Product-Development Challenge:

A Home Health-Monitoring and Trauma-Alert System

Preface
This is a fictional case study to serve as the basis for an educational product development
exercise. It is based in part on existing processes and capabilities but also features fictional
projections of future technologies. Even though the inspiration for features of the case can be
mapped in part to the current marketplace, no element of this case (products, services,
companies, statistics, or regulations) should be considered factual.

Summary
The imperative to reduce costs in health-care systems is driving innovations in technology. In an
attempt to switch from in-hospital care to remote patient monitoring, the current market is
moving toward integrating wireless technology with medical instrumentation. In 2008, BA
Biotech launched an all-in-one, hospital-based monitoring device for vital signs (blood pressure,
temperature, pulse and blood glucose) as well as for oxygen saturation and cardiac rhythm. To
maintain its standing as a market leader, BA Biotech plans to launch HomeAlone, a product that
will bring medical monitoring and trauma-alert care into the patient’s home at an affordable cost.

HomeAlone’s noninvasive remote monitoring will revolutionize the $1.5 trillion U.S. health-care
industry. This product is designed to provide high reliability, high precision, and rapid response
in case of emergency. On average, the payback period of investment will be less than eighteen
months, owing to insurance cuts and reduced visits to hospitals.

Product Concept and Market Review

Industry Background
Health-care systems around the globe are on the verge of a crisis, with financial stresses
demanding an overall change. While technology has substantially enhanced the effectiveness of
medical care by enabling the development of cures for previously fatal diseases and by
advancing predictive and preventive medicine, it comes with an increasing price tag. An ever-
larger population and an increase in life expectancy have created a dilemma for health-care
systems.
Innovations in monitoring devices over the past several decades have enabled
increasingly rapid delivery of treatment to patients in need. As an additional result of these
innovations, doctors are more aware of the medical history of their patients, and patients are
experiencing greater mobility. The current market is moving toward integrating wireless
technology with monitoring devices. This general application of wireless technology will
increase the mobility of patients and caregivers, reduce costs, and greatly improve efficiency and
profitability for the medical community, because it will enable more patients to be treated in the
home.

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 Even so, analysts believe that the $1.5 trillion U.S. health-care industry spends only 5%
on information technology, and even less on wireless technologies. Obstacles to increasing this
percentage exist because of concerns over the reliability of these systems. Wireless transmission
is vulnerable to signal interference, power loss, security breaches, and delays. The U.S. Food and
Drug Administration (FDA) has issued stringent requirements on such devices, and these
requirements have discouraged investment in this sector. However, technologies exist now that
can satisfy FDA requirements, and the next decade is expected to see the integration of network
technologies and health-care systems to greatly improve patients’ access to medical services at
reduced costs.
According to FocalPoint Group, Inc., “The overall U.S. wireless data-networking and
related servicing opportunity in the health-care sector will grow to over $7 billion by 2010, with
the potential to be much higher given proper development.”1

Company Profile
The BA Biotech Corporation, in business for over 35 years, is widely recognized for its
technologically advanced design and manufacturing capabilities and for its aggressive marketing
of vital-sign-monitoring instruments. BA Biotech offers noninvasive monitoring solutions for
blood pressure (NIBP), blood glucose, and oxygen saturation. It has maintained an average
growth rate of 7% since 2005. Its recent innovations in monitoring devices have set a benchmark
for other manufacturers, and its growth rate for 2009 (this year) is projected to exceed 10%.
In 2007, BA Biotech launched the first-generation Patient Probe RBC, which was an all-
in-one monitoring device for vital signs (blood pressure, temperature, pulse, and blood glucose)
as well as for oxygen saturation and cardiac rhythm. This model was launched in hospitals to
enable caregivers to monitor several patients in close proximity. The Patient Probe RBC also
made it easy for hospital personnel to maintain patient-medical-history (PMH) records. Within a
short period of time, it became a best seller. However, competition is high, and within the last
year, there have been over a dozen companies offering similar products. Only two of these
companies pose a serious challenge to BA Biotech’s long-established reputation and market lead:
MT Instruments and CAMA. MT Instruments offers low prices, but its products are less reliable.
CAMA offers patient support and reliability.

Market Opportunity
To maintain its standing as a market leader, BA Biotech plans to launch a new product
that integrates its all-in-one monitoring device with wireless technology. The proposed product
will enable health-care providers to monitor patients continuously and remotely, thereby
reducing the frequency of hospital visits. This product will be the latest in the line that includes
Patient Probe RBC and will bear the name HomeAlone.
The HomeAlone device is designed to perform in-home monitoring of vital signs, oxygen
saturation, and even blood glucose (noninvasive). It will send information to a central monitoring
system (CMS) in the home for measurement, analyses, possible diagnoses, display, and
notification of alerts to others, either at home or at call-and-dispatch centers. Lightweight and
reliable, the HomeAlone device will be worn by the patient on a wristband (the WristBand).
HomeAlone will enable certain patients to avoid prolonged hospitalizations.
1
The FocalPoint Group. 2004. Wireless in HealthCare: Executive Summary. www.thefpgroup.com.

