v=jGz6rWJsYbg

Hype Cycle – Wikipedia
http://en.wikipedia.org/wiki/Hype_cycle

Smart Payment Strategies Enable Growth in Home Health Care and Disease Management Markets for Remote Patient Monitoring Finds Frost & Sullivan
http://www.newswiretoday.com/news/55600/

MobiHealthNews “Wireless Health: State of the Industry – 2009 Year End Report”
http://mobihealthnews.com/5816/wireless-health-year-end-report-2009/

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