Evolving Healthcare Business Models in the Age of IoT

In the last decade, the Internet of Things (IoT) has emerged as a transformative technology. However, its applications are still in their infancy, particularly within the healthcare industry. As a result, most business models using IoT in healthcare are context-specific and industry-focused. It is crucial to analyze the underlying capabilities of IoT technology to identify the key aspects of the business model that require consideration.

Integrating Connectivity in Healthcare

Connectivity brings complexity in the realm of IoT. The fundamental feature of IoT is its ability to connect everything together, challenging the traditional vertical value chain. In this interconnected landscape, there is an abundance of untapped synergy between diverse entities waiting to be explored.

Furthermore, IoT connectivity extends beyond individual processes. It facilitates the linking of processes across companies and industries, fostering collaborations even with competitors. These dynamics have significant implications for healthcare business models, ushering in a new era of innovation and partnership.

Healthcare Business Model Adaptation

Generally, we aim to model our business to minimize the cost structure and maximize profit capabilities. The main elements in the model are as follows.

  • Value propositions to patients and providers
  • Profit model for insurers and providers
  • Value chain for specific healthcare path

Some practices like business model canvas are used to identify relationships between business building blocks: infrastructure of partners and resources, value creation, customers and channels, and financials.

Transformative Impact of IoT on Healthcare Business Models

The question is, what difference does IoT bring to the business model innovation.

IoT’s value in healthcare lies in enhanced convenience, performance, customization, and shareability. The critical inquiry centers on how IoT alters traditional business model innovation. While customer focus and financial aspects remain consistent, there’s a paradigm shift in partnership dynamics and value creation processes.

IoT’s fundamental contribution is in data collection through sensors and subsequent analysis on cloud servers. The crux of IoT-based value creation is how this data is utilized. Therefore, in adapting business models, emphasis should be placed on redefining value propositions, identifying key partners, activities, and resources, as outlined in the business model canvas.

Reading material: Ju, J., Kim, M. S., & Ahn, J. H. (2016). Prototyping Business Models for IoT Service. Procedia Computer Science, 91, 882–890. https://doi.org/10.1016/J.PROCS.2016.07.106