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 BA Biotech’s extensive research on the thermal energy generated by metabolic reactions
in the human body is the basis for its design of this lightweight, noninvasive blood-glucose
monitoring device. The HomeAlone WristBand will use special sensors to measure temperature
and light characteristics in a patient’s wrist with a contact thermometer, a radiation thermometer,
and a multiwavelength reflective-dispersion photometer. The WristBand will enable the central
monitoring system to monitor blood glucose.
Patients, able to move around while wearing the WristBand, will stay informed about
abnormal vital sign readings thanks to an alarm system embedded inside the WristBand (max
65dB) and in the CMS (max 85dB). In addition, this alarm system will notify the user of any
system malfunctions, such as signal failure or hardware or software problems. Readings will be
taken by the WristBand at fixed intervals and transmitted to the central monitoring system. The
sequence and time interval between each vital-sign reading will be set such that measurement of
one vital sign does not affect measurement of the other: for example, body temperature will
always be recorded before blood pressure is measured. The patient’s doctor will prescribe the
frequency of each vital-sign reading and the threshold limits for initiating alerts. However, to
ensure the timely detection of patient trauma, the maximum interval between any set of readings
will be four minutes.
For near-continuous monitoring, the patient with HomeAlone will be required to wear the
WristBand at all times except when washing or showering. The WristBand will employ a
rechargeable battery pack. The WristBand will be connected to the central monitoring system via
a wireless connection based on code division multiple access (CDMA) technology. This
connection must consume minimal power and maintain signal integrity despite interferences. To
further conserve the battery life of the WristBand, the signal-reception sensitivity of the central
monitoring system will be high. The CMS will have two USB ports to support external
diagnostics and data transfer.
The central monitoring system will construct and retain a patient medical history (PMH)
and a history of present illness (HPI). BA Biotech will offer patients the option of connecting
their HomeAlone to a nearby BA Biotech unit (call-and-dispatch station) via a cellular
connection and a backup phone line. (The patient’s home will need to be within cellular range to
benefit from this option.) In case of a trauma alert, this nearby call-and-dispatch station will first
attempt to speak with the patient via the built-in microphone and speaker on the WristBand. If
there is no response, or the patient’s condition is critical, the call-and-dispatch station will
dispatch an ambulance. It will also transmit the patient’s medical history to the receiving
hospital. A door-locking mechanism requiring a security code will be provided for the main
entrance to the house. The call-and-dispatch station will communicate the security code to the
emergency personnel arriving at the patient’s home.
Since there will be two systems in place, BA Biotech is seeking separate FDA
compliance for each system: one for the alarm system inside the house, and the other for the call-
and-dispatch station response system.
This product will be sold for a target price of $8,500. For most patients requiring
continuous monitoring, the savings on in-patient care will justify this investment within eighteen
months. BA Biotech will offer several purchasing options for this product, and the company
anticipates that medical-insurance companies will assist patients in the purchase of these units.

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 Anticipating the market demand for such a product, competitors MT Instruments (MT)
and CAMA (Computer Assisted Monitoring of America) have announced plans to offer similar
products. MT has established a reputation for offering alternatives for a number of expensive
medical instruments, although it is unable to offer high-reliability products and lacks aggressive
marketing capability. MT is usually after lower-tier customers who cannot invest in expensive
solutions, and so its presence is not the primary threat to BA Biotech. MT Instruments’ proposed
product will have similar features to HomeAlone, and it will likely be priced at $6,500.
CAMA has long been in the business of providing high-tech testing equipment for
research purposes. It pioneered some of the noninvasive medical instruments available on the
market. CAMA’s products are usually expensive; however, it offers excellent maintenance
support and has cultivated loyal customers in the hospital industry. Its existence has always been
a threat for BA Biotech. Its version of HomeAlone will likely be priced at $9,500.

