Digital transformation is coming to healthcare as major tech companies invest heavily in digital health. While disruption happens quickly in other industries, healthcare change will be slower due to its complexity. However, automotive examples show electronics will comprise over 50% of vehicle costs. This will open the supply chain and accelerate innovation. A digital hospital would be organized by data and analytics rather than medical specialties. Predictive analytics could link previously separate conditions. Behavior augmentation solutions would be common. Monitoring of things like fertility and seizures would be core capabilities. Data-driven healthcare will challenge providers' competencies and how expertise and data share profits.

1. DigitalTransformation—Spotlight on the
Hospital
Jon Melnick, Ph.D.
Senior Analyst
January 7, 2017

2. About Lux Research
2

3. Agenda
Digital disruption comes to an industry near you
Digital pushes traditional care past existing practices
Restructuring the digital hospital
3

4. Electronics giants are betting big on Digital Health
and Wellness
4
“GoogleVentures Shifts Focus to Health Care” WSJ Dec 2014
The venture group plans to continue investing in the area, looking to capitalize on an
explosion of health data and new ways to analyze it.
- Bill Maris, head of GoogleVentures
“Google Bets on Health: 'The MostYou Can Lose Is AllYour Money'” Bloomberg Feb
2016
• Health care became GV’s largest investment category in 2014, topping consumer,
data and artificial intelligence, enterprise and robotics. In 2013, only 6 percent of
GV’s investments were in health care.That jumped to 34 percent in 2014 and 31
percent in 2015.
Apple Goes Big on Digital Health, Acquires Gliimpse [personal health data
platform that enables any American to collect, personalize, and share a picture of
their health data] ETF Daily August 2016
“Aetna and Apple collaborate on digital health and wellness for employers” Internal
Health Management September 2016

5. 5
Electronics disruption happens fast, but not in
healthcare
Timeframe: 2-5 years to lock in
30+ years of dominance

6. 6
Electronics disruption happens fast, but not in
healthcare
Timeframe: 2-5 years to lock in
30+ years of dominance
Source: Commonwealthfund.org

7. Automotive shows what is coming to healthcare
7
“We take steel, raw steel, and turn it
into car.They have
no idea what they’re getting into if they[
Apple] get into that.” formerGM CEO
Dan Akerson February 2015
1% 3% 4%
10%
15%
20%
30%
35%
50%
0%
10%
20%
30%
40%
50%
60%
Electronics
and
software
as percent
of total car
cost
Apple CarPlay
AppleTitan

8. The new automotive supply chain will be blown wide
open, and innovation is decoupled, and accelerated
8
Tier 1 supplier
Tier 2 supplier
Tiers 3-5
Raw materials
Electronics
Components
Foundries
Raw materials
OEM
(Automaker)
ODM
(Device maker)
New car models
every 4-7 years
New car electronics
hardware every 1 year
New car software
every 1 month

9. Diamler is more concerned about Apple’s moves
than GM
9
“We take steel, raw steel, and turn it
into car.They have
no idea what they’re getting into if they
get into that.” formerGM CEO Dan
Akerson February 2015
“What is important for us is that the
brain of the car, the operating system,
is not iOS orAndroid or someone else
but it’s our brain,”
“We do not plan to become the
Foxconn ofApple,”
Diamler CEO Dieter Zetsche
September 205

10. Agenda
Digital disruption comes to an industry near you
Digital pushes traditional care past existing practices
Restructuring the digital hospital
10

11. 19th century technology is the basis for today’s
hospital structure
Physiological specialties define today’s
hospital
Modern hospitals began in 18th
century
Department specialization (and
organization) started in the 19th
century
When does care become about data and
analysis as opposed to doctor’s
specialty?
Cardiology
Ear, nose, and throat
Dermatology
Gastroenterology
Ophthalmology
Psychiatry
Endocrinology
Neurology
Pulmonology
11

12. Digital threatens to transform every conceivable
arena
12
Exam
Decision-making
Location
Source: Lux Research
Arena
Hospitals
Data security
Data storage

13. Digital threatens to transform every conceivable
arena
13
Past
Exam
Decision-making
Location
Cybersecurity
Centralized repository
Doctor
Centralized
20th Century
Source: Lux Research
Arena
Hospitals
Data security
Data storage
Qualitative symptoms

14. Digital threatens to transform every conceivable
arena
14
Past Future
Exam
Decision-making
Location
Cybersecurity IoT Security
Centralized repository Blockchain
Data
Doctor AI
Centralized Distributed
20th Century 21st Century
Source: Lux Research
Arena
Hospitals
Data security
Data storage
Qualitative symptoms

15. Agenda
Digital disruption comes to an industry near you
Digital pushes traditional care past existing practices
Restructuring the digital hospital
15

16. Gastroenterology
A “digital” hospital is organized differently
Cardiology
Ear, nose, and throat
Dermatology
Gastroenterology
Ophthalmology
Psychiatry
Endocrinology
Neurology
Cardiovascular disease
Skin cancer
Diarrhoeal disease
Visual impairment
and blindness
Epilepsy
Depression
Asthma
Lung cancer
Parkinson’s disease
Diabetes
Infertility
PulmonologyDeafness and
hearing loss
Data-driven hospital departments:
Monitoring
Diagnostics
Predictive analytics
Therapeutics
Assistive technology
Behavior augmentation
D
PA
T
AT
BA
M
16

17. Predictive analytics connections link previously
disconnected conditions
Cardiovascular disease
Skin cancer
Diarrhoeal disease
Visual impairment
and blindness
Epilepsy
Depression
Asthma
Lung cancer
Parkinson’s
disease
Diabetes
Infertility
Episodic condition
Predictive
Analytics
Deafness and
hearing loss
Prediction based on
environmental factors
17

18. Behavior augmentation solutions are most common
Monitoring
Diagnostics
Predictive analytics
Therapeutics
Assistive technology
Behavior augmentation
Cardiovascular disease
Skin cancer
Diarrhoeal disease
Visual impairment
and blindness
Epilepsy
Depression
Asthma
Lung cancer
Parkinson’s
disease
Diabetes
Infertility
Deafness and
hearing loss
18

19. Monitoring-Temperature sensing becomes a core
capability
Fertility tracking Breast cancer screening
Epileptic seizure predictionChildhood development
19

20. Takeaways
20
Intervention
Referrals
Appointments
Symptoms
Prevention
Assistive/
Treatment
Prediction
Monitoring/
Diagnostics
Healthcare Electronics
Data-driven healthcare will upset
quality of care and the patient
experience, forcing existing
providers to compete in ways far
outside of core competencies
There will be room for both data
and medical expertise, but how
quickly does each evolve, how do
they share profits?

21. Thank you
Lux Research Inc 100 Franklin St. 8th Floor Boston, MA 02110
Jon Melnick, Ph.D.
Senior Analyst
jonathan.melnick@luxresearchinc.com