Ref: IMD-7-1858

Case study

Reference: IMD-7-1858

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Resmed, Inc.: The shift to connected medical devices

Goutam Challagalla

By Professor Goutam ChallagallaGoutam Challagalla, Bernard J. Jaworski and David Gray

The case examines the decisions and actions taken by ResMed’s company leadership over a five-year period to transform the maker of medical devices for sleep apnea from a product-focused business into a “health informatics” company.

While the company had a long and successful history of growth and innovation, company leaders anticipated radical change in the market, including competitive threats from lower-cost rivals as well as a shifting landscape for healthcare reimbursement in the United States, ResMed’s largest market. Beginning with the acquisition of a specialized healthcare data analytics company in 2012, ResMed invested heavily in new device platforms and software that enabled it to gather and analyze a vast quantity of patient data. The information gathered through the company’s CPAP devices could be used to improve patient care and enhance profitability for ResMed’s Home Medical Equipment (HME) customers.

The strategy, however, required a wholesale transformation of all aspects of the company’s operations and marketing processes to deliver and communicate the value of its new offerings. ResMed’s leaders also faced the challenge of explaining and justifying to investors how the new “connected care” strategy produced value for the company.

The case explores a number of key decisions related to technology choices, pricing strategy, and the integration of software capabilities into a company that had traditionally focused on product engineering. The case also looks at ResMed’s decision to “double down” on its digital transformation with the acquisition in 2016 of Brightree, a provider of cloud-based clinical, billing and business management solutions for healthcare customers.

Learning Objective

  • Examine the technical, managerial, and cultural challenges involved in a digital transformation of a successful engineering company.
  • Understand leadership decision-making processes related to technology choice and pricing strategy.
  • Examine a corporate process for performing a market assessment, exploring strategic options, and making the ‘case for change’ to internal and external stakeholders.
Keywords Analytics, Cloud Computing, Connected Device, Continuous Positive Airway Pressure, Customer Journey, Health Care, Health Care Costs, Home Medical Equipment, Informatics, Innovation, Internet of Things, Market Expansion, Medical Device, Sleep Apnea, Strategy, Value Proposition
Settings Northern America, United States of America
ResMed, Health Care
Type Field Research
Copyright ©2019
Language English
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Reference: IMD-7-1858

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Reference: IMD-7-1858

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