Health service managers and industry face significant challenges in implementing and delivering innovations for healthcare. The rapidly increasing range and expense of new medical devices has created a growing need to demonstrate that a new product is superior to an existing one in terms of value (Vallejo-Torres et al, 2008).An open business model links the technical potential of a device with the latent value. Recent research has indicated that a wider perspective on the value chain for healthcare technologies could benefit companies (Davey et al, 2010).An articulation of the value proposition, that is the value created for users by the technology is the key starting point for current thinking on open and innovative business models (Chesbrough, 2006; Osterwalder, 2009) and forms a basis for their further development for appropriate evaluation of healthcare products. Conducting economic evaluations to determine value is beyond the activities of most medical device companies and clinicians, however the importance of estimating value at the early stage of technology development is increasingly being acknowledged.The aim of this research is to develop a framework for ‘valuing’ a new medical device at the concept stage that balances benefit to the healthcare provider against commercial costs. This paper explores the utilisation of the ‘headroom method’ (Cosh et. al, 2007) to derive an estimate of the economic (and/or commercial headroom) available to a new device with a particular functional profile in order to support a decision to proceed with its development. It is proposed that appropriate clinical opinion on trials and other evidence-gathering activities undertaken as part of the development process can contribute to the early stage estimates of value beneficial to both the health service and industry decision makers.
Davey, S., Brennan, M., Meenan, BJ., McAdam, R., Girling, A., Chapman, A., & Lilford, RL. (2010). A Framework to Manage the Early Value Proposition of Emerging Healthcare Technologies. In Unknown Host Publication John Wiley & Sons, Inc..