Market Conditions

Competitive Analysis
Customers for in-home monitoring are primarily concerned with price, reliability, weight
of wristband, and patient support. Neither HomeAlone nor the similar products by MT
Instruments and CAMA are on the market at this time. However, based on data from previous
products from these companies, the following hypothetical comparison can be used for market-
planning purposes:

a) Company name – BA Biotech Corporation

 Product – HomeAlone
 Weight – WristBand is 100 grams
 Reliability (mean time between failures) – 3 yrs
 Price – Competitive
 Warranty – 2 yrs (repair or replace with rebuilt unit)
 Memory – WristBand has 5Mb; central monitoring system has 20Gb
 Display – WristBand comes with an LCD display featuring alarm and speaker volume
and varying fonts and brightness
 Communications – Network is based on CDMA technology
 Service – Service representative will respond to service call within 24 hours
 Threats and weaknesses – Known for delays in launching product and in offering
upgrades; components are not readily available on the market and can be purchased
only from BA Biotech
 Strengths and opportunities – Experience in producing similar products; long standing
as market leader; competitive prices; high reliability; and patient support

b) Company name – MT Instruments

 Product – Probe 2000
 Weight – Wristband is 200 grams
 Reliability (mean time between failures) – 1 yr
 Price – Low

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  Warranty – 2 yrs (repair or replacement expected during warranty)
 Memory – Wristband has 8Mb; central monitoring system has 40Gb
 Display – Central monitoring system has an LED display featuring varying fonts but only
low resolution and brightness
 Communication – Uses frequency modulation
 Parts – Readily available on the market; can be replaced by user
 Threats and weaknesses – Customers constitute only 8–9% of the market; MT has a
reputation for low reliability
 Strengths and opportunities – Patients are always looking for cheaper alternatives, and
MT Instruments usually has something to offer; MT has many sales contacts in the
market, and has the highest number of repair centers.

BA Biotech’s response to MT:

 The HomeAlone product will weigh less, offer a better display, and have a longer battery
life.
 MT’s products have a lower reliability rating, and its patients are likely to attempt repairs
by themselves. In addition, signal interference in frequency modulation is likely in the
Probe 2000 and, therefore, transmission errors may occur. Finally, the Probe 2000 will
likely feature an unattractive LED-based display.

c) Company name – Computer Aided Monitoring of America (CAMA)

 Product – Patient Care Remote
 Weight – Wristband is 150 grams
 Reliability (mean time between failures) – 4 yrs
 Price – High
 Warranty – 3 yrs (repair or replace with rebuilt unit)
 Memory – Wristband has 5Mb; central monitoring system has 25Gb
 Display – Central monitoring system has a high-resolution plasma display featuring
varying fonts and brightness
 Communication – Uses a frequency-hopping CDMA (FH/CDMA); high security;
interference is extremely unlikely
 Parts – Spare parts are readily available on the market
 Service – Service representative will respond within 12 hours; excellent patient support
 Threats and weaknesses – Low battery life; high cost.
 Strengths and opportunities – CAMA has been in the business of providing medical
instruments longer than BA Biotech and exceeds BA Biotech in maintenance support,
innovation, and reliability. CAMA will also be coming up with ECG upgrades within a
short period of launching Patient Care Remote.

BA Biotech’s response to CAMA:

 BA Biotech’s products come close to CAMA’s products in reliability, patient support,
and innovation of product. BA Biotech has plans to release an enhanced HomeAlone that
will monitor two patients simultaneously. The enhanced product will provide a four-lead
ECG wire harness for patients with heart problems. BA Biotech’s products are available
at lower prices, and the HomeAlone Wristband will weigh less than CAMA’s product.

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Patient Profile
The first-generation Patient Probe RBC was launched for hospitals and medical centers.
However, HomeAlone targets the home-dwelling elderly, patients requiring monitoring, and
remote medical units with limited staff. Although this product appears to be expensive for
individuals to own, it has an estimated payback period of less than eighteen months. Savings
come about through reduced annual medical-insurance claims, and because of reduced hospital
visits or visits made by doctors. Each user is likely to use HomeAlone for at least five years.
Patients above the age of 65 are vulnerable to medical problems late in the night. Some patients
will require monitoring of vital signs with high frequency, therefore these patients will have
high-priority status and service contracts will vary accordingly.

Market Strategy
The health-care industry is a competitive industry, and so alternative solutions are always
available on the market. The competitive edge held by BA Biotech is in reliability, cost, and
patient support. However, to maintain its market leadership, business goals should also include
optimal patient mobility, continuous monitoring, personalized packages, and theft and tamper
prevention. Resources have to be allocated accordingly to bring about a change in the industry.
Patients should be able to gain real-time information and better care and to self-treat and improve
their overall health condition outside the confines of a hospital or doctor’s office. Technology
should focus on innovations to improve patient productivity levels and to reduce overall costs for
medical treatment. HomeAlone will increase sales for BA Biotech by implementing this market
strategy.

Return on Investment
a) Investment. Launching HomeAlone requires resources for research, test design, manufacture,
and marketing. BA Biotech already has a research and development department, and the
expected investment for launching HomeAlone is $2.5 million.
b) Forecast. HomeAlone RBC is primarily targeted at patients who are above 65 years of age.
Forecast unit sales are shown in the following table and graph.

Forecast unit sales for Home Alone system.

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